Take-Two Interactive Software announced on Tuesday that it will eliminate approximately 5% of its workforce, translating to around 600 jobs, amidst ongoing job reductions within the video gaming sector, which have persisted for over two years.
The company plans to cancel several projects currently in development as part of its strategy to cut costs. These decisions are projected to lead to total charges reaching up to $200 million, though Take-Two has not disclosed the names of the projects being terminated.
According to the company, this initiative is anticipated to yield more than $165 million in annual savings.
Following the announcement, shares of Take-Two rose by 1% in after-hours trading. However, the stock has experienced a nearly 10% decline so far this year.
This action is in line with other major companies in the industry, including Riot Games, Electronic Arts, and Sony Corp, which have also reduced their workforces in 2023 due to fluctuating consumer spending patterns following the spike in demand during the pandemic.
Research firm Newzoo predicts that revenue growth from PC and console gaming will remain below pre-pandemic levels until at least 2026, as gamers show a decrease in the overall hours spent playing.
Project cancellations are predicted to represent as much as $140 million of the total estimated charges, with severance and other employee-related expenses contributing up to $35 million. Additionally, Take-Two plans to downsize some of its office spaces.
As of March 2023, Take-Two employed 11,580 full-time staff members. Last month, the company announced its acquisition of Gearbox, known for the “Borderlands” franchise, for $460 million, a deal of notable value considering the current trend of consolidation in the gaming industry.
While there are significant efforts underway to develop the next installment of the highly successful “Grand Theft Auto” series, there are reports suggesting that the release may be postponed until 2026, rather than the previously anticipated 2025 date.
© Thomson Reuters 2024
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