During Take-Two Interactive's latest quarterly earnings call, CEO Strauss Zelnick addressed a question about rising video game hardware costs, driven partly by generative AI-fueled price increases. Zelnick said the rising cost of hardware is 'not a good thing' because it means fewer people will have machines to play games on, but added that he doesn't think it will slow Take-Two down as a business, since the company believes it delivers experiences people want.
Zelnick pointed to two trends he sees shaping the industry's future. First, he noted the continued shift toward open systems, citing how PC sales tied to console releases have grown from roughly 1-2% of overall sales twenty years ago to as much as 40-50% today. Second, and more significantly, he predicted that low-latency streaming technology is 'around the corner,' which would allow 'machines that weren't game machines before' to become game machines, growing the overall installed base regardless of what happens in the traditional console business.
Zelnick said he believes the industry will be in 'commercial streaming mode' within three years, defining 'commercial' as low latency service that works well for consumers. He estimated this could multiply the effective installed base by ten times, though he was clear this wouldn't translate into a 10x revenue increase for Take-Two, since avid consumers already have access to gaming machines. Instead, he said the opportunity lies in reaching audiences in less affluent regions outside the company's 'core markets' of the US, Western Europe, and parts of Asia, which currently make up about 80% of revenue for companies like Take-Two. He said he'd like to see that percentage 'flip,' noting that the rest of the world loves video games and has devices, even if they are typically low-res, low-capable mobile devices.
When an analyst on the call pointed out that the industry has pursued low-latency streaming solutions before, referencing Google's Stadia service, Zelnick acknowledged the comment was 'fair and accurate,' noting that concerns about latency existed even when Take-Two supported Stadia. He said he believes things are different now due to advances in hyperscaler networks and edge network technology, and mentioned one unnamed player in the market reportedly working on a significant edge network to address latency, at least in the US. He said he chose a three-year timeline because he doesn't think the technology is imminent, but also doesn't think it's five years away, while acknowledging he could be wrong and stressing that Take-Two isn't betting the company on the prediction.
Coverage of Zelnick's comments raised questions about what this might mean for Grand Theft Auto 6, which currently has no announced PC release date despite strong pre-order demand. Reports noted that Take-Two has a history of maximizing profit by making its software available across as many platforms as possible, and that GTA 5 was previously available via Xbox Game Pass and PlayStation Plus streaming, though it was recently removed from Game Pass. It remains unclear whether Zelnick's remarks reflect concrete plans for the company's titles or broader speculation about where the industry is heading, especially against the backdrop of Sony's recent decision to end physical disc-based game production.
Outside commentary noted that promises of a streaming-driven transformation in gaming are not new, pointing to Google's Stadia service, launched in 2018 and shut down in 2023, as a prior example. Current streaming services like Nvidia's GeForce Now, Amazon Luna, and streaming options bundled with PlayStation and Xbox subscriptions exist, but streaming has not replaced downloads as the dominant method of play, an outcome attributed partly to digital infrastructure limitations even in wealthier countries.