Looking ahead: As the RAM crisis makes high-end hardware increasingly unaffordable, it's unsurprising to hear companies float streaming as a possible alternative for gaming. Despite the technology's past failures, the head of Grand Theft Auto publisher Take-Two is bullish on its future.
During Take-Two's first-quarter fiscal 2027 earnings call, CEO Strauss Zelnick put a number on it: he expects cloud gaming to reach commercial, low-latency viability within three years, potentially multiplying the effective installed base tenfold. He made the comments while addressing the rising cost of gaming hardware.
Due to tariffs, rising costs of TSMC's semiconductors, and memory shortages stemming from AI data center construction, game consoles and PC components have gotten more expensive rather than cheaper over the past several years. The Xbox Series consoles and the PlayStation 5 launched at $500, but their successors might double that price.
Zelnick believes the popularity of Take-Two's major franchises, likely referring to Grand Theft Auto and NBA 2K, will cushion the impact of hardware price hikes, though he acknowledged the price hikes could still limit the company's addressable market.
Cloud gaming, meanwhile, has long been floated as a route for bringing high-end games to low-cost devices, and Zelnick believes its moment is finally near.
The CEO argued that advances in networking technology and infrastructure will make cloud gaming more viable than ever for a wider swath of users, potentially growing the installed base by an order of magnitude. While he doesn't expect revenue to climb by a similar amount, he sees it as a way to reach players beyond Take-Two's traditional core market.
According to Zelnick, those advances are what will separate this next wave from the technology's most spectacular recent failure, Google Stadia. The major cloud gaming players today are Amazon's Luna, Nvidia's GeForce Now, Microsoft's cloud functionality for Xbox Game Pass, and Sony's PS5 cloud streaming through PlayStation Plus Premium.
The latter two have proven that streaming can succeed as a complementary feature for games users already own, but success via other business models remains elusive.
Strauss Zelnick noted that 90% of Take-Two's business is already digital, though he left the door open for occasional physical releases going forward, comparing the practice to the enduring demand for vinyl records.
Zelnick also weighed in on Grand Theft Auto VI's upcoming digital-only launch and the broader industry shift away from physical disc games on PlayStation. He noted that 90% of Take-Two's business is already digital, though he left the door open for occasional physical releases going forward, comparing the practice to the enduring demand for vinyl records.
Unlike vinyl (and music CDs), though, no single company controls the pressing of physical games; console manufacturers alone manufacture their platforms' discs, which makes a comparable resurgence less likely.
Grand Theft Auto VI is set to launch on November 19 for PlayStation 5 and Xbox Series consoles, with a PC version expected sometime later. An extended early look at the game will premiere exclusively on Netflix on August 27.