GTA VI is coming, how big could it be for TTWO?

Take Two Interactive is a video game company with several recognizable brands.

From their annual report, they tell us how they make money. They say they "derive substantially of our revenue from the sale of our interactive entertainment content, which includes the sale of internally develop software titles and software titles developed by third parties, the sale of in-game virtual items and advertising, and live services on console, PC, and mobile." Pretty straight forward.

Their Businesses

Here are their various businesses:

Rockstar Games:

Some of these will look familiar: GTA, LA Noire, Max Payne, Red Dead Redemption

For context, GTA V (released in 2013) sold 225 million units, and the entire series has sold 445 million units worldwide.

Red Dead Redemption has sold more than 80 million units worldwide (another huge franchise beloved by gamers)

2K Games

2K Games also knows how to release a banger. Their franchises include: Sid Meier's Civilization, Mafia, XCOM, Borderlands, NBA 2K, WWE 2K, PGA Tour 2K, and Topspin 2K

Zynga

Gamers like to sh*t on mobile games, but they do make money.

Take Two Interactive also owns Zynga, which includes CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Game of Thrones: Legends, Golf Rival, Harry Potter: Puzzles & Spells, Match Factory!, Merge Dragons!, Merge Magic!, Monster Legends, Toon Blast, Top Eleven, Toy Blast, Two Dots, Words With Friends, and Zynga Poker

Take-Two acquired Zynga in May 2022 for roughly $12.7 billion. That's the moment mobile became the biggest slice of the company.

An important distinction on how game publishes work

As I scanned their risk statements, I noticed this risk:

It says, "Sales to our five largest customers during the fiscal year ended March 31, 2026 accounted for 80.6% of our net revenue, with Apple, Sony, Google, and Microsoft each accounting for more than 10.0%."

Wait, what? Aren't they a B2C company?

Here's the chain. When someone buys GTA V on a PlayStation, or spends $20 on virtual currency in NBA 2K on their iPhone, the money doesn't go from the player's wallet into Take-Two's bank account. It goes to Sony, or to Apple. Those platforms collect the cash from the end user, take their cut (the platform fee, historically around 30%), and then remit the rest to Take-Two. So from an accounting standpoint, Take-Two's "customer" is Sony, Apple, Google, Microsoft, not the gamer. The gamer is the end consumer, but the platform is the customer of record.

So yes, it's a B2C company in the sense that real human consumers are the demand. But it's structurally a B2B2C distribution model: Take-Two sells through a tiny handful of gatekeeper platforms to reach a massive, fragmented base of players. The customer concentration is a distribution-channel fact, not a demand-concentration fact.

Revenue by content

Recurrent consumer spending ("RCS") is generated from ongoing consumer engagement and includes revenue from virtual currency, add-on content, in-game purchases, and in-game advertising.

Wild that it represents almost 80% of revenue.

Conclusion

I know that this investment thesis is going to hinge on how well I think GTA VI will sell. So it's important to note, Console is only 37% of revenue, and PC is 10%.

GTA is currently an eighth of revenue as 12-year old game. The next installment lands entirely in fiscal 2027.

So the big question is: how big will GTA VI be?

Sentiment: Neutral