Yesterday, he spoke at the Goldman Sachs Communacopia Conference in New York, and once again didn't mince words. To begin with, he reckons that we'll soon be in a cross-platform world as the 'closed walls are coming down' and 'you have to pay attention to what the consumer wants'.
Eventually, I think we'll be in a cross-platform world for a lot of titles. Certainly between console and PC we will. Microsoft is basically already there. So I think the walls are coming down. The closed system walls are coming down, and they have to. Streaming is going to accelerate those walls coming down. We're all here for the consumers. If you're going to create rules that don't benefit the consumers but somehow you think benefit your enterprise, you're mistaken. Consumers will go elsewhere. You have to pay attention to what the consumer wants.
Let's hope he is right and the cross-platform world is really near. The only remaining barrier to break down, it seems, is Sony's isolationist policy.
Strauss Zelnick also talked about streaming via the cloud, which seems to be almost a daily topic these days for executives in the industry. According to Zelnick, the total addressable market will definitely increase, but that doesn't mean the business of a company like Take-Two will necessary double and it's better to be cautious with predictions of a boom as we've read from other companies. He also said that streaming will probably happen (for the mainstream) in one to three years.
I think streaming will happen. There are numerous companies that are looking at it. The companies that are best positioned to pursue streaming are technology companies that have hyperscale data centers all around the world. So you know what that means; there aren't very many of those because you do have to address latency, and you do have to be pretty close to where the consumer is in order to address latency. Do I think that will happen? I'm sure it will happen. I think that will happen in one to three years.
Does it increase the total addressable market? Naturally it does, because you won't need to buy a box in order to play our games. You'll still probably need to buy a controller, and those will be available. The question remains, see, you have to be careful when you're doing analytics like 'Okay, so there are 120 million current-gen game consoles out there but there are a couple billion PCs in the world and now all of them can play videogames, so that will double the size of Take-Two business'. You gotta be really careful, because it's also possible that people really interested in playing videogames bought the box. Therefore, the total addressable market is bigger but the actual market is not meaningfully bigger. I can't really call that. I know that our job though is to be where the consumer is, so more, better, faster, cheaper distribution--as long as its high quality--is always good for us, because it's good for the consumer. And generally speaking, when you make a product more widely available, more people consume it. But I can't sit here and argue it will be a sea change in the business. I know one of our competitors has argued that, but my view is we should really talk about what we can control, which is making really great content. And probably leave stuff that we can't control like massive hyperscale distribution systems to other people, except to make the point that if they're there, we'll be there. It's the same way that if someone wanted to open a video game store next to GameStop, we'd sell to them, like, tomorrow.
What do you think of Zelnick's take on these two hot topics in the industry, the advent of a cross-platform gaming world and the ability to stream games via the cloud?