Take2 Interactive has announced that it plans to cut around 5% of its workforce or around 600 roles. The information was disclosed through a Securities and Exchange Commission filing by the company on Tuesday, April 16, 2024.
It was revealed that the Board of Directors of Take2 Interactive Software, Inc. has “approved a cost reduction program” that will help the company “identify efficiencies across its business and enhance the Company’s margin profit, while still investing for growth”.
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“As part of these efforts, the Company is rationalizing its pipeline and eliminating several projects in development and streamlining its organizational structure, which will eliminate headcount and reduce future hiring needs.”
The cost reduction plan is expected to be completed by December 31, 2024. Also, Take2 Interactive noted that the plan will cost the company between $160 million and $200 million in total charges. The company further hinted at the source of the cost it will likely incur as it implements its cost reduction plan.
“The total charge consists of approximately $120 million to $140 million related to title cancellations, approximately $25 million to $35 million associated with employee severance and employee-related costs, and approximately $15 million to $25 million related to office space reductions.”
At the end of the cost reduction plan, Take2 Interactive plans to achieve more than $165 million of annual cost savings. In addition to reducing the existing expense base, Take2 Interactive has also “lowered projected expense growth for the coming years”.
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The announcement is coming weeks after Take2 Interactive acquired Gearbox Entertainment from Embracer in a deal worth $460 million. The last time that the GTA maker parent company implemented a cost reduction plan, layoffs were announced in its indie publishing label Private Division.
Take2 Interactive’s layoff announcement is a blow to its management’s image
While several companies have announced mass layoffs this year, including Electronic Arts, Sony, and Microsoft, Take2 Interactive’s layoff is coming just over two months after the company’s CEO Strauss Zelnick said the company has “no current plan” to layoff staff as it pursues cost reduction program.
Zelnick made the statement during Take2 Interactive’s Q3 2024 financial report. It was during that time that the company also revealed it was “currently working on a significant cost reduction program”, although the details of the program were not made public at that time. Zelnick later sent a message to IGN where he expanded on the nature of the cost reduction program.
“We haven’t put any meat on the bones of that yet,” Zelnick said in reference to the cost reduction plan. “I would just note that our biggest line item of expense is actually marketing. We do think we can optimize that. We also have third-party expenses, software, other vendors, and supply services. And we always find opportunity there.”
“The hardest thing to do is to lay off colleagues, and we have no current plans.”
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However, during the earnings call, Zelnick said the proposed cost reduction plan will be “incremental to, and even more robust than, our prior cost reduction program,” which interestingly was also announced during the earnings call of Q3 2023.
In other words, this is the second straight year that Take2 Interactive has announced a cost reduction plan and laid off employees. Zelnick’s February statement will definitely come back to haunt him and it would be hard for employees to take his words seriously going forward. In fact, the next time he says the company is not planning to lay off employees, the staff will expect the opposite.
The last 12 months have been rough for video game workers. Over 10,000 jobs were lost last year and more than 8,000 have already been lost in the first three months of this year.
