Take-Two boss says video games are primed for 25 years of growth
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Take-Two boss says video games are primed for 25 years of growth

If you’ve been paying attention to entertainment trends over the last decade or so, you won’t have missed the rise of video gaming. For many people in their thirties and younger, video gaming is as ubiquitous as television is to their parents – these are people that grew up with Nintendo’s Super Mario World and Sega’s Sonic the Hedgehog, and gaming is just something they do. Today, that popularity is on proud display, as esports finds a global fanbase, innovations in technology connect millions around the globe to play together, and blockbuster franchises blur lines between video games and other forms of entertainment.

Perhaps you’re wondering “when will this incredible growth slow down?” Strauss Zelnick, CEO of game-making giant Take-Two Interactive, has an answer for you: not for at least a quarter of a century.

Take-Two’s share price has appreciated by 43% over the past six months

Take Two Aug 14

Source: Yahoo Finance

Following the release of a serious earnings beat earlier in the month, Zelnick told listeners that the video game industry was in “rude health” – and he expected it to continue:

“We have this wonderful situation in the marketplace which is that the sector has extraordinary tailwinds and we expect those to continue, and that’s driven by the growth in the cohort that enjoys video games. Remember, people consume for the rest of their lives the entertainment that they loved at the age of 17. The video game business is about 30 years old, 35 years old effectively, and the average player age today is around 37 or 38, so there’s plenty of room for growth as people age, more people come into the market, but people don’t stop playing video games, so for 20 or 25 years demographics will grow, will cause the industry to grow, and the industry participants who do a good job will benefit from that.”

He also added that this growth was global, including areas Take-Two was yet to operate in (such as Africa and India). And that innovation was priming the industry for even greater gains going forward:

“Growth in new business models, new technologies such as streaming, and new kinds of games – just observe ten years ago there was no mobile games business and today that’s a $60 billion marketplace. And at the same time that’s sprung up and grown, the core console and PC business has continued to grow at a rapid clip. So, this industry is the most rapidly growing industry in entertainment and that’s not going to change for the next 10, 20 or 25 years.”

As much as his role at the top of one of the world’s most successful video game giants makes him worth listening to, Zelnick also has a well-earned reputation for prescience when it comes to industry trends. If he’s right this time, then it’s great news for game developers and publishers, for fans, and – of course – for investors.

Disclosure

Dominion holds Take-Two Interactive in its Global Trends Luxury Fund.


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