Take-Two Interactive is all but guaranteed to come into an awful lot of cash once Grand Theft Auto VI comes out on November 19 of this year. What does it plan on doing with all that money? One possible answer, floated unexpectedly yesterday by CEO Strauss Zelnick, is acquire another game studio.
This comes from the investor call following the release of the company’s full fiscal year earnings yesterday. During the call, Zelnick was asked by a representative of Baird what the company would do with the infusion of cash it is essentially guaranteed to get from GTA 6. The questioner seemed specifically to be asking if that money was going to come back to shareholders, for instance, via share buybacks.
Zelnick responded by outlining three different potential uses for capital. The first was “supporting organic growth,” aka making more games, which he said Take-Two has obviously done and will continue to do. The third, returning capital to shareholders, is also something the company has done before and will likely do again.
But the second item Zelnick listed was “inorganic growth,” or acquiring other companies, and he spent quite a bit of time outlining what this option would mean. Zelnick was clear that such acquisitions would be “selective,” done strategically, and would only occur “when it’s a creative”—implying he’s not interested in buying anything other than studios that will produce games. As examples, he pointed to the (relatively) recent acquisitions of both Zynga and Gearbox, both of which he sounded quite pleased with.
“I’m proud to say that all of our acquisitions have turned out to be creative and successful in our nearly two-decade period,” Zelnick said. “That’s pretty breathtaking for corporations, it’s not generally the case. And I think that’s because we’re immensely disciplined. You’re not going to see us doing deals hand over first, but assuming our balance sheet continues to improve, I think you could imagine more inorganic growth in the future as well. And we already said in this release today that we expect to be in a net cash position by the end of this fiscal year.”
While he didn’t offer further specifics, this does seem to suggest that Take-Two has acquisitions on the mind, though nothing is for certain and exactly what company it’s eyeing remains a mystery. One possible candidate for such an acquisition could be Remedy Entertainment, as Rockstar is currently working with Remedy on a remake of the Max Payne games. Other options that come to mind would potentially be a piece of either EA or Ubisoft, the former of which is about to be acquired by the Saudi Arabian government and the latter of which seems like it wouldn’t mind selling off a studio here or there as it tries to get its financials together.
