Take-Two Interactive CEO Strauss Zelnick has expressed his stance on how entertainment, specifically video games, should be priced, a contentious topic at the best of times. According to the executive’s philosophy, this can be calculated by a seemingly simple algorithm, though its nebulous nature makes its efficacy unclear.
During the company’s Q2 2024 earnings call, Zelnick was asked about increasing subscription service prices across the larger media landscape. The executive responded to the question but noted that it has “nothing to do with our business”, then outlined his position on how much value consumers get for the price they pay for games.
“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,” Zelnick explained.
In essence, Zelnick seems to be getting at the perceived value of owning a title, like the next Grand Theft Auto, being greater proportionally to a customer based on how eagerly they anticipate it and how deeply they engage with it after release.
“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,” Zelnick added.
What’s your interpretation of Zelnick’s philosophy on entertainment pricing? Based on the perceived entertainment value of Grand Theft Auto V, how would you feel about paying more for the next GTA? Let us know in the comments section below.