Take-Two Interactive (TTWO) Q1 2027 earnings call transcript

Good morning. Thank you for joining our conference call to discuss our results for the first quarter of fiscal year 2027 and to June 30, 2026. Today's call will be led by Straus Zellnick, Take 2's chairman and chief executive officer, Carl Sladoff, our president, and Laney Goldstein, our chief financial officer. We will be available to answer your questions during the Q&A session following our prepared remarks. Before we begin, I'd like to remind everyone that statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management, as well as assumptions made by an information currently available to us. We have no obligations to update these forward-looking statements.

Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent annual report on Form 10K and quarterly report on Form 10Q, including the risk summarized in the section entitled risk factors. I'd also like to note that unless otherwise stated, all numbers we will be discussing today are GAP and all comparisons are year over year. Additional details regarding our actual results and outlook are contained in our press release, including the items that our management uses internally to adjust our GAP financial results in order to evaluate our operating performance. Our press release also contains a reconciliation of a non-GAP financial measure to the most comparable GAP measure.

In addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and filings with the SEC may be obtained from our website at take2games. com. And now I'll turn the call over to Strauss.

Thanks, Nicole. Good morning and thank you for joining us today. Fiscal 2027 is off to an excellent start, led by the power of our diverse portfolio and the strong consistent execution of our strategy at all of our labels. We delivered first quarter net bookings of approximately $1.39 billion, which was slightly above the high end of our guidance range, primarily due to the outperformance of MBA 2K and the grant theft auto series. We're reiterating our fiscal 2027 outlook for net bookings of $8 to $8.2 billion, which reflects both ongoing positive trends in our business and our high degree of confidence around the November 19th release of grant theft auto six.

We expect to sustain this new level of scale and generate strong cash flows for the next several years as we release a robust development pipeline, capitalize on incremental opportunities within our highly established hit franchises, and continue to apply our proven long term approach to managing the company.

Now, turning to highlights for the period. MBA 2K 26's performance was outstanding and concluded a record year for the franchise. To date, the title is sold in over 12 million units, reflecting 9% growth compared to MBA 2K 25. Engagement was up meaningfully during the quarter, with recurrent consumer spending growing 7%, driven by a 15% increase in average daily active users, a 25% increase in my career daily active users, and a 35% increase in average games played per user. The achievements of this year's iteration of the series are a testament to visual concepts ability continually to deliver new, innovative ways for fans to stay engaged, and our live service execution remains a cornerstone of MBA 2K's sustained success.

During the quarter, 2K also supported Borderlands 4, Sid Meier's Civilization 7, and WWE 2K 26 with an array of new offerings, which enhanced player engagement and sentiment.

The Grand Theft Auto series once again exceeded expectations, and to date, Grand Theft Auto 5 has sold in over 230 million units worldwide. For current consumer spending for the series grew 3%, and GTA Plus continues to thrive, all led by a series of content offerings, including the addition of the Rockstar Mission Creator, an all-new suite of innovative and in-depth tools empowering the player community to bring missions to life. Global excitement for the launch of Grand Theft Auto 6 continues to build, with the title having an exceptional start to pre-orders. With Rockstar Games' recent announcement of Grand Theft Auto 6 and extended look coming on August 27th, we believe the consumer's passion and anticipation for the next evolution of this iconic series will grow further, leading up to the title's November 19th release.

Turning to our mobile business, Zinger performed in line with their expectations, and we're pleased that many of our forever franchises continue to resonate with players.

Netbookings for Tomb Blast grew 8% over last year. The title was supported by a new marketing campaign featuring Emmy-nominated actor Giancarlo Esposito. Empire's and puzzles maintained steady momentum, anchored by a successful ninth anniversary campaign and the introduction of new heroes and character abilities. Words with Friends exceeded our forecast with Netbookings growing 8% year over year, led by strong ad performance and higher player engagement with several features, including Dice Challenge, the title's latest permanent one-on-one game mode. Top 11 surpassed our expectations with Netbookings increasing 15% year over year as fans enjoyed a special in-game event featuring player versus environment matches in 10 international locations.

2K's mobile offerings continue to perform well with strong downloads and engagement across key titles. NBA 2K All-Star, our mobile title and China in partnership with Tencent, surpassed 10 million registered users since launching last year and is yielding strong profit margins.

Our mobile direct-to-consumer channel remains a significant driver of revenue and margin enhancement with many of Zinger's titles offering this feature and further growth anticipated.

Guided by our core pillars to be the most creative, innovative, and efficient entertainment company in the world, our 13,000 colleagues share a singular vision for excellence and hit creation. Each day we strive to bring joy to our player communities and value to our shareholders.

I'd like to express my gratitude to our teams for their immense passion and unwavering commitment to our mission to make the most captivating and engaging experiences in the entertainment business.

We believe that fiscal 2027 will be an inflection point for Take-Two, one that will write an exciting new chapter in our history and provide the foundation for new levels of success and the creation of groundbreaking entertainment experiences. I'll now turn the call over to Carl.

Thanks, Rous. I'd like to thank our teams for delivering a great start to the year and setting the stage for the most exciting pipeline in our company's history. And I'll discuss our recent and upcoming releases. On July 8th, 2K and HP Studios launched Season 7 for PGA Tour 2K 25, a free update which added the 154th Open Championship at Weilbergdau Golf Club. The team is planning to launch Season 8 in late September and is hard at work on this year's release of PGA Tour 2K 27.2K will share more details in the coming months.

On July 14th, Rockstar Games launched the Quartz Center Heist for GTA Online, which introduced an all-new blockbuster heist targeting Los Santos Premier Cultural Institution with an array of artwork for the taking. On July 30th, 2K and Gearbox launched Bounty Pack 4 Murders and Acquisitions for Borderlands 4, which includes a new story mission and cosmetic items. Fans can look forward to even more action in September when Gearbox releases additional content, including the title's next story pack. On August 14th, 2K and Hanger 13 will release the Man of Honor story expansion for Mafia the Old Country. With Hanger 13's industry leading capabilities and narrative-driven action titles, players will enjoy two new story chapters and all new content for the game's free ride mode.

2K and visual concepts will launch the ringside pass during the fall. WWE 2K 27 is currently in development and 2K will provide updates later this year. On September 4th, 2K and visual concepts will launch MBA 2K 27. The next installment of our industry leading basketball simulation that provides the most realistic and authentic MBA experience in interactive entertainment. This year, Victor Wembanyama of the San Antonio Spurs will be on the cover of the Standard Edition. Kaitlyn Clark of the Indiana Fever will be on the cover of the Deluxe Edition and Chicago Bulls legend Derek Rose will be on the cover of the Ultra Edition with early access available as part of the Deluxe and Ultra editions.

Last week, a first look trailer of MBA 2K 27's Gang Play was revealed and the response has been positive. The fans and the media expressing excitement over the title's improved graphics and enhanced player movement and presentation.

2K will share more about the game soon including the MBA 2K 27 pre-season breakdown full game reveal on August 18th. Zingle will continue to focus on enhancing its existing mobile portfolio with bold beats and updates as well as releasing new titles including Top Goal which is currently in soft launch. The title recently introduced Real World Soccer Stars as well as enhanced 3D Max simulation and player versus player gameplay.

In closing, we are deeply excited about this year, highlighted by the November 19th launch of Grand Theft Auto 6 which will usher in a new era of growth for our company and returns for our shareholders. We remain steadfast in our mission and commitment to delivering the highest quality entertainment experiences that captivate and engage audiences throughout the world. I'll now turn the call over to Laney.

Thanks Carl and good morning everyone. We achieved excellent first quarter results driven by our powerful franchises industry leading talent and unwavering commitment to our strategic vision. I'd like to thank our teams for their hard work which has enabled us to reach this exciting point within our company's history.

Turning to our results we delivered first quarter net bookings of $1.39 billion which was slightly above our guidance range of $1.32 to $1.37 billion. This primarily reflected better than expected performance from NBA2K and the Grand Theft Auto Series. For current consumer spending declined 1% for the period which was favorable to our guidance of a 3% decline and accounted for 84% of net bookings. NBA2K grew 7% the Grand Theft Auto Series rose 3% and as expected mobile declined 7% over last year.

Gap net revenue increased 2% to $1.5 billion while cost of revenue rose 17% to $651 million and included a $43 million impairment charge related to the decision not to proceed with an unannounced title from a third party developer. Operating expenses were flat at $918 million. On a management basis operating expenses declined 1% year over year which was favorable to our forecast of 3% growth due to timing of marketing expenses across our labels. With the ongoing positive trends in our business and excitement around the November 19th release of Grand Theft Auto 6, we are reiterating our fiscal 2027 net bookings outlook range of 8 to 8.2 billion dollars which represents approximately 20% growth over fiscal 2026 at the midpoint.

The largest contributors to net bookings are expected to be the Grand Theft Auto Series NBA2K, Tune Blast, Mash Factory, Empire's Imposals, Wars with Friends, the Red Dead Redemption Series, WWE2K, Color Block Jam, and Zynga Program. We continue to expect recurrent consumer spending to be in line with fiscal 2026 and to represent 64% of net bookings. The underlying drivers remain unchanged. The NBA2K projected to grow high single digits.

The Grand Theft Auto Series expected to be up and mobile expected to be down due to last year's success of Color Block Jam and our assumption that trends will moderate for several of Zynga's mature mobile titles. We now expect the net booking breakdown from our labels through roughly 37% Rockstar Games, 34% Zynga, and 29% 2K. We continue to forecast operating cash flow in excess of 1 billion dollars and we remain on track to be in a net cash position by the end of the fiscal year. We now plan to deploy approximately 290 million dollars of capital expenditures which is up from our prior forecast due to a planned real estate purchase. We continue to expect GABnet revenue to range from 7.9 to 8.1 billion dollars while we now expect costs of revenue to range from 3.54 to 3.66 billion dollars.

Our total operating expenses are now expected to range from 4.15 to 4.17 billion dollars. On a management basis, we expect operating expense growth of approximately 7% year over year which is down slightly from our prior forecast.

Now moving on to our 1.62 to 1.67 billion dollars compared to 1.96 billion dollars in the second quarter last year. Our release date for the quarter includes MBA2K27 as well as new content updates for various titles. The largest contributors to net bookings are expected to be MBA2K, the Grand Theft Auto Series, Tomb Blast, Match Factory, Empires and Puzzles, Words with Friends, Color Block Jam, the Borderlands franchise, the Red Dead Redemption series and Zingo Poker. We project recurring consumer spending to decline by approximately 5% which assumes growth for MBA2K and the Grand Theft Auto Series while mobile is expected to be down. We expect GABnet revenue to range from 1.42 to 1.47 billion dollars. Operating expenses are planned to range from 1.01 to 1.02 billion dollars.

On a year as last year included significant marketing expenses for the launch of Borderlands 4. Looking ahead, fiscal 2027 is on track to be a milestone year for our company, led by the release of Grand Theft Auto 6. We have great ambitions as our teams have carefully curated new opportunities that we believe will sustain this new level of scale for the foreseeable future, including live service enhancements, franchise extensions, a launch of new IP and international expansion. In addition, we will continue to evaluate a creative M&A. As we bring these opportunities to fruition, we are confident in our ability to enhance our financial profile further and generate strong cash flows, setting us on a path to deliver continued growth and long-term shareholder returns.

Thank you. I'll now turn the call back to stress.

Thanks, Lanie and Carl. On behalf of our entire management team, I'd like to thank our colleagues for an excellent start for what is poised to be an outstanding year for Take 2. And through our shareholders, I want to express our appreciation for your continued support. We'll now take your questions. Operator?

No, it's really not what we're seeing. Our results have been affected by how color block jam is doing versus last year in terms of copying because it was a new title last year. But apart from that, we've delivered some really good news in mobile. There's no doubt there's a bit of pressure on user acquisition at the moment. I think that that comes and goes in the marketplace, but we don't feel like the consumer is coming back at all.

You know, this is the first of its kind partnership with Netflix. They're a great marketing partner for us and distribution partner, as you know. We also work with virtually every social media outlet on Earth. This is part of Rockstar Games marketing strategy. We're excited for everyone to see an extended look of Grand Theft Auto 6. I'm not prepared to tell you how it's going to go, but I feel really good about it. And of course, some six hours after the initial launch on Netflix will be available on Rockstar Games channel on YouTube and I think ultimately many other outlets.

Thank you. We're actually very pleased how things are going right now. We typically don't give specific details about how releases are doing, but I can tell you that right now we're very pleased with how things are going. And like all the Rockstar releases, they're exciting. They're by players and they always bring in, they always reactivate folks so far so good.

Look, we've said this many, many, many times. Our goal is to deliver way more value to consumers than what we charge them. And the truth is that the real cost of a AAA video game is a whole lot lower today than it was 20 years ago. Pricing has not kept pace with inflation. And our goal is to continue to over deliver for our consumers because how you feel about any experience is the intersection of the experience itself and what you paid for it. So, you know, to say that we expect that Grand Theft Auto 6 will be an incredible bargain as experiences go is a gross understatement because Rockstar Games is known for over delivering.

And when people engage with our titles and Carl just answered a question about GTA Online. Remember, we're 13 years after GTA Online was launched and people are still highly engaged. We have record setting engagement at times. So, that's our goal. Our goal is not to maximize price. So, in this case, I think what we've decided to do makes a whole lot of sense in the context of what we're delivering. And that's the lens through which we're going forward as well.

Netflix is a close partner of the company. And we have tight relationships up and down the line. So, we're always in conversation about things that we can do together. And this is a groundbreaking partnership that Rockstar arranged with our friends and Netflix and really excited about how it's going to come about. I wouldn't normally get detail on sort of the nature of the back and forth or the terms of the arrangement.

Look, the rising cost of hardware is not a good thing. And we wouldn't argue that it is. I don't think it will slow us down any because we're delivering, we believe we're delivering experiences that people want. However, a lower price point for hardware would be a good thing because there would be more hardware in people's hands. So I cannot argue this is a positive but equally. We don't see it as a headwind either.

And going forward, look, two things that I think are relevant. Probably the most relevant thing is the world continues to move to open systems and that will continue. So 20 years ago, when we showed up here at Take Two for a console release that was available on PC at launch, PC would represent one to two percent of the overall sales. Today, that can be 40 or 50 percent in a similar situation.

And I believe that's going to grow because people have PCs that have outboard controllers. They work great as game machines and I think that will continue. Number two, with the advent of streaming, which we really do believe is around the corner in terms of having something in the slow latency and it really works well for consumers. Machines that weren't game machines before will become game machines. So without regard to what happens in the console business, which is a consequence to us, of course, we see the overall installed base as a practical matter growing materially. And if you believe in streaming to be clear, we really do and I'm happy to put a timeline on it.

I think we'll be in commercial streaming mode within three years. And by commercial, I mean low latency. I mean, that can 10x the effective installed base. Now, it doesn't mean we're in a 10x or revenue and we wouldn't project or we would. But because obviously your avid consumers already have access to video game machines. But I do think it creates great opportunity for titles that are broadly desirable even outside of core markets. And we do have titles like that, obviously. The third thing is that interactive entertainment and the most important thing remains, you know, America's past time and the world's past time, it is the fastest growing part of the entertainment business that's going to continue as the cohort ages and grows.

All we need to do is the hardest thing you can do, which is continue to make hits.

So in terms of MBA, obviously, MBA 2K26 performance was outstanding. It was a record for us, both on units and engagement. I think that's the key. And we get the question, the same question, almost every quarter, certainly every year about how high can high be and how the growth is. And every time we get the question, we answer it the same way. And it's really is, I don't want to say it's unlimited, but there's still a huge amount of growth potential in the MBA franchise. And that would be coming both from increased units, geographic expansion, etc. And bringing more customers back year over year, there's still a lot of wood to chop there, and also more and more engagement.

So we continue to refine that. And what really drives that is the folks at Visual Concepts and 2K and their efforts to year upon year to innovate. And it's really hard to do that on an annual release. And yet somehow through the brilliance and hard work of the team, they're able to do it. So I would just answer the same way we had before, which is the growth is going to be coming from the same place it always does. And that's through the innovation, the creativity of the teams. We did announce some fun things in terms of cover athletes for MBA 2K27. I'm going to leave all the exciting news about what's next for that title with 2K, which is August 18th, I think, is when there's going to be more of a reveal.

And with regard to your question about AI, look, we are first and foremost an entertainment company and always have been, however, we're an entertainment company that creates entertainment in computers and always has. So this company, it's products and its approach was built on AI and you know, we're we're dying in the well will adopters of new technology to the extent it enhances our ability to do what we do. We have a three part strategy, two parts of which are innovation and efficiency. So we have projects that sort of fall into both the basic research and the applied research buckets here to see the basic research side, the art of the possible on the applied research side, how we can innovate more and how we can create additional efficiencies and that threads through our entire company.

All that said, you know, the first of our core pillars is creativity and we have 13,000 colleagues around the world, the vast majority of whom are people who are creative every day. And we believe the technology can enhance their creativity, but we do not believe it can or should replace their creativity. And ultimately, we make the spoke entertainment products and aim to make the best ones in the world and technology should make it easier for our incredibly creative people to innovate. But for better for worse, and I happen to think it's very much for the better, those tools are not going to replace anyone. So unlike some of our competitors who are announcing opportunities to save hundreds of millions of dollars with AI, I've said since the beginning that the history of new technology in the interactive entertainment businesses, efficiencies are creative, are indeed creative, but then we find ways to do bigger and bigger things.

And, you know, we actually don't reduce the cost of doing those things, but we can meaningfully increase the quality. And what does meaningfully increase the quality mean for us? It means making bigger and bigger hits that appeal to more and more consumers. And that's our job. Our job is not to lead in technology. Our job is to lead in entertainment.

And as it happens, we use technology to try to do that.

Yeah, we've been very focused here on increasing our international footprint. You know, as you know, companies like Take Two and many of us, but there are some, basically derived by 80% of their revenue from the US, Western Europe, and one or two countries in Asia. The rest of the world's really underrepresented, even though they love video games, of course. And even though they have devices typically low-res, low-capable mobile devices, but devices nonetheless. So, for example, despite the number of people in India, our revenue out of India is really, really tiny, and people in India love like mobile video games. Same is true for Africa, a massive market, but our revenue footprint is very low. And we're also underrepresented in places like Latin America, obviously Russia, much of the Middle East, and much of Asia, although we do have a significant amount of business in China, and the select of other countries, South Korea, Taiwan, for example, growing business in Indonesia, a little business in Vietnam.

So, it's been an enormous strategic priority for us to begin to build up in these underrepresented territories in a way that we have a geo pricing tool for that purpose because different markets have a different ability to pay. That's a tool that we created in-house that allows us to experiment in a way that doesn't infect other parts of our business and other parts of the world. And in certain instances working on properties that may only appeal to some of those markets very selectively. So, my goal is that in the next 10 years, we've flipped the percentage of our revenue that comes from the US and international markets in the other direction because we've grown the overall business.

And if we don't invest here now, we run the risk of being behind in 10 years. So, it's an area of enormous focus. Turning to your second question about M&A, we've always looked at inorganic growth through the same three categories.

First, are we buying owned intellectual property? Secondly, are we buying tools and teams that are valuable? And third, is the transaction immediately agreed to EBITDA and to GAP earnings. And generally speaking, our acquisitions have ticked all those boxes. Then we have the Broad River because is there a cultural fit? We've done many small tuck in acquisitions, and then we've obviously done one very, very large acquisition. And I've had to say that unlike the history for most corporations, public corporations, our track record is excellent. I think virtually all of our deals have worked out if you define work that as being accretive and long-lasting. And certainly, this is going to deal with as been terrifically successful as has the yearbox deal, our most recent larger transactions.

So, we'll continue to look at the world that way. And in terms of areas in which we're not represented, thankfully, we don't really have any more big mobile company with big console and PC company. So, we don't have any must-haves, but there are certainly some nice to-haves, and we think some opportunities will come our way. We also, to finish the thought, have this allergy to being over-leveraged. And we have very, very light net leverage now. We expect to be in a cash position in about 30 seconds. Sorry, not exactly 30 seconds, but you get what I mean. And once we're back in a cash position, I think that would be the time when we'd be more likely to think about an organic opportunity.

Well, it's a great, it's obviously a great question. And I think the point is that if you look historically at big, really, really big releases for this company, and I'm thinking, obviously, of Granite Dotto and Red Dead, they didn't just affect us positively for a quarter. They had ongoing effects on our company. And we also have this massive pipeline that's, we think, quite extraordinary. And we have live services, and we have a catalog. So if you believe, as I said, I do, before that there are opportunities in terms of organic growth, because the market is growing, and because we're trying to extend other markets, and we have a pipeline, and we have a huge, what we believe is a huge release coming up, there's a lot of fuel for the fire.

It is a very fair and accurate comment, and even when we supported Stadia some years ago, we talked at the same time we were supporting Stadia about concerns about latency, and you're right, certain things remain perpetually in the future, like nuclear fusion, which is perpetually 30 years away. Although people think it's not now, I hope it's not. I don't think that's the case here because of enormous advances in hyperscalar networks and advances in edge network technology. And I think, for example, there's one player in the market that's looking at rolling out a significant edge network that would address latency, at least in the US. And I picked three years because we know it's not tomorrow, but I don't think it's five years.

But of course, I could be wrong. We're not betting any of our company on this. We just see it as another one of the many embedded call options in our security.

Yeah, we don't tend to give a lot of color around pricing or additions. We leave that to our labels, but I think rockstar feels that offering phenomenal value at $80 makes sense for some consumers. And then offering incremental value at a modestly increased price makes sense for consumers. And given the hype around this title, I mean, I think we could have made any number of other pricing choices. But as I said earlier, our focus on is on delivering way, way, way more value than what we charge for something. And with regard to pre-orders, our pre-orders are exceptional. No one's ever seen anything like this before at Take Two or in the industry. That said, you could absolutely be right.

We just don't know. So could demand be pulled forward? Sure. And one of the reasons that we're not changing our guidance is to be clear, we haven't sold one unit yet. You can cancel a pre-order. So we around here, we're allergic to victory laps. But one thing we certainly don't do is think of victory lap before we run the event. So the news is great so far. We're incredibly excited. We couldn't be more excited than we are. And yet we are realistic and at best, cautiously optimistic. And we're going to leave it at that until the thing occurs.

Thanks for your questions. I'm not going to comment on Sony's own decision, but in terms of our decision, look, our business is well over 90% digitally distributed as it's already a digital business. So in certain instances, especially if it's a big game, you know, disks, just and note I said disks don't really make sense for the consumer. Also, most instances you have to register online to play anyhow. So if you're already connected, like who cares if you download digitally, it's all the same and it's much more convenient. So that's where the world is going in our opinion and I think Sony understands that. We certainly understand that. It doesn't mean that we won't have physical additions now and then I'm sure we will in the same way that they're still vinyl in the recorded music business, but in other instances, it just won't make sense.

On direct to consumer, yes, that remains growth business for us. We are not direct to consumer across our entire mobile portfolio yet, but we're getting closer and we are seeing growth there. We have not, we don't talk about the actual percentage and we don't talk about our goals in terms of the percentage of our business. What we want to do is be where the consumer is. So we will support and continue to support all third party distributors who treat us appropriately and which we can make sound economic arrangements.

At the same time, we'll offer direct to consumer opportunities for consumers who want to avail themselves with those. There is no doubt that our direct to consumer business has had a material effect positive on our margins in the mobile business.

I like that ring fencing of dimensionalization, which is another way of saying how many units are you going to sell? The answer is, I don't know and I'm not going to tell you. But I can say that the level of pre-orders is unprecedented and astonishing and we're very grateful for that. But they are so unprecedented that we just don't know how it'll translate into sales, and which is a question I answered earlier, we genuinely don't know. And we just don't believe in claiming victory before it occurs.

Yeah, you're 100% right that if you believe in Moore's Law, what we'll be able to do with mobile games will grow materially, if not exponentially. And what I said earlier about streaming basically means that all games will become mobile games, if you wish.

But I think, and I haven't used the word mobile all the time as a result, when we talk about mobile versus console, we're really not talking about where you consume the title or on what device. We're talking about two different types of interactive entertainment. What we call a console where PC title is big and you spend hours on it and often you consume it on a big screen.

What we call mobile is light experience, typically an avid consumer of a mobile game will play that game five to seven times a day for around nine minutes per session. It's a very different movie or binge watching a series for an evening. A mobile experience is something you do when you have a few moments free and you want to relax and enjoy and be entertained. And so the change in technology that will allow a console experience effectively to become a mobile experience probably broadens the market. But I don't think it means that casual or hyper-casual or semi-casual or AA games necessarily go away. I think there's going to be a need and a desire for all different kinds of interactive entertainment.

And as technology enhances the art of the possible, there'll be new formats that are delivered. An example of that not that's not interactive, but an example of a new format that digital technology has enabled is micro-dramas. That's huge business in China and a growing business in the US. It didn't exist five years ago. So there's some moral equivalent there of an interactive entertainment. And one of the things that we think about here is the unknown, unknown. What's the next thing that's coming in interactive entertainment at which we can excel, which our customers would love, that new technology enables. We spend a lot of time thinking about that.

In terms of Grand Theft Auto and where it's going in the future, that's something that we're not talking about today. And in the fullness of time, I'm sure Rockstar will talk about.

Yeah, advertising is a growing part of our mobile business. We've rolled out ad units in many of our titles and previously did not have them. And our view really is look if you're going to engage with one of our mobile titles. We ought to be able to monetize that engagement in some way. So if you only engage with in app payments, your monetize, pardon me, less than 20% of the audience, typically, often quite a bit less than 20%. But if you have advertising as an option, you could monetize 100% of the audience in one form or another. So that has been a big part of our strategy in mobile and we have rolled out advertising units in most, but not all of our titles so far.

On the console side, look, you're correcting and quoting me and saying if you're paying premium price, you probably shouldn't be subject to advertising unless the advertising is sort of endemic to the title. So when you go to a basketball game or watch a basketball game on television, you're accustomed to seeing advertising in and around that game, advertising in the arena, for example. And in our video game, you'll see that too. And that's appropriate and we are able to monetize it is a relatively small part of the console business that I want to expect that that will continue to be the case.

Well, this particular partnership is groundbreaking and unique. Rockstar has licensed content to the Netflix before as has the rest of the take-to. We have a close partnership with Netflix and they are in the video game business. And we're very happy to be their partner. And I'm sure there'll be plenty of things that we can do with Netflix and many other outlets in the future. So we want to be ubiquitous. We want to be where our customers are. We have we believe the best and biggest collection of owned intellectual property in the interactive entertainment business. And wherever you are, when you wake up, if you want to engage with our content, we want you to be able to do so.

Generally speaking, our update on cadence for GTA Online has been pretty stable. And some of the updates have been amazing. Some have been less successful, but generally speaking, consumers really love them. But the cadence hasn't really changed, and we do apply significant resources to that. And we expect to continue to support GTA online going forward.

Look, I think that Rockstar got right in terms of the pricing of this standard edition and the pricing of the deluxe edition. And I think there's no doubt that consumers are really excited about both. And I think depending on your own ability to pay and how avid a consumer you are, you can choose between them. But the pre-orders have been exceptional and we're happy with the mix as well.

Engagement is fine. And as I said, we're very happy with what we see in the marketplace. And we have some titles that are just doing incredibly well. We have the tougher year over year comp on a color block jam. So that has affected our numbers. But that's really a comping issue, not a performance issue. So give people what they want, they show up for it. And we have some titles that just continue to do great, like tune blast and, you know, match factory and words with friends and empires and puzzles and many other big titles. So the consumer is there. That said, you know, user acquisition costs or a collection of any number of things at any given time, including what else is going on in the market.

And what our competitors are doing in certain instances will have competitors who from our point of view are vastly overspending in UA. And that will make it less economic for us to spend. So we really pay attention to, you know, how much we spend in UA and how that foots with the lifetime value of the property. And, you know, we want to make sure that every nickel that we spend in marketing comes back, you know, at a significant multiple. And some of our competitors don't seem to look at the world that way. And if they're a bunch of them in a given period of time, that can crowd us out of the very helpful.

The first thing, the most important thing is that we all want to reiterate our enormous gratitude to our 13,000 colleagues around the world who work hard every day to deliver the best entertainment properties to consumers, wherever they are, whatever devices they have and whatever interests they have. And more often than not, our teams are brilliantly succeeded at that task. And that's everything. That's the whole shooting match. And we are aware of that. And as I said, highly grateful for that. We're also really excited about what we believe the future will bring for our company and for our colleagues. And all of that should translate into enormous benefits for our shareholders. We have a wonderful year that we're in process hoping things are going really well.

And we have great expectations for the upcoming launch of the GTA 6, MBA 2K, WWE, and lots of other titles coming from both the console and the mobile side. And as I said, we expect that this will usher in a new period of success at a different and enhanced level for take two. So we couldn't feel more optimistic than we do.

We pick smiles on our faces and yet we know we have to wake up every day and do the hard work to deliver. That's our goal. Thank you so much for joining us today.

This concludes today's call. Thank you for attending. You may now disconnect.