Grand Theft Auto VI publisher Take-Two Interactive announced massive cuts in an SEC filing at the end of business today. The company revealed it will lay off 5 per cent of its roughly 11,000-strong workforce and has cancelled several in-development projects valued at $US140 million in an effort at “rationalizing its pipeline.”
“The Company estimates that it will incur approximately $US160 million to $US200 million in total charges in connection with the Plan,” Take-Two wrote in its filing. “The Company expects $US40 million to $US60 million of the total charges to result in future cash expenditures. The total charge consists of approximately $US120 million to $US140 million related to title cancellations, approximately $US25 million to $US35 million associated with employee severance and employee-related costs, and approximately $US15 million to $US25 million related to office space reductions.”
These surprise cuts come less than a month after Take-Two CEO Strauss Zelnick told IGN the company had “no current plans” to lay off any more employees following a “cost-reduction” program teased in a March investor call. The company is expecting a massive boost to sales when GTA VI launches. It’s currently slated to arrive in 2025.
Take-Two recently announced a plan to acquire Gearbox Entertainment, maker of the loot shooter series Borderlands which is published by its 2K label, for $US460 million by the end of June. The deal would be financed by a sale of new Take-Two stock. In addition to GTA VI, Take-Two and its subsidiaries also have new BioShock and Mafia games in development, while Ken Levine’s Ghost Story Games works on Judas, which looks like BioShock in space.
Take-Two reported net bookings of $US1.2 billion last quarter, up 20 per cent from a year ago. Zelnick raked in over $US40 million in total compensation as head of the company last year, thanks in part to bonuses pegged to getting players to spend more money on microtransactions.
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