Marianne Marchant Take-Two Interactive Software, Inc. Case Study May 29, 2012 Take-Two Interactive Software, Inc.

T2 is a third-party software developer in the video game industry. This means th ey create games to be played on multiple consoles. They are most known for Grand Theft Auto, Red Dead Redemption and Mafia II. There are many competitors in the video game industry. Sony, Nintendo and Microsoft are the three biggest first-p arty creators, since they make games specific for their consoles only. Activisio n was the largest third-party developer in direct competition with T2 holding on to about 17% of market share. Other than Activision, T2 also has to compete with EA, Ubisoft and THQ, all of whom develop many games. T2 managed to break a cycle of losses in 2010 with a large growth margin. In 200 9 T2 reported a loss of $56.5 million, and in 2010 a growth of $5.92 million. A large advantage T2 had was its release of Red Dead Redemption. This game brought in added revenue, and also put their name back on the map for producing tripleA games. With the growth of social games, like those on facebook, T2 needs to decide wher e to lead the company in the future. T2 s main competitors took two different tracks ; EA embraced social games by purchasing Playfish, an already established compan y in the social game industry. On the other hand, Activision Blizzard did not fo llow the social game trend, and decided to stick to developing traditional forms of video games. In order for T2 to continue to grow they need to decide what th eir plan of action will be in regards to social games. The three most practical decisions would be to either buy an existing social game company, built a branch for social games, or do nothing and remain committed to traditional gaming. Firstly, social gaming is a new market, and T2 is not necessarily equipped to ju mp into the field. A company with pre-existing experience in regards to social g ames would already be established, and ready to launch new games once acquired. T2 s games tend to be complex and hard to convert to the simplicity of social games such as facebook. Another option would be to, instead of spending millions of dollars buying a new company however, T2 could also opt to create a division within T2 and start dev eloping their own games. This would allow T2 to specifically pick exactly what t hey want out of a development team. Thirdly, T2 could do nothing in relation to the social gaming industry. This way they could focus on what they do best, produce traditional styled games. This i s the best option, because it keeps their product line focused on what they know . Guy Kawasaki explains in his book, The Art of the Start that although the lack of growth is detrimental to a company, dipping into too many sectors could spre ad a company thin and provide more harm. Especially in T2 s case, they need to worry about the longevity of their company. Fo r many years they have been reporting losses, and only recently with the sales o f Red Dead Redemption did they make a profit. T2 has already tested a small grou p in the social gaming industry by trying to convert their game Civilization to a facebook platform. However, T2 is a traditional gaming company, and their game s are too complex to convert to a facebook platform easily. There has been little evidence to support that social games take away from the p rofits of traditional console games. Therefore, T2 should not risk spreading the mselves too thin by entering a market they are not properly equipped to handle. Instead, T2 should focus on developing more triple-A games and increasing their brand worth and popularity in a field they already know. This could give them an edge over EA given that they have spread out to social gaming they would not ha ve the same resources available to put into their games as they did before.