What just happened? In what has become a depressingly familiar sight in the video game and tech industries recently, Grand Theft Auto publisher and Rockstar parent Take-Two Interactive has announced it is cutting 5% of its workforce, or around 600 employees. The company said it would also be shuttering several projects, though it never revealed what these would be. The news comes soon after CEO Strauss Zelnick said there were no plans to lay off workers as part of a cost reduction program.
An SEC filing made by Take-Two reveals that it expects the cost-cutting efforts, which it calls "rationalizing its pipeline" and "streamlining its organizational structure," to incur costs of up to $200 million, including $35 million from employee-related costs and $140 million from canceled projects. There are also $15 million to $25 million in charges related to office space reductions.
Take-Two added that the move is expected to result in more than $165 million in annual savings. The changes are set to be completed by the end of 2024.
What makes the layoffs even more jarring is Zelnick assuring employees earlier this year that while the company was working on a significant cost reduction program, there were "no current plans" to let people go.
In November, the CEO told IGN that the publisher was in "growth mode" following the GTA VI announcement, and that it was done "right-sizing" the business. GTA V is the second-best-selling video game of all time behind Minecraft, moving 195 million units since its release in 2013 and earning Take-Two a small fortune. It's expected that GTA VI will be just as successful.
Take-Two agreed to acquire Gearbox Entertainment from Embracer Group in March for $460 million, confirming in the process that a new Borderlands game is being developed. It bought mobile game giant Zynga for $12 billion in 2022, a massively expensive and delayed acquisition that arrived just as the market started shrinking.
There have been around 9,000 layoffs in the video game industry this year so far. Most companies say the cuts are necessary to survive in a competitive market, something Larian director of publishing Michael Douse believes isn't true at all. He pointed out that "none of these companies are at risk of going bankrupt." Take-Two, for example, made $1.3 billion in net bookings during the last quarter, with net bookings of $5.25 to $5.3 billion expected for its 2024 fiscal year.