Take-Two Chairman Zelnick Cool On Digital Impact, MLB License

Take-Two Chairman Strauss Zelnick downplayed the near-term impact of digital content on his company's business, and expressed displeasure with the company's current deal with the Major League Baseball license.
Take-Two Chairman and soon-to-be CEO Strauss Zelnick downplayed the near-term impact of digital content on his company's business, predicting the sector would only make up 25 to 30 percent of revenue "over time." "I still think in five years the packaged goods business will dominate," Zelnick told Reuters at that news organization's Global Media Summit. "It's kind of irrelevant to us -- basically the same gross margin, basically the same risk." The statement comes in sharp contrast to competitors like EA, whose CEO Scott Brown said yesterday that digital revenues were a "principal growth driver" for the company that he hoped would soon make up 40 percent of the company's revenues. Given the recently lagging returns from Take-Two's exclusive licensing agreement with Major League Baseball, Zelnick told Reuters he would only be interested in renewing that agreement if the economics of the relationship change. "It's a losing proposition and we don't have any interest in pursuing losing propositions," Zelnick said of the license, which the company first acquired exclusively in 2005. Zelnick confidently predicted Take-Two was now in a position to turn a profit in a year without a Grand Theft Auto game release, matching similarly bullish recent predictions from analysts like Janco Partners' Mike Hickey. He added that "annualizing" such major franchises with yearly releases, as Activision Blizzard has done with the Call of Duty series, brings the dangers of lowering the games' quality and alienating customers.

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