Take-Two CEO: Over Time It Will Be Harder for Small Companies to Compete in Gaming

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Speaking with investors during the company's Q1 2022 earnings call, Take-Two CEO Strauss Zelnick discussed the topic of mergers and acquisitions (M&A) in the games industry. The Take-Two CEO conceded that a few opportunities were missed, obviously referring to Codemasters, which the company tried to buy before Electronic Arts swooped in and secured the deal for a whopping $1.2 billion.

We haven't seen any change in the market yet. And valuations remain frothy, I think because of the growth of the sector and enthusiasm around the sector. However, our discipline has really paid off in the past 14 years knock wood, we haven't made a failed acquisition. Our acquisitions are accretive, usually right away. Sometimes it could take a little bit of time. But we're happy that we've done every deal that we've done. We did miss out on a few that we wish we had done, but frankly, not all that many.

Take-Two CEO Strauss Zelnick also suggested that it will be increasingly harder for smaller companies to compete going forward.

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I think you raised a good point which is over time will it be harder for smaller companies to compete in the space. And I think that'll be true, the answer will be yes, with regard to both mobile and console, the resources required are significant. The risk profile is significant. And, the history of the entertainment business is that over time, those that are very creative become very successful. Those that are very successful become bigger, those that are bigger have the opportunity to acquire smaller enterprises. And as long as the focus remains on creativity, innovation and efficiency, and as long as the culture that has made the company successful in the first place is maintained. There's an opportunity for continued success, even with scale. And that's certainly how we see ourselves and how we envision our future.

It is likely that the Take-Two CEO is not really referring to independent developers, though, as that slice of the market is stronger than ever. In all likelihood, Zelnick referred to the AA or mid-tier, which is indeed being slowly eaten by larger companies like Microsoft, Sony, Tencent, and Embracer.

Credits for the quotes go to Seeking Alpha.

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