In Take-Two Interactive‘s analyst call, CEO Strauss Zelnick got a query about expanding from games into the film business.
The analyst noted the success of films like The Super Mario Bros. Movie surpassing $1 billion and the critical acclaim for The Last of Us on HBO. And then the analyst asked if Take-Two’s talented game developers wanted to expand into that category.
But Zelnick said, “We think it’s a relatively small opportunity economically. We’re not going to use our balance sheet to invest in film and television projects. Those are typically very challenged asset classes with which I’m quite familiar.”
He added, “To point out two successes, notable as they may be, belies the fact that there are many, many failures where money was lost. So far, we’ve taken a very selective approach to licensing. And we do have a Borderlands movie coming from Lionsgate. We have BioShock movie coming as well. We’re excited about both. And selectively, we could see licensing in the future when there’s a creative imperative and an economic opportunity.”
Zelnick acknowledged the recent successes that were associated with great intellectual properties.
“The reason you’ve had the failure in the past is the expression of the IP just wasn’t very good, despite people’s best efforts. It’s a really hard business. And we’re not going to bet this company’s future, or the value of our intellectual property based on someone else’s execution in another area of the entertainment business,” Zelnick said. “So, we’ll continue to be very selective. Indeed, even if we did take a broad-based approach, in the absence of investing ourselves, the economic opportunity in the context of the much greater economic opportunity for our core business is limited.”
In other words, putting money into games makes more sense.