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Take-Two Interactive will Begin $50M Annual Cost-Cutting After Failing to Meet Q3 2023 Expectations

Take-Two Interactive

It seems like there's a bit of trouble going on for Take-Two Interactive. The threat of layoffs is starting to hang over some of the company's employees as the company seeks to save up to $50 Million due to an initiative that will reduce costs at a company-wide level. This was reported in Take-Two's latest financial call, which revealed its earnings results in Q3 2023.

Unfortunately for Take-Two Interactive, the sales expected from games like Marvel's Midnight Suns have not been as satisfactory as they had expected. Because of this, they are expecting to cut costs within the company. As Take-Two Interactive CEO Strauss Zelnick said:

We believe that there is always more to achieve, particularly when we fall short of our expectations. We have embarked on a Company-wide cost reduction program that will optimize our expense structure, while also positioning us to deliver on our anticipated growth trajectory.

We expect to achieve savings in excess of $50 million as a result of this initiative. Our balance sheet remains strong, allowing us to navigate these uncertain times with confidence.

Take-Two Interactive has also downgraded its full-year revenue projections while cautioning investors that the company's net losses would be deeper than previously expected. Zelnick told that, despite this company-wide efficiency strategy, the company isn't planning a "broad-based reduction in its workforce."

We continue to support and build our development teams, and where we have overhead, we have to be very diligent about looking at the overhead. We don’t expect any kind of broad-based reduction in force. We are going department by department and trying to drive efficiency.

While Marvel's Midnight Sons, PGA Tour 2K23, and New Tales from the Borderlands were some of the biggest releases during the quarter, none of them cracked the company's list of largest revenue contributors. As you might expect, the strongest sellers during the quarter were NBA 2K23/22, GTA V, Red Dead Redemption 2, Merge Dragons, and Toy Blast.

NBA 2K23 has now sold-in more than 8 million units (up more than 3 million from the previous quarter), while Grand Theft Auto 5 reached the 175 million sales mark and Red Dead Redemption 2 had a stronger-than-expected 4 million copies sold to finish the quarter with more than 50 million copies sold lifetime-to-date. Zelnick even talked about how Red Dead Redemption 2 outpaced their expectations.

Take-Two's President, Karl Slatoff, talked about what's in store for the future. They primarily talked about Private Division's upcoming titles, such as the Early Access release of Kerbal Space Program 2, the current partnership between it and Bloober Team, and the Private Division Development Fund to support smaller, independent teams.

Additionally, Slatoff also talked about how Rockstar Games will continue supporting Grand Theft Auto Online with additional content updates, the upcoming WWE 2K23, which will be with the promise from 2K that they will continue supporting the game with post-launch content. Additionally, Midnight Suns and Civilization VI will also receive more add-on content.

Lainie Goldstein, Take-Two Interactive's Chief Financial Officer, talked about the revision of the company's guidance for FY2023:

Our forecast takes into account the current economic environment and consumer purchasing trends that we have been experiencing and which we expect to continue into the fourth quarter, including lower expectations for some of our recent game releases and softer recurrent consumer spending, as well as the shift of an unannounced mobile title and focus on enhanced profitability for our hyper-casual business.

We project Net bookings to range from $1.31 to $1.36 billion, compared to $846 million in the fourth quarter last year. Operating expenses are expected to range from $871 to $881 million. [...] while we are disappointed to have lowered our outlook for the year, we are highly confident in our long-term growth potential. We believe that the actions we are taking now will position us to deliver sequential growth and record performance over the next several years, which we anticipate will drive meaningful shareholder value.

What will come from this financial strategy? Will Take-Two Interactive see a wave of layoffs before the next financial results call? Make sure to stay tuned for updates on this developing story.

The post Take-Two Interactive will Begin $50M Annual Cost-Cutting After Failing to Meet Q3 2023 Expectations by Ule Lopez appeared first on Wccftech.

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