How can TakeTwo justify layoffs with this revenue ?

[herbal space program]

8 minutes ago, Lisias said:

Operations don't run on loss. They run on expectations of profit, so it's an investment.

They are allowed to run an operating loss in the timeframe of development based on the expectation of future profits when the product is complete. That is what I said. I'm not sure where your semantic hang-up is.

Edited May 3 by herbal space program

[Lisias]

Just now, herbal space program said:

They are allowed to run an operating loss in the timeframe of development based on the expectation of future profits when the product is complete. That is what I said.

Yes. But I rewrote it in terms the accountants use in order to explain how they take decisions.

If you want to understand why some people take some decisions, you need to understand how they think and, so their language.

[herbal space program]

1 minute ago, Lisias said:

Yes. But I rewrote it in terms the accountants use in order to explain how they take decisions.

If you want to understand why some people take some decisions, you need to understand how they think and, so their language.

The truth however is they can't just think in such mechanical terms, because  they can't magically predict the future with 100% accuracy. They have to make a guess like anybody else. And more importantly perhaps, future revenues for an entertainment company don't depend  entirely on such hard-nosed decisions to kill your babies the second they underperform. That approach may work for stockbrokers, but companies like Take Two have to take less tangible things into account like brand integrity and the customer loyalty that comes along with it. Those are not things you can calculate on a spreadsheet.

[Fizzlebop Smith]

I think it was greed to a degree...

Just my thoughts. But it felt (again to me) that the scope of the game changed at some point. It became shallow shell of the former spirit of the game.

Various elements were simplified & and extreme focus on visuals were both designed to increase market share.

The scope was a bit grand & I felt they shifted focus somewhere along the way. The narrow focus on visuals / multi-player promises over more technical aspects ensured a poor reception.

I don't know all the details behind the scenes that contributed to multiple delays, but I still think certain road map items should have been reserved for future DLC (Subsequent Systems) & Multiplayer considered more of a stretch goal.

Start Small, Refine and start a realistic cadence of feature / patch content.

Edited May 3 by Fizzlebop Smith

[Lisias]

56 minutes ago, herbal space program said:

The truth however is they can't just think in such mechanical terms, because  they can't magically predict the future with 100% accuracy. [...]Those are not things you can calculate on a spreadsheet.

Yes they can, and yes they do.

They don't even try to predict the future with 100%. It's Enough And Sufficient(R) to be right enough to garantee the profits.

There's a Discipline on Management called Risk Management.

This means that sometimes they will kill a small golden egg chicken now and then, but as long they manage to keep the golden egg goose alive and healthy, they call it an "acceptable outcome" and call it a day.

I'm not asking you to like this. I surely don't.

But yet, this is exacly how business are conducted.

Edited May 3 by Lisias
Entertaining grammars made slightly less entertaining.

[herbal space program]

9 minutes ago, Lisias said:

But yet, this is exacly how business are conducted.

Go look up the term "brand stewardship" and get back to me. I didn't just fall off a turnip truck you know!

[Lisias]

1 hour ago, herbal space program said:

Go look up the term "brand stewardship" and get back to me. I didn't just fall off a turnip truck you know!

So please don't assume I did.

I have a pretty decent resume on the subject.

And since we are here, check how Stephen Elop stewarded the Nokia brand before Microsoft acquired it.

Things are WAY more complicated than you appear to think.

=== == = POST EDIT = == ===

Additionally, check this absolutely marvelous video:

Using the Game Theory lingo, KSP is in the final rounds of the game - where the most rational decision is to defect until the end.

Edited May 3 by Lisias
Post Edit

[Uuky]

26 minutes ago, Lisias said:

The myth of the infinite demand.

With ZIRP (the pandemic relief program), suddenly borrowing money became cheaper as hell, so you could literally burn money with impunity if you wanted.

So they used the cheap money to hire people from left to right as a strategic move - if I hire this guy, he will not work on my competitor against me - it's someone else paying his salary (the Government), not me!. As well to buy anything that they laid their eyes on.

But then the ZIRP is over, and all that buyouts increased the fixed costs of the company.

It's interesting, but the budget to buy things is different from the budget from paying salaries. Not only they go on different Cost Centers, but they are classified differently too - buyouts go to the variable Cost Centers, and salaries (and maintenance, and taxes, etc) go to the fixed (recurrent?) Center Costs.

Now, fixed Cost Centers are the problem for the Accountants. Profits are calculated prioritizing fixed Costs (as variable costs are easily amortizable over long periods of time, sometimes even as loss on the taxes, while fixed costs need to amortized constantly).

Now we have a situation where the earnings are going to shrink and the taxes are going to get higher (see changes on the Section 174 of the corporate tax), so now they have a expenditure that is going to be harder to amortize.

So they get rid of the expenditure. Simple like that.

Oh, people are going to lose the jobs due this? Too bad, Corporations are not Charity Entities - you need to pull your weight now to so the money they spent on you this month is amortizable on the next. Otherwise, they will get rid of the costs of paying you.

The system does not promotes maximizing fair deals with the employees. The system is trimmed to maximize profits.

Yes on the short term but it is not the main driving factor.

It is all about the share price, its volatility and the dividends. And some mythology. 

 

[calabus2]

5 minutes ago, Uuky said:

Yes on the short term but it is not the main driving factor.

It is all about the share price, its volatility and the dividends. And some mythology. 

 

Well if you know the answer then why ask the question? Garbage EA release, complete lack of communication,  beyond slow development..... should I continue? It isn't exactly a secret why it failed. The community has been telling them for over a year to get their head out of their collective asses.

Edited May 3 by calabus2

[Lisias]

54 minutes ago, Uuky said:

Yes on the short term but it is not the main driving factor.

It is all about the share price, its volatility and the dividends. And some mythology.

If you see a CEO taking decisions that don't make sense on the long run, it's because they are probably working on the hypothesis of not existing a long run to worry about. These guys are not stupid, they didn't reached that position just because.

(there's always a chance you are missing some detail, but then I call "Risk Management" and see what are the chances of it - recent happenings, dating almost a year already, suggests otherwise however)

 

49 minutes ago, calabus2 said:

Well if you know the answer then why ask the question? Garbage EA release, complete lack of communication,  beyond slow development..... should I continue? It isn't exactly a secret why it failed. The community has been telling them for over a year to get their head out of their collective asses.

Perhaps because they is open to new ideas that, perhaps, may change their mind?

Other that this detail, I agree with you.

Cheers!

Edited May 4 by Lisias
Entertaining grammars made slightely less entertaining...

[K33N]

9 hours ago, DanW said:

https://companiesmarketcap.com/take-2-interactive/revenue

 

Seems wrong.  

Because KSP2 was likely costing them millions of dollars.

Add on to the product actively damaging the brand they still own ( collapsed player count, collapse of content creators, collapse of social media views, loss of goodwill,) and their choice was all but made for them.

[Scarecrow71]

11 hours ago, DanW said:

Seems wrong.  

No more wrong than companies reporting record profits and then telling their workers they can't afford to give them raises.  Happens in the company I work for every 3 years.

[Uuky]

10 hours ago, Lisias said:

If you see a CEO taking decisions that don't make sense on the long run, it's because they are probably working on the hypothesis of not existing a long run to worry about. These guys are not stupid, they didn't reached that position just because.

(there's always a chance you are missing some detail, but then I call "Risk Management" and see what are the chances of it - recent happenings, dating almost a year already, suggests otherwise however)

The prime duty is to the RoA of the big shareholders. They are the owners.

It is more about culling marginal costs (and profits) than sanitizing the company. The aim is to generate an artificial profit growth in order to give more dividends and push the share price up. Shareholders needs their money back as quickly as possible. They invested for this. They don't want to see their stock going down, that a loss in capital value unless they want to achieve a specific move on the stock.

It has little to do with the profitabilty of the company, even on the short term(because it is rarely profitable). It has all to do with the profitabilty of the shareholders.

 

 

Edited May 4 by Uuky
dyslexia. btu tahts' bteter nwo.

[magnemoe]

On 5/3/2024 at 4:38 PM, DanW said:

earnings also includes deductions for things like buying other companies.
so, its possible that these purchases didnt help their earnings:
https://en.wikipedia.org/wiki/List_of_acquisitions_by_Take-Two_Interactive

September 2022	Storemaven	Zynga	Israel		Storemaven	[42]
March 2023	GameClub	Take-Two Interactive	USA			[43]
March 2024	Gearbox Entertainment	2K Games	USA	460,000,000	Gearbox Software	[44]

Note that expanding or buying up other companies will cut into your revenue, this is not an problem if you assume they will make profit or you can eat the loss because stuff like WW 2, internet or Covid. 
And you can write of these losses. But the gaming companies has been folded into stuff who created the anti trust laws and are very cooperate. 
But its just entertainment so ignore it. 
 Embracer Group or the facehuggers kind of enpowred this, it did not have an long term plan except buy up everything, do something like wearing underwear on top of spandex as it tend to work and profit. 
And games costing +300M$ who is idiotic unless you launch an new franchise and use years fixing it. 
But it was bunch of low effort always online games focusing on macro transactions. 

In 2040 this will be as obvious as why Germany lost WW 2. Now they had much better tools now but they disagree with that you want so you ignore them. As history repeat itself again, the 2001 IT bubble was fun util it burst. 
But all the large cigars might be worth it.