Take-Two Interactive is often represented at the Cowen and Company 45th Annual Technology, Media & Telecom Conference and this year was no different. CEO Strauss Zelnick attended to discuss the importance of microtransactions in GTA Online and their other games, as well as VR and the Nintendo Switch.
Microtransactions were the focus of Zelnick's presentation and he not only discussed their future use by Take-Two, but also addressed some of the criticisms levied against the practice by fans and customers.
GTA Online's microtransaction model has been constantly debated for several years now, and in spite of a chunk of the community understanding that it is actually the most consumer-friendly among the options, there is still a vocal group which speaks out against microtransactions.
Zelnick paints a picture similar to what we've said ourselves several times. The entirely optional microtransactions live in symbiosis with the constant free DLC updates that GTA Online has been getting ever since it went live.
As a business, it is not in Take-Two's interest to give away free content, content that costs them money to make, with no prospect of profit. And not forcing players to buy said content but rather offering an optional way to acquire the content faster is far more beneficial to the players than most other models used in the industry.
You can't give stuff away for free in perpetuity; there's no business model in that. But we're not trying to optimise the monetisation of everything we do to the nth degree. My concern is, if you do that, the consumer knows. They might not even know that they know, but they feel it.
Looking at a number of other games, both multiplayer and singleplayer, many that offer additional content next to the game itself use systems which are far less friendly and fair towards the customer. Blind loot-boxes, where the player doesn't even know whether the item they get is useful, are becoming increasingly common. Paid DLC packs which divide communities and penalize those who won't buy-in are also standard, as are freemium environments where making any meaningful progress in the game is handicapped for non-paying players.
Alternatively, in GTA Online, you can progress equally compared to paying players without having to spend an additional dime, all the DLC is free thus leaving the community undivided, and there are no items or advantages available only in exchange for real money. There is only a single currency, $GTA, which is what you earn in missions or buy as microtransactions.
Think about it anecdotally--when you paid a little too much for something, even if it was something really good, it really irks you. Paying too much for something bad is even worse. Paying too much for something really good, even if you can afford it, just leaves you with a bad feeling. We don't want our consumers to ever feel that way.
The majority of critics base their argument on the high prices in GTA Online, which require players to spend unreasonable amounts of time grinding money to buy high-end items. On the one hand, high-end items are, you know, characterized by being hard to acquire, and on the other, the statement is outright false.
While money is relatively harder to earn in this game than in others, it isn't by much, and with the right techniques, it becomes quite easy.
In fact, with recent updates, Rockstar has been making a notable stride in the direction that players have been asking. Several recently released DLC vehicles, which were highly popular, had modest, sub-million prices. The Infernus Classic and the Turismo Classic were both well-loved cars and highly anticipated, meaning Rockstar could have easily laden both with heftier price tags driving up Shark Card sales, but they chose not to. Additionally, Import/Export introduced a game mechanic which, when used correctly, can make earning money a breeze.
In fact, Take-Two is considerably tame when it comes to cashing in on microtransactions. Other developers' games often feature various types of microtransactions — you can buy cosmetic customizations, power levels, in-game currency (sometimes even premium currency only available through purchase, netting you an unfair advantage) and special abilities. On the flipside, Take-Two has levelled the playing field in GTA Online, giving no extreme advantages to paying players.
We are convinced that we are probably from an industry view undermonetising on a per-user basis. There is wood to chop because I think we can do more, and we can do more without interfering with our strategy of being the most creative and our ethical approach, which is delighting consumers. We're not going to grab the last nickel.
It's possible that Take-Two will expand on their microtransaction products in the future since they still have plenty of ground to cover before stepping over the line that separates a fair business model and greed. Based on this, it's very likely that Red Dead Online, the multiplayer mode for the upcoming Red Dead Redemption 2, will feature a microtransaction system similar to GTA Online.
Switching to the topic of VR, Zelnick reiterated his previous comments regarding the platform, which were pretty cautious and critical. A year ago, Zelnick said that Take-Two doesn't see enough of a market in VR which is still in a fairly experimental state. The high entry cost, limited technology and even more limited library of games makes it a small niche. Nonetheless, Take-Two have released a VR title already to test the waters (Carnival Games VR for the HTC Vive, PlayStation VR, and Oculus Rift) and a VR version of NBA 2K will be on the market soon.
VR is developing exactly as I said it would. So far there is not a significant entertainment market for VR software. I think that's a factual statement. If VR develops as a meaningful entertainment platform, we'll be there. I am highly convinced it's not going to be, 'put on the headset, put on the earphones, stand up, hold two controllers, and do that for six hours.' That's very unlikely to happen.
Recent scandals around Oculus regarding stolen source code hasn't helped the issue either, and VR headset prices haven't dropped — not to mention the amount you'd need to invest in a strong enough gaming PC to support them.
Finally, the Nintendo Switch was discussed and Zelnick was a lot more enthusiastic about this platform. He's been open about his faith in the console and Take-Two's support has been apparent ever since NBA 2K17 appeared in the promotional footage for the Switch.
We believe in it. We see it the way [Nintendo does]; it's been a very successful launch. It remains to be seen how it does, but we're excited about it. Assuming there is an installed base, we'll be there. Not with all of our titles, but selectively.
The Switch is Nintendo's fastest selling console and a much needed success after both the Wii and the Wii U ended up underperforming. That said, the Switch isn't without its limitations as a hybrid platform and is unlikely to support all of Take-Two's titles. We wouldn't hold our breaths for either a GTA title or Red Dead Redemption 2 hitting the Switch.
While no juicy bits of info regarding concrete games were discussed, this conference wasn't the right kind of forum for those topics. Nonetheless, we've gained some valuable insight into the inner workings of Take-Two which usually take place behind closed doors.
