Take-Two plans for growth, not sale

Take-Two Interactive Software Inc., has no intentions of selling Take-Two and Rockstar, according to the company’s chairman Strauss Zelnick.

“I imagine we will try to find greater efficiencies but they probably won’t be through headcount. I imagine headcount will grow. This is a growth business. We are in growth mode,” Zelnick said.

He added that Take-Two was “a very efficient enterprise now” as a result of recent divestitures despite rumors among industry analysts earlier in March 2007 that suspected Take-Two’s management being ousted and the company sold to Electronic Arts.

“I’m much more interested in growing the business than in selling it, to be clear,” Zelnick explained. “I would say for the next five to seven years this is a terrific time to be in the video game business.”

Zelnick, who has a reputation of aiding ailing companies and helping them out of their dilemma, said his strategy is to time his entry into videogames ahead of a growth spurt especially as consumers begin purchasing new gaming systems, including the Xbox360 and PlayStation 3, despite the higher production costs game makers must endure to create a game for the new systems.

Shares in Take-Two fell 1 percent to $14.58 on Nasdaq amid a broad market slide. Over the past year, the stock has fallen 17 percent, compared with a fall of 8 percent for Electronic Arts and a rise of 11 percent for Activision.

“From a general point of view I think you’ll see some industry consolidation. It’s hard to imagine that you wouldn’t,” Zelnick said. “From a specific point of view, what we find most compelling is building up our collection of our intellectual property. I’m not really interested in scale for scale’s sake.”

Zelnick predicts that four to six publishers will end up dominating the gaming side of the gaming industry set to hit $40 billion in global sales of hardware and software this year. He plans for Take-Two to be one of them with the next installment of Grand Theft Auto scheduled for next year in 2008 using the delay in release to the companies advantage along with working on developing more original games like BioShock rather than pursuing licenses for movies or other properties many other companies have done already.

“I believe this release, ‘Grand Theft Auto IV,’ is going to be vastly better than those expectations – vastly better – and that’s hard to do when expectations are so high,” he said.

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