Take-Two Interactive CEO Strauss Zelnick shared his perspective on entertainment pricing, particularly video games, an often debated topic. Zelnick’s calculation method for pricing entertainment is rather intricate, making its effectiveness somewhat uncertain. This was discussed during the company’s Q2 2024 earnings call (via eXputer).
When asked about the potential rise in subscription service prices across the media landscape, Zelnick distanced Take-Two Interactive from the topic. He then delved into his belief in how much value consumers receive in relation to the price paid for games. He stated, “In terms of pricing for any entertainment property, basically the algorithm is the value of the expected entertainment usage, which is to say that the per-hour value times the number of expected hours plus the terminal value that’s perceived by the customer in ownership if the title is actually owned, not, say, rented or subscribed to. And you’ll see that that bears out in every kind of entertainment vehicle. By that standard, our frontline prices are still very, very low because we offer many hours of engagement.”
Upon clarification, Zelnick added, “The value of the engagement is very high. So, I think the industry, as a whole, offers a terrific price-to-value opportunity for consumers. That doesn’t necessarily mean that the industry has pricing power or wants to have pricing power. However, there is a great deal of value offered.”
Zelnick ultimately emphasized, “It’s our strategy here to deliver much more value than what we charge consumers. There have been precious few price increases in the business. The price increase, for example, the $70 for certain frontline products, was the first increase in many years after many generations. So again, I think we offer a terrific value to consumers.”
