The publisher will spend up to $200 million on a cost reduction program that will also include project cancellations.
Grand Theft Auto maker Take-Two Interactive is reducing its headcount by 5 percent as part of a cost reduction program that was announced earlier this year.
The U.S. publisher, which just spent $460 million to acquire Gearbox Entertainment from Embracer, said it wants to "identify efficiencies across its business and enhance the company’s margin profile, while still investing for growth."
"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," added Take-Two in an SEC filing.
"The company estimates that it will incur approximately $160 million to $200 million in total charges in connection with the Plan. The company expects $40 million to $60 million of the total charges to result in future cash expenditures."
Breaking down those figures, Take-Two said it will spend between $120 million to $140 million on project cancellations, an additional $25 million to $35 million on employee severance and employee-related costs, and between $15 million to $25 million on office space reductions.
Take-Two expects its cost reduction plan to be "largely complete" by December 31, 2024.
When announcing its cost restructuring program earlier this year, Take-Two indicated it would largely focus on shrinking marketing expenditures. Speaking to IGN back in February, Take-Two CEO Strauss Zelnick said the company was still finessing the program but emphasized that it wasn't currently planning on making layoffs.
"We haven't put any meat on the bones of that yet," he said at the time. "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, supply services. And we always find opportunity there. The hardest thing to do is to lay off colleagues, and we have no current plans."
Despite indicating layoffs were off the table at that point, there had already been reports of job cuts at Visual Concepts Austin–which is owned by Take-Two through its 2K Games subsidiary.
In its latest fiscal report, Take-Two revealed it currently employs 8,894 people across its various internal studios and subsidiaries. Assuming that figure is still largely accurate, a 5 percent workforce reduction would result in over 400 layoffs across the company.
Take-Two recently updated its guidance for fiscal 2024 and currently expects to deliver annual net bookings of between $5.25 billion to $5.3 billion. It's also preparing for the long-awaited launch Grand Theft Auto VI in 2025 and continues to tout the success of Grand Theft Auto V, which recently topped 195 million lifetime sales.
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