Is Take-Two Learning the Wrong Lesson From The Success of 'GTA Online'?

"We aim to have recurrent consumer spending options for every title that we put out at this company."

Grand Theft Auto V celebrated its fourth anniversary this year and publisher Take-Two celebrated with it as the game became what CEO Strauss Zelnick says is now the "all-time bestselling video game" both in terms of copies sold and revenue.

The game has sold more than 85 million copies and has hit the top ten chart 42 times in the 50 months since its release. All of that success, seemingly unexpected by Take-Two, rides largely on the back of Grand Theft Auto Online and Rockstar's ability to release a steady stream of new and engaging content.

Which begs the question, one asked in a variety of forms during this week's investor call with Take-Two: What did the company learn from all of this?

Summarized, the lesson, Zelnick says, is that they need to figure out a way to get money out of all of those players who continue to play a game released four years ago, and then they need to apply that system to every game they make.

That often means things like downloadable content, loot boxes, pay-to-play or win unlockables, but Zelnick goes into a lot more detail in his full answer to that question.

"Look, I think the key lesson from GTA Online, remember we launched that title four years ago, so we certainly have learned a lot from what we knew four years ago. And one of the things that we learned is, if we create a robust opportunity and a robust world in which people can play delightfully in a bigger and bigger way that they will keep coming back and they will engage and if there is an opportunity to monetize that engagement," he said according to a transcript of the call. "And we've announced that there will be an online component to Red Dead.

"We've said that we aim to have recurrent consumer spending options for every title that we put out at this company."

"And furthermore we've said that we aim to have recurrent consumer spending options for every title that we put out at this company. It may not always be an online model. It may not, probably won't always be a virtual currency model, but there'll be some ability to engage on an ongoing basis with our titles after release across the board."

That, Zelnick goes on to say, is a sea change in the way the video game industry works. He points out that "recurrent consumer spending" is 42 percent of the company's net booking for the quarter.

"It's been transformative for us and the only reason it's transformative for us is because it's transformative to our consumers," he says. "The business that once upon a time was a big chunky opportunity to engage for tens of hours or perhaps 100 hours has turned into ongoing engagement, day-after-day, week-after-week. You fall in love with these titles and they become part of your daily life.

"And that's immensely exciting and it's the beginning of the maturation of interactive entertainment as a part of the audio-visual entertainment industry."

Also in the call, another analyst asked Zelnick about the growing consumer pushback against things like monetization when discussing NBA 2K18.

"Look, we take consumer feedback very, very seriously indeed. And you're right. There's been some pushback about monetization in the industry. "

"Look, we take consumer feedback very, very seriously indeed," he says. "And you're right. There's been some pushback about monetization in the industry. The good news is the title was reviewed extraordinarily well. People love it. And the other news is, entertainment is a want-to-have business, not a must-have business and people vote ultimately with the usage and the usage on the title is up 30 percent in terms of average daily users. The title itself, say, unit sales were up 20 percent year-over-year. So, people clearly are voting that they love NBA 2K18 and the reviews reflect that as well. That said, we are concerned about any perception, any negative feedback. And we're focused on it and we're taking it really seriously."

Buried in the nuance of what Zelnick is saying seems to be a note that the company will only do what it can get away with in terms of monetization. Gamers, he seems to be saying, vote with their attention and their wallets. So while Grand Theft Auto Online's tremendous and ongoing success could easily be sending the wrong message to the business-side of the game industry, ultimately, the decision seems to be in the hands, or more specifically the wallets, of gamers. If you don't like a certain form of monetization, or think it's too much, don't buy it. It may take a bit for the message to get across, but it appears it will.

In discussing the game industry as a whole, Zelnick also makes a very important point often lost within the circles of daily gamers. There's still a lot of people out there who don't play games and that means there's a lot of room to grow.

"I just saw a study, the American media day, average media day is about 22 hours," he says. "Obviously, people are sleeping and eating. What it means is they're parallel processing and they're consuming a lot of different kinds of media. But within that 22-hour day, only about an hour-and-a-half is interactive entertainment. 

"This is just the beginning."