Take-Two CEO sees streaming driving tenfold growth

Take-Two Interactive’s CEO Strauss Zelnick expects cloud gaming to become commercially viable within three years, potentially expanding the industry’s installed base by tenfold. He made the prediction during the company’s first-quarter fiscal 2027 earnings call, citing rising hardware costs as a primary driver for the shift. While the technology has struggled to gain traction in the past, Zelnick believes recent infrastructure improvements are finally ready to support low-latency streaming at scale.

The economics of the traditional console cycle are facing a pressure that is unlike anything seen in previous decades. Hardware costs have climbed steadily, pushed upward by tariffs, rising prices for TSMC semiconductors, and memory shortages stemming from AI data center construction. The Xbox Series and PlayStation 5 consoles launched at $500, but their successors might carry a price tag that doubles that figure. This trend creates a significant barrier for entry that streaming could potentially circumvent. Zelnick acknowledged that while major franchises like Grand Theft Auto and NBA 2K will cushion the impact of these hikes, the increased costs still threaten to limit the company’s total addressable market.

Infrastructure and the Streaming Market

Cloud gaming has long been discussed as a route for bringing high-end games to low-cost devices. Zelnick argued that advances in networking technology will make this option more viable for a wider swath of users than ever before, potentially growing the installed base by an order of magnitude. He sees this next wave as distinct from previous attempts, specifically the high-profile failure of Google Stadia. The CEO believes that current technological capabilities are what will separate this new era from past missteps. The current market sector includes Amazon’s Luna, Nvidia’s GeForce Now, and cloud features integrated into Xbox Game Pass and PlayStation Plus Premium.

This shift suggests the industry is moving toward a model where the hardware barrier to entry is removed entirely, replacing the traditional console upgrade cycle with a subscription-based service dependency. If streaming reaches the low-latency threshold Zelnick describes, it essentially decouples the profitability of blockbuster titles from the sales of expensive dedicated consoles. It represents a fundamental change in how publishers reach consumers, turning the focus from hardware specs to network reliability.

Microsoft and Sony have demonstrated that streaming works best as a supplementary feature for games users already own. Success via other business models remains elusive for the time being. Zelnick does not expect revenue to climb by tenfold alongside the user base growth. Instead, he views it as a method to reach players beyond Take-Two’s traditional core market.

Digital-Only Releases and Physical Media

The conversation regarding digital formats extends beyond just streaming services. Zelnick noted that 90% of Take-Two’s business is already digital. However, he left the door open for occasional physical releases in the future. He compared the potential practice to the enduring demand for vinyl records in the music industry. Unlike vinyl or CDs, no single independent company controls the pressing of physical games; console manufacturers alone manufacture their platforms’ discs. This centralized control makes a broad resurgence of physical media less likely compared to the music industry where third-party pressing plants exist.

This digital focus is clearly evident in the upcoming launch of Grand Theft Auto VI. The title is set to arrive on November 19 for PlayStation 5 and Xbox Series consoles as a digital-only release. A PC version is expected to follow sometime later. An extended first look at the game will premiere exclusively on Netflix on August 27. The move signals a broader industry shift away from physical disc games on PlayStation, aligning with the publisher’s already dominant digital sales figures.