Take-Two Interactive Software, Inc. (NASDAQ:TTWO) Q3 2023 Earnings Call Transcript

Karl Slatoff: So in terms of the effect of IDFA, we’ve been living that for quite a while now. And I would certainly say that, that has stabilized. And I don’t think we’re expecting — there’s no surprises down the road that we’re expecting at this point. And there’s been some improvement in how we are able to target since then. So I think there’s been some adjusting going on. I don’t want to characterize that as we’re sort of back to where we were, because that would be a mischaracterization. But we certainly feel like we’ve got our hands around it, and then we’re going in the other direction. So that’s positive in terms of our ability to target. I would also mention, too, that in the hypercasual space, it is a much wider funnel and targeting is not — it doesn’t require as much targeting as it does in the normal mobile business. So that’s also helped our ability to attract new audiences.

Strauss Zelnick: Yes. And on the second part of the question, we’ve said all along, and I said it today, the hit ratios in the mobile business are very low. And when we announced the combination with Zynga, the most current question was, well, obviously, you’re going to take Take-Two IP to mobile is not great. And my answer was, that is potentially a very exciting opportunity, but it’s really, really hard to do. One of our competitors has done it really well with the title, and we’re impressed by that and admire it. But we have a healthy respect for how difficult it is. The vast majority of hits in mobile are native to mobile. They are not based on existing IP. They do not come from a console. I’m very optimistic that we’re going to give it a try, and I’m really hopeful that we’ll do well with it. But it’s not a slam dunk.

Eric Sheridan : Thanks so much.

Operator: Thank you. Our next question is from Doug Creutz with Cowen and Company. Please proceed with your question.

Doug Creutz : Hey, thanks. Just in your commentary about some of the new release underperformance. You’re essentially attributing to macro or at least partially due to macro, but there’s been two other companies who have sort of had the same problem. You have several other patters that have had record launches in the quarter, and it seems from the data that’s been released, overall console spending was pretty stable versus a year ago. What makes you think the issue is macro-related versus this is just the way the video game industry is going to be from now on? And if that’s case, how does that cause you to rethink your pipeline going forward?

Strauss Zelnick : It’s a really good question. What causes us to believe that it’s macro related is that we don’t just pull our expectations out of the year. We based our expectations on prior performance of similarly rated titles within that genre. And so in the case of certain of these titles, we’ve had great scores and terrific critical acclaim and yet the unit sales were lower than expected on an apples-to-apples basis by comparison to prior releases and prior periods. So that is — that sort of leads us to believe, okay, that’s probably a macro result. But I don’t mean to imply for minute that quality doesn’t matter, quality does matter and the biggest titles will obviously continue to perform with regard to market conditions.