Earlier this month, Take-Two announced a cost-cutting plan that included canceling projects, cutting 5% of its workforce and other cost cuts. Amidst this announcement, reports based on internal documentation have surfaced that appear to confirm that Take-Two is shutting down OlliOlli World developer Roll7 and Kerbal Space Program 2 developer Intercept Games.
But when I asked Take-Two CEO Strauss-Zelnick on a call today why these closures happened, he told me, “We didn’t close these studios”:
We did not close these studios, to be clear. And we’re always looking at our release schedule across all of our studios to make sure it makes sense. So we’re acting very judiciously because we’re in the middle of a cost-cutting program that we’ve already finished and we’re now fully implementing it. We announced that we are saving $165 million in existing and future costs, but we haven’t closed anything.
The reports, which come from both a WARN Act notice cited by the game developer and internal documentation seen by Bloomberg, seemed pretty conclusive, so this was a surprising response. [Update: Bloomberg reporter Jason Schreier has since shared a snippet of the document on Twitter/X as well.] I followed up by asking Zelnick if he was denying the reports, at which point a PR representative for the company chimed in with the following:
What we said is that in the 8-K filing that we put out, we talked about the cost reduction plan being roughly a 5% reduction in global headcount, but we didn’t give a label-by-label breakdown of what that looks like.
I tried again, asking if the studios existed or not. PR reiterated that “We have not provided any additional color beyond what I just said.”
If you’re wondering what to do with all of this, you’re in good company. The WARN Act notice for Intercept Games in Seattle cited “closure” as the reason for the layoffs of 70 people, roughly the total number of employees there. It seems possible that Take-Two has somehow folded both of these studios into Private Division, given that the label will take over support for Kerbal Space Program 2 in the future. I asked Zelnick if we should take these reports as a sign that the private sector itself is in some sort of trouble:
I do not think so. I think like I said, we’re looking at all the projects across the company and sometimes we really have to make tough choices. We just tend to leave those messages to the label, we don’t tend to talk about them, so we’re not trying to be cute or difficult today. We just don’t tend to bring these discussions into these meetings.
In a follow-up email, Take-Two PR clarified that “the entire organization” contributed to the cost-saving effort and that Private Division still plans to support games like Moon Studio’s No Rest for the Wicked and the upcoming Tales of Shire games and an undisclosed project Gamefreak, which the publisher announced last year.
In our last few calls, Zelnick told me the company was in “growth mode” and as recently as February that there were “no current plans” for layoffs. He has spoken before about the state of the industry post-pandemic, noting that other companies undergoing layoffs got “a little fat and happy during the pandemic” and overspended as a result. But now he admits that Take-Two is, at least to some extent, in that sort of boat:
We’ve been very lucky during the pandemic, we’ve done really well and so have many of our competitors. But I said when I was asked during the pandemic that we expected post-pandemic demand to be below pandemic demand but above pre-pandemic demand, and that’s exactly what happened. With that said, I think we overstepped our skis a little bit and I think we were overly ambitious in terms of building fixed overhead. We have this three-part strategy to be the most creative, the most innovative, the most efficient company in the business, and I’m not sure we’ve fully delivered on the promise of efficiency.
The hardest thing I do as a CEO is parting ways with friends and colleagues, and it’s always the last choice we make. We’re always trying to find efficiencies elsewhere, through suppliers, the way we structure, through operations. Sometimes, though, it’s unavoidable, and this is one of those times. So we are reducing our headcount by about 5%. We don’t feel good about doing it, but it’s our duty to be a really efficient business, and the good news is we feel like we’re structured really well going forward and have the right amount of operating leverage, so as we implement this new pipeline, we’re going to generate the results , which reflect this.
As for Intercept Games and Roll7, the prognosis still doesn’t look good. Even stranger, this isn’t the first time Take-Two has done something like this specifically to a Kerbal Space Program developer. In 2020, a studio called Star Theory was making Kerbal Space Program 2 before Private Division took the game away from them. While some employees were moved to Intercept Games, others were left scrambling to pitch desperate new projects to save the studio…only to have the COVID-19 pandemic interrupt their pitching opportunities and lead to a shutdown of the studio. 2K Marin was similarly shut down quietly, without Take-Two officially acknowledging the change.
Today, Take-Two Interactive reported full-year net revenue of $5.35 billion and a net loss of $3.7 billion. A significant portion of the reported loss was related to impairment charges and business reorganization charges related to the company’s cost reduction programs, resulting in operating expenses that increased 69% year-over-year. Take-Two also announced that it expects to release Grand Theft Auto 6 in the fall of 2025, while Grand Theft Auto 5 has surpassed 200 million units sold to date.
Rebecca Valentine is a senior reporter for IGN. Got a story tip? Send it to rvalentine@ign.com.
