Take-Two Interactive Software Inc. Chief Executive Officer Strauss Zelnick wanted to run a Hollywood studio when he was a kid.
The Harvard University business and law school graduate worked his way up to become president of 20th Century Fox by his early 30s, but soon realized the industry wasn’t the growth one he envisioned. So he ditched movies and TV shows for the up-and-coming business of video games.
“I left Fox voluntarily, which no one ever does, to move to Silicon Valley, take a 95% pay cut and become the pre-revenue CEO of a little tiny video-game company called Crystal Dynamics in 1993,” Zelnick said in an interview for Bloomberg’s The David Rubenstein Show: Peer to Peer Conversations.
That move proved a shrewd one for Zelnick. Since an investor group led by Zelnick took control of Take-Two in March 2007, the shares have soared 12-fold. That’s thanks to successful game franchises like BioShock, Red Dead Redemption and Borderlands.
The biggest of them all is set to launch on Nov. 19 when Take-Two’s Rockstar Games unit releases Grand Theft Auto VI, the latest iteration of the modern-day gangster title. The last edition of the game sold nearly 235 million copies.
“We believe that the Grand Theft Auto franchise as a whole is probably the most valuable intellectual property in the entertainment business of any type because of its enormous reach to consumers worldwide,” Zelnick said. “I’m very optimistic.”
Games like Grand Theft Auto are popular because they’re easy to approach but difficult to excel at, according to Zelnick.
“Almost anyone can jump right in and enjoy it, because it’s this big world where you can do many things, and very few people can actually master the title because when you really dive into its competitive framework, it’s a really challenging game,” he said.
Zelnick dismissed criticism from some circles that games like Grand Theft Auto, which features criminals shooting each other and the police, encourage real-world violence.
“I’ve been in every entertainment business there is, and with popularity comes the question of whether entertainment content has anything to do with actual behavior,” Zelnick said. “It’s been tested by scientists over and over and over again, including people who really were anxious to prove causation between the two. There’s neither correlation nor causation, no evidence whatsoever.”
Early in his tenure as CEO, Zelnick cut costs and focused on the most promising Take-Two franchises, some of which, like NBA 2K and Civilization, are still active and relevant.
Some new games were developed in-house and others were acquired, like in the $12.7 billion deal for mobile-game maker Zynga Inc.
The game industry has reached its own level of maturity lately, with many of the largest players, including Microsoft Corp.’s Xbox and Sony Group Corp.’s PlayStation, cutting jobs and shutting down studios. Two of the biggest publishers, Electronic Arts Inc. and Activision Blizzard Inc., were acquired, leaving Take-Two as the largest pure-play in the space.
Zelnick suggested a deal like those two isn’t in the cards.
“We are a public company and we serve at the pleasure of our shareholders,” he said. “I think we’ve proven that we can do very well as an independent company.”
Funnily enough, although Take-Two’s titles are enjoyed by millions of players all over the world, Zelnick didn’t have to pry game controllers from his own kids’ hands. When his sons were in high school, he created a video-game room in the family’s apartment with consoles, a couch and snacks.
“I thought all their friends would come over and they wouldn’t be able to get them out of there,” Zelnick recalled. “Literally, they both went in the room for 45 minutes. They’re like, ‘Why do we need this?’”
You can watch more of David Rubenstein’s interview with Take-Two Interactive CEO Strauss Zelnick on “The David Rubenstein Show: Peer-to-Peer Conversations,” airing Nov. 11 at 9 p.m. in New York.
Palmeri writes for Bloomberg.
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