GTA Parent Publisher Says Ignoring New IP Is "Kiss of Death"

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Take-Two president Karl Slatoff: "We should be focusing 50 percent of our efforts all the time on new IP."

 

 

Publisher Take-Two believes it should not annualize its marquee franchises like Grand Theft Auto or Red Dead Redemption, and adds that a major investment in new IP is essential to its long-term survival.

During a presentation to investors on Thursday, Take-Two president Karl Slatoff said 50 percent of its efforts should always be focused on the creation of brand-new franchises.

"We love putting out titles where we've got history, and they're really, really big titles. Because they're safe and they're predictable and you know you can generate a lot of cash flow from them," Slatoff said during this week's MKM Partners Investor Day Conference. "At the same time, to ignore the opportunity of creating new IP, to not dedicate a substantial portion of your resources towards developing new IP, is the kiss of death for creative franchises."

 

"Because god forbid, one of your core IP starts to deteriorate over time, then you're in real trouble. So how do we actually manage that to avoid that deterioration or fatigue? One is don't come out with stuff every year," he added.

"Unless it's a sports title where you do come out every year. But in general, your big, core franchises; big releases every year that are hyped up as big releases is not a great way to--it may be a great way to monetize the near-term cash flow but not to make sure that franchise exists for the long-run. That's a very important piece of it; it needs some breathing room."

This doesn't mean publishers can't monetize those games in between big releases. Take-Two does this through what it calls "recurrent consumer spending," led by downloadable content expansions and virtual currency. These efforts have been successful, according to past comments from the company, as CEO Strauss Zelnick referred to Grand Theft Auto Online, which lets you spend real-world money for virtual items, as "the gift that keeps on giving." Slatoff also teased, "If we had any online subscriptions, that would also be in that category; we don't have any subscriptions at this point."

"We should be focusing 50 percent of our efforts all the time on new IP" -- Karl Slatoff

Overall, Slatoff said Take-Two's aim with expansion content is to keep consumers engaged with titles--and spending money--in between major releases. Of course, this is nothing new for Take-Two, as the company has been selling post-release content for its games for years. But going forward, Slatoff said the connected nature of new consoles like the Xbox One and PlayStation 4 could lead to even bigger revenue gains for Take-Two.

"So that monetization opportunity is there in a much bigger way than it was in the previous generation," he said.

Going back to Take-Two's strategy regarding the development of new IP, Slatoff said, "I think that we strongly believe, on average--it doesn't always work out this way but my gut tells me--that we should be focusing 50 percent of our efforts all the time on new IP."

He went on to say that it's often considered wise to release new IP at the start of a console generation so that you have a chance to establish a fan base and drive revenue. However, Slatoff pointed out that publishers can release new IP at the tail-end of a console and still find success, but only if handled appropriately. "If you manage the franchise properly, transitioning from cycle to cycle, console generation to console generation, should be seamless," he said.

One major new IP published under Take-Two's watch is Evolve, a 4v1 monster-hunting game from the creators of Left 4 Dead. The game was originally targeted to launch in 2014, but was recently delayed to February 2015. This was done to give the developers more time to polish the game. The company is also working on the long-in-development Agent, though the status of this project is currently unknown.

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