Take-Two Interactive, the video game publisher behind popular franchises like Grand Theft Auto and Red Dead Redemption, is undergoing another restructuring effort aimed at reducing costs. This latest program, approved by the board of directors, will see layoffs impacting roughly 5% of the company’s workforce.
According to an SEC filing, the company intends to “rationalize its development pipeline” by canceling ongoing projects and “streamline its organizational structure.” This translates to job reductions estimated at around 580 positions based on Take-Two’s employee count in their 2023 report. The total cost of this restructuring is expected to reach $200 million, with significant portions allocated to canceled projects ($140 million), employee severance costs ($35 million), and office space reductions ($25 million).
This marks the third cost-cutting program Take-Two has initiated since February 2023. The first program aimed to eliminate $50 million in annual expenses, with CEO Strauss Zelnick emphasizing the lack of anticipated widespread layoffs. However, the details surrounding the second program, announced just two months ago, remained more ambiguous. When questioned about potential job cuts, Zelnick only referred to it as “more robust” than the initial plan.
The company’s financial performance paints a concerning picture. Take-Two has reported net losses for seven consecutive quarters, with the last profitable quarter preceding the acquisition of Zynga in June 2022. This combination of factors suggests a strategic shift within Take-Two, prioritizing cost-cutting measures to address recent financial struggles.
Apart from the layoffs
Despite the cuts, Take-Two’s stock price saw a slight increase in extended trading. However, it remains down nearly 10% year-over-year. This suggests investor confidence in the company’s long-term prospects despite the short-term challenges. The gaming landscape itself faces headwinds. Research suggests subdued revenue growth for PC and console games until at least 2026, potentially due to declining gaming hours.
However, Take-Two continues to make strategic acquisitions, like the recent purchase of Borderlands developer Gearbox for $460 million. This highlights a trend of consolidation within the industry. Concerns linger regarding potential delays for Grand Theft Auto 6, originally anticipated for release in 2025. Take-Two’s restructuring might push this back to 2026.The industry will be watching closely to see how these changes impact Take-Two’s development pipeline, future releases, and its overall position within the evolving gaming landscape.
