Take-Two Interactive Software, Inc. (TTWO) Earnings Call Transcript & Summary

Hey. Good morning, everybody. Thanks for joining us at our Second Annual Global Interactive Media Conference. Good morning for those in North America. Good afternoon for those in Europe. I'm Andrew Uerkwitz, senior U.S. analyst covering interactive media. With me today, it's really my pleasure to have Strauss Zelnick, CEO, Chairman of Take-Two Interactive. He's been at this role since 2007. He's also the CEO, Founder of private equity firm, ZelnickMedia. Previously, he has led or held senior management roles or been chairman of many other media companies. I'm not going to name them all, but I'll go through the, I think, the good ones: BMG, Crystal Dynamics, 20th Century Fox, CBS, Columbia Music and Columbia Pictures, so well versed in the media landscape. And that's where our conversations going to be today. So Strauss, thank you so much for joining us this morning.

Thank you. And as for my resume, what it sounds like to me is that I can't hold the job, but I appreciate you putting it in good light.

Yes, yes. No, it's a great resume. What -- Strauss, you reported earnings last week. Let's just hit that real quick. What's the 1 -- 1 or 2 key takeaways from the earnings call?

Look, at the risk of breaking my arm, patting myself on the back, the team delivered another great quarter. And once again, we were able to demonstrate if you create great entertainment properties and distribute them incredibly effectively, people show up. And net bookings were up 3% year-over-year. We had expected them, of course, to be down. And recurring consumer spending, which is 69% of our business in the quarter, was up 7%. And our expectations have been for an 11% decline. So the consumer is back post pandemic or a new normal, whichever way you'd like to put it, and back in the way that we thought. Not as incredibly powerful as during the pandemic because people are sheltering at home; however, much bigger than pre-pandemic. The business is bigger than it was in '19, calendar '19, and it will continue to grow from here, again, if we release great properties.

Yes. No. I mean, my takeaway, and I try to be as impartial as I can on these calls. But even with the delays, you're still raising guidance. I think this just goes to show you that quality content brings gamers. And I guess that leads to my next question, which is really -- and this is -- I promise this was the last time I asked a COVID-related question on the demand side. Can we -- I guess the question is, should we be stopping asking this question because it seems like consumer spending regardless of whether we're in a reopening or closed or whatever have you?

Well, I'm not tired of the question, so you're fine there. But again, I think we're in the new normal. I think some people are going to be working remotely for quite a while. I think there'll be more scares because we're in a moment where we're going to be scared a lot. Even though we're now at a point where if you're vaccinated, you really shouldn't fear this particular illness anymore than you fear any number of other communicable illnesses. But that doesn't matter because if you spend 18 months seeing a massive traffic accident outside your house every day and then suddenly, there are stoplights everywhere, police officers everywhere, and there are no more traffic accidents, it really doesn't matter, you're still going to be looking out for traffic accidents. So we're going to be at a higher alert for a while, in my opinion. But I think in terms of consumption patterns, no, some people work from home and maybe they'll play a bit more because they're at home. Some people are back at office, hopefully most people over time. Certainly, the vast majority of the economy will be back to work in a physical location soon because remember, 60% of the U.S. economy works physically, no matter what, like they were going to work during the pandemic. All the discussion about work-from-home is less than 40% of the economy, and that's the U.S. economy, never mind economies that don't look like the U.S. economy. So I think what we've seen is our consumption patterns, the sector's consumption patterns are about where they are. And they're going to continue to grow materially because this is the business that is growing more rapidly than any other entertainment business. And that, in my opinion, will continue to be the case for the next 15 or 20 years. And that's simply a matter of the cohort aging, but continuing to play games and having new people join the cohort.

Got it. Got it. And on the flip side, on the supply side, clearly, studios are having -- maybe they're struggling to adapt to work from home. We've seen myriad of delays across the entire industry. I don't think one developer has not had a delay. Is that the new normal as far as delays go?

No, because even if it takes longer to make a great game, people are going to adjust to that, and then they'll set release dates accordingly. So there won't be delays. Delays come about because something unexpected happened. And we've had precious few. We've had more than we like, or precious few, I think really only 2. And in both instances, we were taking the time needed to make a great game, what we believe will be a great game. I do think that development times can be extended partially because of work from home because I don't think work from home is as productive and partially because we're always seeking to make better and better games. And as we have new technology that gives our developers more to do, they will inevitably want to do more. And that takes more time and therefore, costs more money. The good news is that in success, this is a high-margin business. So if we -- I said this earlier in the group discussion, if we were in a commodity business and suddenly saw your cost increases, especially if those cost increases were disproportionate among different producers, you'd be in terrible trouble, those with higher cost. But that's not the case. We don't make fungible goods. We make bespoke goods, all of us. And consumers either want them or don't want them, but when they want them, they really, really want them. And that means if you have an ability to make fantastically complicated, elegant, beautiful and compelling entertainment properties that people really want, and we seem to have that ability across our entire company, then a longer development cycle and even at a greater cost isn't really something to be concerned with. What we need to be concerned with is making [ heads ].

Yes. And on that point of making heads, earlier this year, you outlined 93 titles that you're currently working on, 64 of those potentially launching over the next -- this fiscal year and the next 2. I don't think I've ever seen a studio or a group of studios with such an ambitious plan. So I guess a couple of questions around that. One is how do you -- how is the CEO -- do you ensure that your standard of quality can match the future quantity? And then just from a management perspective, the increase in quantity, was this a -- is this something you saw in the industry? Was this just more ideas were coming to you, and you just want to green light more ideas? What if anything changed that gave your team confidence to be more ambitious?

So I'll answer the second question first. We took over the company 14 years ago, and our goal was to diversify and grow the intellectual property base. And obviously, you can only do that with the best. And we had to be very judicious at first because we had a pretty thin and wobbly financial structure. And we also didn't have the human capital to pursue that approach too aggressively. We needed to walk before we can run. And then we did walk, and we generated a lot of success, for which I'm incredibly grateful. And we felt, okay, we can invest a bit more, we can hire more great people, we can do more of this, and we did that and generated more hits. So it's been an incremental approach to create a growth over time. And now we're just reaching a crescendo, we hope, where in every year, we hope to have a handful or more of really great frontline releases in addition to our live ops business as it exists already and our catalog that exists already. And if you go back and look at my remarks, 14 years ago, really slow night where you can't sleep, you'll find that, that's exactly the strategy that I outlined. We've been pursuing this since the beginning. Now the question is, and this is your first question. Okay, that's all well and good, but I'll just be a little more blunt than you are. But now you're sort of fat and happy, and you have too much capital and you are just throwing a bunch of stuff against the wall to see what it sticks. And now we're going to see your wanted average Metacritic scores decline, and we'll see your hit ratios decline, and you'll just look like everyone else. You're going to look like the Take-Two we know and hopefully love. And the answer is we're trying mightily to make sure that we're maintaining and, in fact, growing our quality standards. And so far, that's been the case. I mean, this NBA 2K22 is one of the best NBA titles ever made, and the metrics reflect how we sold in over 5 million units. People love the title, and they're hugely engaged with the title. The add-on content for Grand Theft Auto, most recently the Los Santos Tuners update. This is just a fantastic stuff. Recurrent consumer spending in a quarter on Grand Theft Auto Online was up 33%, just a phenomenal second quarter for Grand Theft Auto Online. That isn't magical and that isn't the industry moving the dial. That's the title. That is the team doing great work. So everyone is as serious as a heart attack around here about quality. And I don't need to like drill that into the [indiscernible]. Literally not one communication I have about the business doesn't involve me saying publicly or privately. Our strategy is to be the most creative, the most innovative and the most efficient company. There isn't a person at this company who can't repeat that back to you probably with rolling eyes. But they know it's true because that's how we make decisions around here. And we won't pursue a title unless the team is passionate about making it, unless we believe it can be a massive hit. I'll be wrong sometimes by both, actually. Hopefully, not that frequently. But there's nothing we're pursuing now about which we're not incredibly excited. We just have the bandwidth now, and we have the financial footing now to pursue a broader mandate. And finally, why do that? It's manifest destiny, right? In a capitalist environment, you're either growing or you're declining, you're not standing still. And everyone here is super ambitious. And so we need to create a bigger environment for them to be ambitious in. Where we're not getting bigger is at the corporate level. We're not building up our bureaucracy. We have the same number of senior managers today that we had 5 years ago, and basically they're all the same people, too, or largely. They're about 8 of us, and we share 3 assistants on one hallway in a relatively modest office in Midtown Manhattan with no cafeteria, no private jets, no security guards, no chief of staff, no earpieces, nothing. We're just like normal people working away, trying to help our teams, make the best entertainment properties on earth and market them more effectively than anyone else.

And I guess to that point, you've doubled your headcount, I think, over the last 4 years. You just added basically a medium-sized studio in the quarter by hiring, I think, almost 350 people...

We just announced another acquisition.

Exactly. So -- are most of these people working on that future content? Or are they kind of in supporting stuff you -- like the live service piece of it? And then, I guess, like what's been the hiring environment? Like would you have wanted to go faster at this point?

We definitely would have liked to go faster, but we're very selective. The hiring environment is challenging. However, we are known, I think, at this point to be a company that creative folks want to work at and business folks want to work at if they're interested in the interactive entertainment business. I don't want to overstate the case, but I do think we have a leg up there. We have the lowest attrition rate in our business. Our attrition rate is less than 50% of the industry average. And in terms of the acquisitions, some are tech. So they would be developers, who support all of our properties or multiple properties. The bulk of those acquisitions, though, are related to working on particular intellectual properties, either ours that previously existed or ones that we brought in-house that are new.

Got it. And then just a follow-up from an investor. As you get to scale, does that change the way you think about M&A? Does that take large-scale M&A off the table? Or are you guys going to continue to do kind of an acqui-hire sort of strategy?

Does -- in other words, are we at a point now where a larger acquisition no longer makes sense because...

Correct, yes. Yes.

No. I think to the contrary, we're now at a point where our balance sheet and our track record actually would give us confidence to do something bigger if that were available on sensible terms.

And then just kind of switching it up a little bit. Because of your media background, you did an interview this week with GamesBeat. And anybody listening, I encourage you go watch it, really great comments around metaverse, VR, AR, NFTs, and I'll touch on some of these things later. But you also mentioned in there, where companies really need, especially in gaming, it's a new industry. You got to be on the leading edge of technology. Aside from the buzzwords, NFTs, metaverse, is there anything from a technology perspective that you care about more so that you think others are kind of ignoring, that we should be paying attention to, that will make a bigger difference in your business going forward?

It is a superb question. So thank you for that. And the answer is, by definition, if I had an answer, I probably wouldn't share it publicly.

I figured. I figured, but that's all right.

So I think what we're looking for is the next new thing, the unknown, unknown. And it's hard to look for that because you're actually looking for something that doesn't exist or doesn't exist widely. We sort of missed it initially on Mobile. Now I have plenty of excuses, as one always does, like we were building up this business, we were revitalizing the company, we didn't have a balance sheet to speak of. But it's also true that I didn't fully understand the Mobile business at the time. And so we got into Mobile, but we got in much later than we should have. We missed some opportunity that way. We don't ever want to make that mistake again, I certainly don't want to. And that means with regard to the next new thing, we have to live up to the part of our strategy that says be the most innovative. But we have to do it in a way that's consistent with also being the most efficient, which is we're not going to deploy hundreds of millions or billions of dollars in service of some pet project that I wake up in the morning and say, "Aha, it's the -- it's VR," which was basically my complaint about what the business did. That's basically like there's a collective moment of irrational enthusiasm around VR. No one stopped to say, "Wait a second. Wait a second. Is this going to work? Are people going to actually strap on vision and hearing, including headsets, and sit in a dedicated room and lock the door and be with no other people and just engage in a VR experience for long periods of time?" The answer is that -- it's defied reason. That's before you even get to the point where 20 minutes in, 99% of the populous is nauseated, like 20 minutes in. People play our console titles for 4 hours of a stretch or more. And they watch television for 4 or 5 hours in a stretch. So to me, it just defied reason, and we don't operate that way. But that -- you don't extend that to say, "Therefore, no innovation makes sense." In fact, the story of life is all about innovation. We're, in my opinion, entering a period of technical and creative innovation, the likes of which we've never seen. That's unpopular for an old entertainment executive to say because a lot of old entertainment executives like, "Wow, the roaring '50s, the roaring '70s, the roaring '80s. Those days will never come again." The answer is we're just getting started. All the form factors we're using are already antique. They won't exist in 10 years. The properties that we're making, fantastic as they are, are antique. The Movie business reached its creative and technical asymptote 35 years ago. You had special effects that are better now, but they existed already. The nature of what a movie is was established in the 1930s. We haven't fully established what a fantastic video game is. It's not yet clear what it is, and we certainly have not scratched the technical asymptote. So -- not even come close. So we even touched it, never mind scratched it, we haven't. It's never come close. So I think that's amazingly exciting. And the question is, what is this company going to do to be at the leading edge of that, and that's what I'm pushing for. But in a way, I'm sort of pushing against the string because I really am saying, "We have to find a thing that hasn't yet been found." And that probably means that we're going to find this less by my having a dream in the middle of the night saying, "The future is plastics, young man." And it's more than we're going to actually run into some small enterprise in some arcane location, who's doing something incredibly cool. That's probably more we're going to find.

And kind of along those lines, just -- and maybe I'll go more kind of an incremental technology change. And again, I'm going to avoid the buzzword because I tended to agree with you on many of these buzzwords. But what are your thoughts on doing things like opening up your economies, trying to tap into secondary markets, providing value to -- providing more value maybe to virtual goods, opening up trading and buying and selling of different goods within some of your big titles?

Well, it's certainly going to happen. I mean, NFTs will take us there. And -- but the question is how do you do it in a way that you don't hurt your consumers? I have 0 interest in creating some exchange that solely buys and sells Dutch tulips in the 1600s. I mean, that's what we're doing now with NFTs and with cryptocurrency. And we know where all speculations land. Some people will have made a lot of money, gotten out in time, and they'll have turn that money into fiat currency, and they'll be very happy about it. And a whole bunch of people have lost a lot of money, and they'll have lost fiat currency incidentally. So -- and maybe their homes along the way because there are people who were levered up doing it. So we're not going to create an economy to enable our enhanced speculative activity. We would create an economy and services making great entertainment, really, really great entertainment and making great entertainment experiences. And do I think NFTs can be in service of those goals and other game mechanics can be in service to those goals? Yes. However, are we going to bleed over into gambling? Well, not unless we're regulated and honest about it, straightforward. And even then, I'm not sure if it's here. But we're certainly not going to like pretend that speculation is entertainment, even if we could make money doing it.

Yes. So it sounds like what you're really driving to is there is innovation out there that's interesting, that if applied correctly, could open up audiences, drive engagement and make the core experience better. Is that a fair way of saying...

You said it better than I and better -- much more concise, too.

And then I guess -- I have several questions from investors. But the last one, you've already touched on kind of the -- on the M&A question. But I'll go ahead and ask it again or maybe I'll ask it slightly differently. The industry, at least part of the industry, valuations are fairly compressed. Do you think that is because investors don't really believe that you guys are going to take advantage of some of the technology or you're not saying the right buzzwords? Or do you think there's something else that's kind of driving the compression of the industry multiples to what appear to me be 4- to 5-year lows? And then a follow-on, does that make you want to do more M&A?

We believe that if we make really great entertainment and do so in an efficient structure and always think about creating the next new thing, the economics will follow. And that served us well. And if you look at our stock performance over a 1-, 5- and 10-year period, not so good over 1. It's really good over 5 and 10. We're long-term investors, and I'm at this for the long term. I never argue about valuations, and I'm willing to predict most things, but I'm not going to predict market multiples. And I think you probably should be grateful that I don't think I could do that sort of thing. I think what's happening now is there was a lot of momentary enthusiasm during the pandemic about what is possible for interactive entertainment companies. And now everyone is coming back to earth and saying, "Oh, it's the new normal," which it is. And ultimately, you trade on the fundamentals. You don't trade on the story. So ultimately, Rivian is going to have to generate loads of EBITDA to support their valuation. There are companies that were great darlings of the business that would serve valuations. I won't single out the names, but in the last month, a bunch of them have come way, way, way down, not because they're bad companies, but because their mission, their role in the economy leads to a certain level of revenue and profits. And we are ultimately going to be judged on that basis, always have [indiscernible]. So at one point in time, Microsoft was judged as this amazing thing that could be extraordinary. Today, Microsoft trades at what 12x EBITDA, whatever it is, not so far off. Apple trades at an EBITDA multiple. Apple doesn't trade up. This is a cool company, and they do cool stuff. They trade off of an EBITDA multiple. So we should, as in a mature business, ultimately trade off multiple of our income. And the more growth we're expected to have, the higher that multiple can be. And I'll leave the projections about where our growth rate will be to investors in terms of what our profitability rate can, should be. It's very straightforward. We have very strong gross margins. We have strong operating margins. And as we gain scale, if we maintain our gross margins, our operating margins, too, will grow. And the question for investors is, what do you want to bet on? Do you want to bet on today or tomorrow or 5 years from now? And again, we leave that to investors. But we've talked about where we're going, and we have a track record of over-delivering against what we say we're going to do. But it doesn't mean we will in the future. What is it -- past performance is no guarantee of future results. And all I can tell you is we get up every day with a burning desire to create the greatest entertainment properties, to do so in an exceedingly efficient structure and to generate creative value for our consumers, first and foremost, and then, of course, to generate returns for our shareholders.

Great. No, I think that's very fair. And it's a -- I think that's a great answer, and I agree with you. Some of these companies, I feel like they're leveraging buzzwords and not actually operating. I'm going to switch it over to some investor questions that we've gotten. I think this is a good one. Can you comment on the job market for game designers, engineers, senior leaders? Obviously, it's a tight market. Is there anything that you're doing differently or that you've changed to continue to attract the best talent in the industry?

There's nothing we're aiming to do different because we've had the same strategy forever. I think we're always improving our working environment. I think there's more attention than ever on making sure a company is a great place to work. I think this generation of talented people are different. They're saying, "Look, I'll work hard, and I'll deliver for you, and I also want to be treated a certain way." That's consistent with our strategy. That's consistent with our culture. So I'm good with that. I think we have an advantage because historically, that's always been who we were. We always had a culture that reflected the desire to be civil, to be respectful of all, to be inclusive, to be kind and yet at the same time, to be incredibly ambitious and hardworking. And I think you can do those things all at the same time. I think that puts us in a good position. We have -- I may have said this, forgive me. We have the lowest attrition rate in the business, less than half the industry average. At the senior management level, we have virtually no change. In the Entertainment business, by the way, if you want a little trick, you can predict performance of pure-play entertainment companies based on the longevity of the senior management team. It's a direct correlation and a very -- has a very high R square, amazingly enough sort of for obvious reasons. I mean, it may be a little bit circular. If they were doing a horrible job, they would have gotten fired, but it does exist. So I think we have a remarkable culture, not everyone agrees with me. We have a unique culture, but it's still challenging to hire talented people.

Yes. And then kind of switching gears a little bit. When you think about live service games, and we go back to that technology answer you said before, is there a point where the technology just gets too far ahead of a live service game that where -- where you kind of just have to wind down the live service and start it back up on new tech? Or are you able to kind of just keep building upon what you've done before to kind of maintain live services for longevity?

We're willing to do both. It depends on what the consumer wants. So we run NBA 2K Online 1 and 2 in China simultaneously. We have no plans to wind down 1. We could have other circumstances where we shift over. And certainly, in the past, we have had live services that we have not supported any longer. We don't precisely shut them down. We don't -- I guess, we sometimes really shut down servers, but it's more typical that we just stop supporting it. But that hasn't happened of late, but we have done it, and they have to be where the consumer is. And the consumers love what you're doing, even though it's not up to date, we're happy to continue to support it. But you do need a critical mass, especially with something that's multiplayer online.

Got it. Got it. And then switching back to Mobile, you mentioned Mobile. Could you just -- it's -- when I look at the chart of game -- potential games you're working on, there is a lot of mobile in there. Is this a broad strategy of trying to hit a whole bunch of genres? Or is it more pinpointed based on the internal talent that you have? Can you talk a little bit about your mobile strategy over the next 3 to 5 years?

We're just trying to make hits. We're trying to be ahead of where the consumers are. We're trying to skate to where the puck will be, not where it is. And we'll see if we're successful at it. Everyone else is trying to do the same thing. It's not a unique strategy. This is all about execution.

And then could you kind of -- this is an interesting question, especially in light of one of your earlier answers around always trying to think of what's coming next. But how do you think that impacts your core franchises? I mean, the longevity there has been tremendous. Do you think that games like NBA 2K, GTA can live another decade, 20, 30 years? I mean, obviously, NBA 2K probably can, but when you think about your core IP, do you think there's a life to it? Or do you think it kind of can just keep going despite some of the broader industry changes that occur naturally in this industry?

If it's really, really great, it will keep going. I mean, I don't know if you saw it. I just saw the new Bond film. It's...

Yes, of course. Yes.

And you would like every franchise to be James Bond. There are precious few entertainment franchises of any sort that fall into that category, but they do exist. And I think GTA is one of them. I think Red Dead is one of them. NBA is obviously one of them because the game will continue to exist. I also think Borderlands, BioShock, Civilization and other titles have the ability to be titles like that. But once the gating factor, it's all about quality. And it also requires you to be thoughtful, to be willing to rest the title so that you have a sense of, wow, this is a rare event. I've always said that annualizing nonsports titles runs the risk of burning out the intellectual property, even if it's good. So we take the time to make something that we think is incredibly phenomenal. And we also rest titles intentionally so that there's pent-up demand for that title, so it's a special event. I go to see a Bond film because I -- there isn't another one in 2 months. Like I'm going to see every Bond film. But by the way -- and this is the second part of it. And if it's bad, I'm going to be really upset. I'm going to be really upset like a personal upfront because I believe that, that [ IP ] is always just beyond. And that's the compact that Rockstar has with its consumers. And that's a compact 2K has with regard to NBA 2K. That's the compact that Gearbox and 2K has with Borderlands consumers. And I want to have more of that [indiscernible] with Civilization consumers. It is so hard to deliver on that basis. It is so difficult to do that over and over again. But that's our goal and that's our job. That's what we aim to do. And yes, to answer your question, if you do that, are these franchises permanent? Look, nothing's permanent. But they can be very, very long lasting. That said, we don't bet on that, which is why we're launching new intellectual property. It's why of -- our release schedule over the next 3 years, 56% of it is new intellectual property. That's super risky. Our hit ratio will be much lower than it will be if you blend into the franchise, has to be. But we have to do it because our franchises are not permanent. One of our competitors uses the phrase, forever franchises. I'm really -- I'm in awe of that, right? Because I don't know that much is forever, certainly not. We don't have the confidence that it's forever. We have to get up every day and make the next one great.

Yes. And you've mentioned the resting idea. I'm fascinated by that idea because I completely agree with you. I think certain franchises do need rested. How is that choice made? Is that developers coming to you and saying, "Look, I have other ideas. I'd like to explore this." Or is it a conscious effort across the board to say, "Hey, this is a franchise we will rest regardless of what you want to work on?"

No, we don't operate that way around here. First of all, no one comes to me because we're at a constant dialogue. Secondly -- we as a company. And secondly, smart people who have the same goal generally arrive at the same conclusion. You can disagree about the tactics, but you generally don't disagree about the strategy. And we're aligned around here, aligned culturally and are aligned economically. As everyone knows, we have economic alignment with everyone, who can move the dial by rewarding people based on our actual success on an annual basis and the success, including the cost profile. And therefore, we're all aligned economically. That pulls people very, very magnetically in a particular direction. And then the culture is consistent with that magnetic pull. And now we're just saying to each other on the table like how do we achieve this? And undoubtedly, we could have disagreements or debates about what the best way to achieve that is. But I think why would you do? Isn't that complicated. Like the notion of creating consumer anticipation, to me, that's sort of a no brainer.

And then kind of just switching gears back to the investor list questions. We have a couple more minutes. What do you think about user-generated content? I know there's -- I know you do have some of that, right, with the modding community. Is there ambition to really try to implement that in some of your titles? Or like what you -- or maybe what's your high-level thoughts on user-generated content?

I would love to be in a position where for the right title, modding is a natural part of what we do. It won't be for all titles, in the same way that like I have -- I'm really interested when I consume entertainment and seeing what the creators make. I don't have an interest in being a creator personal. But there are others to do, and there are vehicles out there for that kind of expression. We need to make sure that those vehicles are safe and that they don't violate people's copyrights, ours or anyone else's. And that's a bit of a challenge technically. So we need to address that technical challenge, then that may take us a bit of time. But will there be user-generated content in the interactive entertainment business front and center going forward? Absolutely. And will that be a good thing? Certainly, it's been a good thing for Roblox. Can it be a good thing for us? Yes, it can. Will it be the core of our business? Absolutely [ not ].

And then it's probably -- I'm laughing because you're like you personally don't want to be a creator and yet, here, you've led some of the biggest media franchises in the world. But I guess my last question, and we'll wrap up here, is we're seeing some -- finally, some success in other media leveraging video game properties. I think Borderlands is being made into a movie. What's the benefit for the video game property if you or your competitors start to really go down this path of really trying to combine different media verticals around singular IPs?

Well, we're not going to go headlong in that direction because there is no particular economic benefit. There's a limited creative benefit, and there's limited marketing benefit. We'll do it when our creators are excited about it. We'll do it if we think there can be a benefit for the intellectual property. And we'll do it if we're compelled by the idea and the partners, who are pursuing it. But unless we're going to actually use our own capital and build a division that actually makes film and television properties, which, to be clear, we're not going to do. We're not really going to have exposure to the outside in a way that makes a lot of economic sense. And it's very time-consuming. So we'll continue to be exceedingly selective.

Strauss, I want to wrap up there. I know you have more meetings today. Thank you for your time. It's always a real pleasure to have you, and look forward to talking to you next quarter.

Thanks. Thanks for having me.

Yes, absolutely. Thank you.