Take-Two boss Zelnick says it would be “unfair” to put ads in premium games

The CEO of Take-Two Interactive, Strauss Zelnick, has said that it would be “unfair” to have in-game adverts within premium titles.

Speaking to The Games Business, the executive addressed comments made by industry analyst Matthew Ball regarding the major role of advertising in the mobile games sector and the massive revenue potential for sports titles such as NBA 2K.

Zelnick’s response is that in-game adverts make sense in free-to-play titles, but not in premium releases.

“For free-to-play titles, yes,” he said.

“For titles for which you’ve paid $70 or $80? No. We have some limited advertising inside games like NBA 2K because it fits with the vernacular. You want to see advertising in a stadium, because you would if you were there in real life. But that’s not a big economic contributor.

“It’s difficult for me to believe that we would want to have interstitial advertising in a game that someone paid $70 or $80 for. It would seem unfair.”

Zelnick also addressed Take-Two’s reliance on the United States and Western Europe for revenue. At the moment, 65% of its revenue comes from the USA, but in ten years, he reckons it will be between 20 and 25%.

“There’s this massive population that loves interactive entertainment that we’re not really serving,” he explained.

“For example, India and Africa. I would argue we underserved the Middle East. We certainly underserved much of Asia and Latin America. We need to change that.

“One of the ways we have to do it is localize, which requires us to invest. And the other thing that we have to do is create distribution partnerships, largely for mobile. We also have to support streaming services that make sense. Finally, we have to be willing to use our geo pricing tool, and take the risks that someone might use a VPN to circumvent our geo pricing, which is a risk we will take in limited circumstances.

“If you look at our numbers now, we run about 65/35 in favor of the US in terms of our revenue. It’s certainly not true of population, with the US having a population of 330 million people. So, as the world opens up technologically… on the console side, that means going more to PC, which is already becoming a much greater share of so-called console releases. On the mobile side, it means having technology that allows us to address less technologically advanced devices. As those things occur, which they will, and as the distribution models open up either for regulatory or commercial reasons, or both, we have the opportunity to serve the rest of the world, and those numbers should really change. I would guess in 10 years, if we do things right, the US is 20% to 25% of our business and the rest is outside the US. And obviously the scale of our business will grow materially.”

The Games Business also asked Zelnick about Google’s Project Genie. The tech appears to have briefly caused slumps in most publicly-traded video games companies after demonstrating an incredibly limited ability to create vanishingly short interactive experiences from a prompt. The industry veteran CEO says that he was “stunned” by this response from investors.

“[The market’s] reaction was somehow seeing it as a threat to what we do, when it’s quite obvious that creation tools are beneficial for our industry,” Zelnick said.

“I think the bear case for big entertainment companies is somehow that AI tools will mean everyone can create hits, but that doesn’t stand to reason. These tools may help you create assets, but that won’t help you create hits. There are loads of assets out there now. It doesn’t matter if you push a button to create an asset, or it takes you six weeks; at the end of the day, you have an asset. And thousands of mobile games are launched every year, and there are only a handful of hits.

“Equally, you can create assets that might look like a big release, that might look like NBA 2K or EA Sports FC. But creating a hit of that magnitude is a completely different animal and does require human engagement and creativity.”