Take-Two Interactive CEO Strauss Zelnick recently said during the Credit Suisse Annual Technology Conference that the decrease of physical games being purchased really won’t hurt publishers all that much, despite fears that digital games could lower publisher profits.
We’re indifferent, because we can’t choose how a consumer wants to consume. We need to be everywhere. We need to be flexible to make our products available. The margin dollars are a bit higher, but not so much higher I can say in good conscience to you, ‘Here is the holy grail of our business.’
In addition to all of the great stuff–new generation, wind at our back, high quality, a vastly more rapidly growing area of entertainment consumption than anything else–All of that good news would be even better news, which is that our entire model switched from one to another that has a higher margin.’ That’s what people want me to say, but it just doesn’t have the benefit of being true.
Zelnick continued by saying that around 20 to 30 percent of Take-Two’s game sales come from digital markets, such as the PlayStation Store, which is currently featuring numerous sales and deals right now. He also noted that he believes that that number will probably “head into the 50 percent land relatively soon.”
It is almost certainly true that people will consume more and more digitally, as they do, for example, with music. But right now, physical distribution is still 70-80 percent of our business. And physical distribution partners are our primary distribution partners, and happily so.
What do you think about Zelnick’s statements? Do you prefer digital games or physical ones?