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Show Notes

(00:00:00) - (First question) - Brief overview of Take-Two

(00:00:57) - Take-Two's acquisition of Zynga represents a significant push into mobile gaming

(00:02:30) - Mobile gaming faces challenges from Apple's IDFA removal and Google's changes

(00:04:02) - Apple's privacy changes benefit them but hurt mobile publishers

(00:05:15) - How Take-Two evolved from PC and console to mobile

(00:08:13) - Console and PC target AAA games; mobile reaches a broader, less premium market

(00:10:18) - Creating new iconic AAA gaming IP is nearly impossible due to high costs

(00:12:33) - Big IP success in gaming historically depended on retail relationships and distribution

(00:13:59) - Grand Theft Auto and 2K likely represent 80-90% of Take-Two's business

(00:15:04) - Sports games have almost 100% revenue visibility; others like GTA fluctuate

(00:17:01) - GTA's next release is anticipated and guaranteed to sell millions, but post-launch is uncertain

(00:22:49) - Risk of new console alignment affects expectations for next GTA game release

(00:25:22) - Updating titles for different consoles has become less complicated with PC architecture

(00:25:56) - GTA's revenue splits 70-30 or 60-40 between upfront sales and in-game purchases

(00:27:09) - Pricing at $60-$70; new tech may boost in-game spending

(00:28:55) - GTA's mature nature makes in-game advertising tough

(00:30:24) - NBA license with 2K is a partnership, not exclusive

(00:32:53) - Take-Two lacks profitable titles beyond GTA and 2K

(00:35:22) - EA smartly bought Respawn and built studios; Take-Two lacks similar capability

(00:36:54) - Gaming industry consolidated to fewer franchises; similar to film industry's trend

(00:38:49) - Big publishers dominate mobile gaming; Zynga's main franchises are declining

(00:41:32) - Zynga's acquisition was ill-timed; it's a declining asset with no value

(00:44:57) - Microsoft's deal may lead to Amazon or Comcast buying Take-Two

(00:47:36) - Valuing these businesses often relies on traditional PE methods

(00:48:46) - In-game purchases boosted predictability, raising multiples to 20-25x earnings
(00:49:31) - Key risks for Take-Two are overhyped GTA expectations and service burnout

(00:51:02) - Lessons learned from studying Take-Two