Just as Take-Two Interactive started a call with investors to discuss the company's latest earnings report, its stock price tumbled over 9%. The market movement came as Take-Two posted a diminished third quarter relative to last year, but the questions CEO Strauss Zelnick fielded from investors shortly after tended more toward unease about the future than earnings past. Dan Houser's exit from Rockstar and the lack of a high-profile, non-annual title for 2020 appear to be the day's top concerns for Take-Two's shareholders.
Throughout today's earnings call, investors asked questions regarding Dan Houser, Rockstar, and talent retention more generally. Take-Two's stock dipped around 6% yesterday after the announcement of Dan Houser's departure, but had rebounded with the market's opening on Thursday ahead of the earning release.
Zelnick was effusive in his praise of Rockstar and Dan Houser while taking care to remind those listening that the GTA and Rockstar developers didn't lose both of its leading creatives:
"Dan Houser had been on an extended leave since early Spring 2019. The company has been led since its founding by Sam Houser, who is president of the company, and it's an extraordinary team effort. Sam's a great player-coach [...] the label has really never been stronger, we're incredibly optimistic and excited. At the same time we're grateful to Dan for his contributions and wish him well."
Later, Zelnick added that he's "only seen ongoing improvements at Rockstar" in terms of its oft-scrutinized culture. "I've only seen growth and engagement and innovation, and I think one of the great things about all of our labels and our company as a whole is that we're incredibly self-critical, and we aim to be utterly transparent. [...] Rockstar Games sets a standard for always trying to improve the quality of its operations, the quality of the way that they work, and the quality of their culture."
When asked if investors should expect a new triple-A title from Take-Two in 2020, Zelnick emphasized the strengths of the company's existing catalogue before explaining that, from Take-Two's perspective, a year without a "frontline release" is not out of the ordinary for a company of its status. "Given that we're a company that depends on our creative teams to make as close to perfect products as possible, we have to be willing to live with the vagaries of product deliveries, and that means sometimes we will have thin frontline years," Zelnick said.
Take-Two did report successes with the last quarter: record spending in GTA Online, the debuts of Borderlands 3 and The Outer Worlds, Red Dead Redemption 2 doubling the sales of the first game in part thanks to the PC port, and Grand Theft Auto 5 topping the NPD's best-seller list for the decade. At the same time, on top of future concerns with Rockstar and of a muted 2020, Take-Two's quarter was marred by poor reception of NBA 2K20 and WWE 2K20's disastrous launch.
As the entire industry looks to the rest of 2020 and the start of a new console generation, Take-Two is undoubtedly ending the generation in a strong position, but investors evidently have concerns over whether the company's winning approach will continue to work in the years to come. More from Rockstar, a new BioShock, and other new IP are surely on the way, but on today's call, COO Karl Slatoff only said that Take-Two hopes it can share more along those lines in the coming months.