Next-gen console transition will see publisher casualties, says Take-Two chairman

Strauss Zelnick of Take-Two Interactive, publisher of BioShock, Borderlands, NBA 2K and Grand Theft Auto, foresees casualties for video game publishers with the coming console generation transition. While the arrival of the Wii U and the next Xbox and PlayStation may be cause for excitement, they're also cause for concern for video game publishers, Zelnick says.

On Tuesday, the Take-Two chairman touted his company's focus on quality and the need for financial stability during a console transition, warning of dangers for game publishers who divert their efforts elsewhere.

"Toward the end of the [console life] cycle, it's bad for everyone," Zelnick said at this week's Credit Suisse Technology Conference. "Third parties particularly limit their release schedules and begin to think about launching for the next generation ... and third parties typically will not launch at the very launch of the next generation because there's no install base and they don't have a hardware business to support [them]."

"Historically, in every transition that's occurred in this business, one or two third parties have gone out of business."

Zelnick says that generational development gap for third parties can be "quite meaningful."

"If you're not capitalized for the transition, you can find out that you're not there for the transition," he said. "Historically, in every transition that's occurred in this business, one or two third parties have gone out of business. Last time around it was Midway and a couple of others. Midway was the highest profile. Reasonable people can argue about which one it'll be this time. I have my own point of view, which I haven't exactly been quiet about."

Zelnick has been outspoken about the viability of rival publisher THQ and the quality of its titles. In April of this year, Zelnick said, "THQ won't be around in six months."

At the Credit Suisse conference, Zelnick said Take-Two asks itself, "How do we make sure we're not on the list of casualties? And that, to the contrary, we're on the list of winners?"

"You have to have four key elements," Zelnick said, listing owned intellectual property, talent, technology and "a very strong financial footing" to succeed. Take-Two Interactive recently announced it has $330 million in cash.