Take-Two Caps Gaming Earnings Season With Huge Loss as Publishers Cement New Strategies

“Grand Theft Auto” parent Take-Two Interactive announced during its earnings Thursday it is anticipating a fall 2025 release window for the highly anticipated sixth installment of the franchise.

But its disclosure of a $2.9 billion loss for the first quarter of 2024, against recent guidance of just $170 million in losses at the high end, underscores how messy the path has been to get to a new period of “GTA” prosperity for the publishing group. 

In development for at least a decade, the next “GTA” title carries a rumored budget of as much as $2 billion, which would make it the most expensive game in the history of the medium. The vast majority of that budget is due to the personnel involved and supporting their salaries for such a long development cycle. 

Per Take-Two, most of the $2.9 billion loss incurred in the most recent quarter was due to “goodwill,” which could refer to the ongoing expenses from its $12.7 billion acquisition of mobile giant Zynga in 2022. 

While Zynga helped establish a robust bed of recurrent consumer spending across its free-to-play mobile titles that helps to support the development of titles across Take-Two's Rockstar, 2K and Private Division labels, the company has gone through three rounds of layoffs in the span of 14 months, the latest cutting around 5% of staff in April. 

The headcount for global gaming job cuts in 2024 is already close to passing that of 2023, less than halfway through the year. Hardware spending on consoles is projected to close 2024 at its lowest point since 2020, per Circana.

Pandemic-related lockdowns and new console launches in 2020 led to a surge in the overall gaming market that lasted through 2023, when semiconductor chip shortages ended and finally put next-gen consoles like PlayStation 5 and Xbox Series X/S in the hands of every gamer who wanted them. But since then, gaps between AAA releases have widened amid constant delays. 

Complicating Take-Two's cost-cutting is its impending acquisition of Gearbox for $460 million that will bring the “Borderlands” franchise fully under 2K, which already publishes its main titles. “Borderlands” has a film adaptation at Lionsgate scheduled for August but no new games on the immediate horizon. 

The decision to close Tango, Arkane Austin and others was reportedly made from a desire to prioritize other studios with new games that are farther along in development. 

However, Activision Blizzard on Thursday announced the launch of a new standalone studio, Elsewhere Entertainment, that is developing a new narrative-based, “genre-defining” AAA franchise, complicating matters further. The creation of a new studio is undoubtedly positive for laid-off developers seeking work, but it contradicts the reason given for the closures of Tango and Arkane Austin. 

The ability to launch new big-budget IP is growing exceedingly rare as other publishers focus on what is already working and embracing more diverse distribution. While Ubisoft reported its highest full-year net bookings ever on Wednesday, it also announced it would be strictly narrowing its releases to either live-service titles or open-world games.

As open-world games tend to be huge and take time to develop, this move is a hint that new single-player AAA games at Ubisoft will be limited to its “Assassin’s Creed” and “Far Cry” franchises, as “The Division: Heartland” was announced to have been canceled. Ubisoft has its own cost-cutting program underway, having parted ways with as many as 1,700 workers. 

Meanwhile, Square Enix announced a commitment to multiplatform releases going forward in its earnings on Monday. Square Enix has never been limited to one platform but has been a major second-party asset to PlayStation through its “Final Fantasy” games, which typically see new releases and remakes hit PlayStation as console exclusives.

This was the case for “Final Fantasy 16” in 2023, as well as “Final Fantasy 7: Rebirth” and “Foamstars” in February, all of which were second-party PlayStation exclusives that have failed to meet sales expectations. 

Second-party games are a major asset in the console market and help to fill out gaps between first-party slates. While Sony Group narrow missed PS5 sales targets in its earnings on Tuesday, it was able to boast that live service “Helldivers 2” quickly became its fastest-selling exclusive ever upon its February release, having sold 12 million copies in 12 weeks.  

A major component of that success was a dual PS5-PC release strategy where those on Windows could play the game without a PlayStation Network account, a decision that was reversed in May to great controversy among players, not to mention the game’s developers at Arrowhead studios, some of whom called for review bombs on Steam. 

It’s clear the fabric of release strategies has strained significantly halfway through the current console generation. Xbox is already experimenting with releasing its newer catalog to the PlayStation ecosystem, which in turn has come to rely on PC heavily to fill out sales.

If Square Enix and other publishers see more success from multiplatform titles, the expected success of “GTA 6” next year will only cement how crucial it is to have AAA games in as many hands as possible.