Take-Two Interactive Software Inc. (NASDAQ:TTWO) Q2 2020 Earnings Conference Call November 5, 2020 4:30 PM ET
Company Participants
Henry Diamond - SVP, IR and Corporate Communications
Strauss Zelnick - Chairman and CEO
Karl Slatoff - President
Lainie Goldstein - CFO
Conference Call Participants
Mario Lu - Barclays
Eric Handler - MKM Partners
Drew Crum - Stifel
Mike Ng - Goldman Sachs
Garrett Johnson - BMO Capital Markets
Todd Juenger - Sanford Bernstein
Alex Giaimo - Jefferies
Operator
Greetings and welcome to Take-Two Interactive Software Second Quarter Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Mr. Hank Diamond, Senior Vice President of Investor Relations and Corporate Communications.
Henry Diamond
Good afternoon. Welcome and thank you for joining Take-Two's conference call to discuss its results for the second quarter of fiscal year 2021 ended September 30th, 2020. Today's call will be led by Strauss Zelnick, Take Two's Chairman and Chief Executive Officer; Karl Slatoff, our President; and Lainie Goldstein, our Chief Financial Officer. We will be available to answer your questions during the Q&A session following our prepared remarks.
Before we begin, I'd like to remind everyone that statements made during this call that are not historical facts are considered forward-looking statements under federal securities laws. These forward-looking statements are based on the beliefs of our management as well as assumptions made by and information currently available to us.
We have no obligation to update these forward-looking statements. Actual operating results may vary significantly from these forward-looking statements based on a variety of factors. These important factors are described in our filings with the SEC, including the company's most recent Annual Report on Form 10-K and quarterly report on Form 10-Q, including the risks summarized in the section entitled Risk Factors.
I'd also like to note that unless otherwise stated all numbers we will be discussing today are GAAP and all comparisons are year-over-year. Additional details regarding our actual results and outlook are contained in our press release, including the items that our management uses internally to adjust our GAAP financial results in order to evaluate our operating performance.
Our press release also contains a reconciliation of any non-GAAP financial measure to the most comparable GAAP measure. In addition, we have posted to our website a slide deck that visually presents our results and financial outlook. Our press release and filings with the SEC may be obtained from our website at www.take2games.com.
And now, I'll turn the call over to Strauss.
Strauss Zelnick
Thanks Hank. Good afternoon and thank you for joining us today. I'd like to begin by acknowledging those who've been affected by the global pandemic. On behalf of our entire management team, I'd like to express our deepest sympathies and shared hope that in time this crisis shall pass. We remain immensely grateful to everyone who serves on the frontlines caring for those in need and helping the world navigate these challenging times.
I'm pleased to report that our positive momentum continued in the second quarter, operating results that significantly exceeded our expectations. Our stellar results were highlighted by the outperformance of NBA 2K, PGA Tour 2K21, and the Mafia: Definitive Editions and Mafia: Trilogy.
Our ability to deliver the highest quality entertainment experiences to our audiences during these challenging times is a reflection of the professionalism and the passion of our entire organization. I'm immensely proud of our teams throughout the world that embody our core tenets of creativity, innovation, and efficiency.
On September 4th, 2K and Visual Concepts launch NBA 2K21, the latest installment in our industry leading basketball simulation series for PlayStation 4, Xbox One, Nintendo Switch, PC, and Stadia. The title was off to a remarkable start and net bookings from the title have outperformed our expectations.
To-date, NBA 2K21 has sold in over 5 million units. As compared with the second quarter of fiscal 2020, net bookings for the NBA 2K series grew 28% and recurrent consumer spending significantly exceeded our expectations growing an incredible 76%.
Consumer engagement with NBA 2K continues to increase with daily active users, my career users, and my team users growing significantly.
Moreover, NBA 2K21 users have been more deeply engaged with the game, with average games played per user up 21% as compared to NBA 2K20 in the same period.
Next week, NBA 2K21 will launch for next-gen platforms, which Karl will discuss shortly. I'd like to congratulate to 2K and Visual Concepts for delivering another outstanding entry in this beloved franchise.
Seven years after its initial release, Grand Theft Auto V continues to grow its audience. The title has now sold in over 135 million units, and remains one of the most successful and iconic experiences in all of entertainment.
In addition, recurrent consumer spending on Grand Theft Auto Online outperformed our second quarter forecast and was the titled best second quarter ever, in terms of both active players and new players.
During the month of August, Rockstar Games released the Los Santos Summer Special for Grand Theft Auto Online, featuring an array of new vehicles, Co-Op missions, business battles, racetrack, the open wheel race creator, and more. We continue to expect Grand Theft Auto Online to establish a new net bookings record in fiscal 2021.
Red Dead Redemption 2 also outperformed and to-date has sold in over 34 million units worldwide. Net bookings from Red Dead Redemption 2 grew an outstanding 124% including 106% growth in full game sales. Engagement with and recurrent consumer spending on Red Dead Online continues to increase with net bookings from the title surpassing expectations growing 96%. Furthermore, the title grew 28% in audience and growth in new players was 47%.
During the second quarter, Rockstar Games added new content to Red Dead Online including the Naturalist update, a new specialist role including the ability to hunt, track, and study legendary animals as well as new poaching missions, and free roam events, two new weapons, the advanced camera and more, including the latest edition of Outlaw Pass -- The Outlaw Pass Number Three.
Throughout the coming year, Rockstar Games will continue to support both Red Dead Online and Grand Theft Auto Online with more content updates to keep new and returning players excited and engaged.
In late summer 2K enhanced further our sports simulation offerings with the release of PGA Tour to 2K21 for PlayStation 4, Xbox One, Nintendo Switch, PC, and Stadia. Developed by HB Studios, PGA Tour 2K21 was universally lauded by consumers and critics, including Game Informer, Golf Digest, and USA Today for being an incredibly fun, realistic, and engaging entry into the category.
The title has exceeded our expectations and today has sold in over 1 million units. According to the MTD Group, PGA Tour 2K21 was the fastest selling golf game buy units over the past 10 years and in addition, according to Metacritic, the title is the highest rated golf simulation of the current console generation. I'd like to congratulate teams of 2K and HB Studios for continuing to support the game with additional post launch content.
During the second quarter, 2K also released WWE 2K Battleground, a completely new WWE game featuring arcade style brawling action for PlayStation 4, Xbox ONE, Nintendo Switch, PC, and Stadia.
We're very pleased to expand our WWE offerings with a title that provides both casual gamers and diehard wrestling fans with an over the top pick up and play experience. The title has exceeded our expectations and is being supported with post launch content.
In addition during the period, 2K release Mafia: Definitive Edition for PlayStation 4, Xbox ONE, and PC, the title which has exceeded our sales expectations and received significant critical acclaim was comprehensively remade from the ground up.
The release of Mafia: Definitive Edition completes the full Mafia: Trilogy, a collection featuring definitive editions of all three Mafia titles. The Definitive Editions of Mafia, Mafia 2, and Mafia 3 are available individually or as part of the Trilogy. To-date, these titles are collectively sold in over 2 million units.
Turning to Private Division, during the second quarter, the label released Peril on Gorgon, a narrative expansion for their award-winning RPG, The Outer Worlds from Obsidian Entertainment. Peril on Gorgon is the first of two expansions that can be purchased individually or bundled at a discount in The Outer Worlds Expansion Pass. The Outer Worlds continues to outperform our expectations and has now sold in over 3 million units.
Our second quarter results were also enhanced by a variety of other offerings led by Borderlands 3, Social Point's mobile games, and Sid Meier's Civilization VI.
During the second quarter, recurrent consumer spending exceeded our expectations grown 43% and accounted for 64% of net bookings. In addition to virtual currency for NBA 2K, Grand Theft Auto Online, and Red Dead Online, recurrent consumer spending was enhanced by the following offerings; in the free-to-play category, Social Points' live games including Dragon City, Monster Legends, World Chef, Tasty Town and Word Life outperformed during the second quarter, matching the net bookings record achieved in the previous quarter.
Live games delivered new fresh content, events, and experiences to boost engagement and enhance the customer experience and net bookings grew 55%. The studio continues to invest in its broad and innovative pipeline of more than 10 new games planned for launch in the coming years.
WWE SuperCard also outperformed during the second quarter growing 24%. The title has now been downloaded more than 22 million times and remains 2K's highest grossing mobile title. Later this month 2K will deliver Season 7 of our popular free-to-play sports entertainment mobile game.
And NBA 2K Online in China grew 13% and remains a significant contributor to our results. The title is the number one PC online sports game in China with more than 50 million registered users.
Add on content grew 254% and outperformed expectations led by offerings for the Borderlands Series and Sid Meier's Civilization VI. As a result of are better than expected second quarter performance and improved outlook for the back half of the year, we're increasing our outlook for fiscal 2021, which we expect to deliver a new record for net bookings of over $3 billion
In September, as part of our ongoing strategy to expand selectively our portfolio of owned intellectual property, and to diversify and strengthen further our mobile offerings, we acquired Playdots, a long standing leader in the mobile puzzle genre. Founded in 2013 and based in New York City, Playdots builds mobile games with unique and thoughtful designs. The studio has printed three hits; Dots, Two Dots, and Dots & Co., which have collectively been downloaded over 100 million times. They're best known for Two Dots, which has been downloaded over 80 million times since its launch six years ago and that continues to engage deeply audiences throughout the world.
Playdots' near-term strategy for growth includes live ops technology and the addition of numerous features to its core games, such as scavenger hunts and social leaderboards, which are driving meaningful long-term consumer engagement.
In addition, Playdots will remain focused on existing IP and will continue to create new properties as they've done since their inception. We're very pleased to welcome Nir Efrat and the entire team of Playdots to the 2K family and are excited by the potential of their development pipeline and positive long-term contributions to our business.
It bears noting the next week we'll enter in an exciting new era in the history of our industry. The eagerly anticipated launches of two new gaming platforms from Microsoft and Sony marked the latest technological advances -- the promise to provide our world-class development teams with better platforms on which to captivate and engage our audiences. We're both prepared and thrilled to take this next step. And Karl will have more to share about our offerings for this next generation.
As we've seen over the past several months, consumers' appetite for participation in interactive entertainment has never been stronger. We believe that this trend coupled with the fervor for new gaming platforms, bodes well for the upcoming holiday season and that interactive entertainment will be among the most popular gift giving items.
Looking ahead Take-Two as the strongest development pipeline in its history, including sequels from our biggest franchises, as well as exciting new IP. We continue to make great strides to increase the scale of our enterprise both organically and through selective inorganic accretive opportunities.
In closing, our company remains superbly positioned creatively, operationally, and financially to capitalize on the many positive trends in our industry and to deliver growth in returns for our shareholders over the long-term.
I'll now turn the call over to Karl.
Karl Slatoff
Thanks Strauss. I'd like to begin by thanking our teams for continuing their stellar work and achieving strong results that are lining up to deliver a record year for net bookings.
Our culture of collaboration, coupled with the company's commitment to creating the best entertainment experiences, is driving our ongoing success and the ability to engage with audiences more deeply than ever before.
I'll now discuss our recent and upcoming releases. As Strauss mentioned, we are very excited about next week's introduction of two new leading edge gaming platforms. Through these new robotic platforms, our development teams have an even greater ability to captivate and engage audiences with our renowned franchises and new intellectual properties. We are thrilled to deliver at launch 2K's most successful and popular franchises NBA 2K and Borderlands for both platforms.
NBA 2K21 was built from the ground up for next-generation consoles and will once again redefine the standard for sports simulations. In addition to unparallel, graphics and loading speeds, NBA 2K21 will introduce several initiatives to bridge current and new console generations with the game, including MyTEAM Cross-Progression and a Shared VC Wallet within the same console families.
Furthermore, NBA legend Kobe Bryant's lifetime achievement of basketball excellence would be celebrated with the NBA 2K21 Mamba Forever Edition, which will provide players with seamless access to both current and next generation versions of the game.
Just yesterday, 2K released the trailer for the City, featuring a completely overhaul the park experience exclusive to NBA 2K21 on next-gen consoles. Originally introduced in NBA 2K14 for Xbox One and PS4 the park helped push to 2K forward by creating a competitive online basketball environment that allowed our quickly growing community to compete against each other outside of the authentic NBA experience. This experience has evolved over the years into the neighborhood. And now what we have probably introduced as the City, which is many times larger and more immersive community based experience only possible on next-gen consoles and is visual concepts most ambitious execution of a virtual basketball community.
Borderlands 3 has been fully optimized for next-gen consoles so Mayhem will be bigger and bolder than ever before. All players who own the game on current gen will be able to download the next-gen upgrade within the same console family for free. It's free next-gen upgrade will add a number of exclusive features, including 4k resolution at 60 frames per second in single player and online co-op plus support for three and four player split screen co-op.
In addition, Rockstar Games has announced that they will bring their iconic Grand Theft Auto V to the next-generation of consoles in the second half of calendar 2021 during fiscal year 2022. The new generation versions of the game will feature a range of technical improvements, visual upgrades and performance enhancements to take full advantage of the latest hardware, making the game more beautiful and more responsive than ever.
For the community of Grand Theft Auto Online, the journey through this ever evolving world will continue on the next generation consoles with more new updates, including additional content, exclusive to the new consoles and PC. There will also be new standalone version of Grand Theft Auto Online coming in the second half of calendar 2021, which will be available for free exclusively on PlayStation 5 during the first three months. Rockstar Games will share more details on the new versions of Grand Theft Auto V in the month ahead.
Driving long term consumer engagement with our titles after their initial launch remains a key strategic priority for our organization. There are a myriad of ways that our creative team strive to do this. However, we are always focused on designing games with the goal of giving players experiences that far exceed their expectations, and importantly, are worthy of their time and money. To that end, we recently released an array of add on content for some of our key titles.
Last month, 2K and HB Studios released two updates for our popular golf simulation PGA Tour 2K21. The Three-Hole Matchmaking update allows players to play a quick multiplayer round with friends. Two weeks ago, the team launched the Halloween update, featuring fun holiday themed cosmetic items to customize players and courses. Players can expect additional content to be released for PGA Tour 2K21 throughout the year.
In addition, Private Division, in partnership with the European Space Agency released their Share Horizon update for Kerbal Space Program for PS4 and Xbox One. The update celebrates the agency's contributions to space exploration and is free for all players of the critically acclaimed physics based Space Simulation Game.
Private Division of new development studio intercept games remains hard at work on Kerbal Space Program to which is now planned for release during fiscal 2023. Tomorrow 2K will release the first update for their new wrestling title WWE 2K Battlegrounds. The update features new superstars and legends that will be made available throughout the month, adding to the games outrageous in and out of the ring action. 2K will make additional superstars available in December and we'll share more details in the coming weeks.
More than a year after the initial launch of Borderlands 3 engagement with a title remained incredibly strong. Next week, due to the immense popularity and success of the titles add on content strategy and Season Pass. 2K and Gearbox Software launch a second season pass for the game. The season pass two which will be available for all previous release, and all next gen versions of the game will include two brand new content add-ons. The designers cut add-on will add all new ways to play Borderlands 3 by introducing a new skill tree for each Ball Hunter, a new standalone mode called arms race, and more. While the director's cut add on includes additional missions, and game content, and behind the scenes extras. Designer's Cut will be available for purchase starting on November 10. While Director's Cut is planned for release in spring of next year,
Rockstar Games has announced that both Grand Theft Auto Online and Red Dead Online will receive major updates later this year, featuring an extension to the two existing frontier pursuits for Red Dead Online, as well as Grand Theft Auto Online biggest update ever was a feature a new take on heist in a new location.
For access games will continue to deliver new content for Sid Meier's Civilization VI as part of their new frontier pass for PlayStation 4, Xbox One, Nintendo Switch, PC and mobile, featuring new civilizations and leaders that will be made available on a billion-monthly basis to the end of March 2021. Later this year, the new frontier pass will come to mobile platforms and each pack will be available for individual purchase.
Enjoy during the first half of calendar 2021 Private Division will release The Outer Worlds Murder on Eridanos, the second narrative expansion for their successful RPG from Obsidian Entertainment. The expansion will be available individually or at a discount as part of The Outer Worlds expansion pass, which also includes the previously released Peril on Gorgon.
Turning to eSports, the NBA 2K league concluded its third season on August 28, with Wizards District Gaming winning the 2020 NBA 2K League Championships. All 2020 season games aired live on the NBA 2K League Twitch channel in addition to select games airing live on ESPN 2, ESPN digital platforms, Sportsnet in Canada and the NBA 2K Leagues YouTube channel and on delay on EGT network in Southeast Asia and Loco in India. Dash Radio is nothing but Net Channel also provided live game coverage.
The NBA 2K League has begun the trial process for its fourth season set to take place in 2021. The new format will include more than 35 Pro Game tournaments hosted by league teams as part of the NBA 2K League draft prospect series, featuring a first of its kind NBA 2K League combine. The League will enable 2K fans and players to engage with the league and showcase their excitement throughout the offseason by awarding draft eligibility on a rolling basis to members of the 2K community who excel in a tournament as part of a draft prospect series.
In addition, we continue to develop showcase female 2K players. The league is involved with several elite all woman 2K Teams who are participating in Pro 2K tournaments throughout the year. We are very excited about the continued success and growth of the NBA 2K League, which has the long term potential to enhance engagement and to be a driver of profits for our company.
Looking ahead, we have the strongest development pipeline it takes to its history, as well as significant potential to drive increased engagement and recurrent consumer spending. In addition, we're investing in a number of emerging opportunities that have the potential to enhance our growth rate. Whether transitioning our audiences seamlessly to new platforms, capitalizing on new business models and distribution channels, or increasing our presence in emerging markets Take-Two is exceedingly well positioned to generate value to consumers as well as growth and margin expansion for our company.
And I'll turn the call over to Lainie.
Lainie Goldstein
Thanks, Karl, and good afternoon, everyone. Today I'll discuss our second quarter results and then review our financial outlook for the third quarter and fiscal year 2021. Please note that, additional details regarding our actual results and outlets are contained in our press release. As Jeff mentioned, we delivered second quarter operating results that significantly exceeded our expectation. Net bookings grew up to $958 million. This result exceeded our outlook of $775 million to $825 million, driven primarily by the outperformance of NBA 2K PGA Tour 2K21 and the Mafia Definitive Edition and Mafia Trilogy.
Digitally delivered net bookings grew 14% as compared to our flat outlook and accounted for 83% of the total. This result exceeded our outlook primarily due to the outperformance of recurrent consumer spending. During the second quarter 59% of sales of current generation console games were delivered digitally from 51% last year.
The current consumer spending grew 43% as compared to our outlook of 10% growth and accounted for 64% of total net bookings. This growth was driven primarily by NBA 2K Social Points mobile games, Red Dead Online and Red Dead Redemption 2 and
Sid Meier's Civilization VI
GAAP net revenue was $841 million, and cost of goods sold was $433 million. Operating Expenses decreased by 7% to $293 million, due primarily to lower marketing expense. And GAAP net income grew to $99 million or $0.86 per share as compared to $72 million or $0.63 per share in the second quarter last year.
Now to our guidance, starting with the fiscal third quarter, we project net booking to range from $675 million to $725 million compared to $888 million in the third quarter last year, which benefited from the launch of Red Dead Redemption 2 on PC and the Outer World. The largest contributors to net bookings are expected to be NBA 2K21 Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Social Points mobile games, Borderlands 3 , Sid Meier's Civilization VI and PGA Tour 2K21. We expect digitally delivered net bookings will be down approximately 15% due to lower digitally delivered sales of Red Dead Redemption 2 on PC and the outer worlds which launched last year.
Digitally delivered net bookings are projected to account for 82% of the total compared to 78% last year. Our forecast assumes that 71% of our current generation console game sales will be delivered digitally up from 44% last year. We projected with current consumer spending to grow by approximately 5%. We expect GAAP net revenue to range from $760 to $810 million and cost of goods sold to range from $291 million to $370 million. Operating expenses are expected to range from $325 million to $335 million.
At the midpoint this represents a 4% increase over last year, driven primarily by the addition of played up, higher research and development and IT expensive, partially offset by lower marketing and stock compensation expenses. And GAAP net income is expected to range from $128 to $140 or $1.10 to $1.21 per share.
For management reporting purposes, we expect our tax rates to be 16% throughout fiscal 2021. We are increasing our full year outlook, which now includes record net bookings. This will be the third consecutive year that net bookings have grown. Our net bookings outlook range is now $3.15 billion to $3.25 billion up from $2.8 billion to $2.9 billion. This is being driven by our second quarter performance, along with an updated forecasted balance of the year, which has improved primarily due to higher recurrent consumer spending from NBA 2K, Grand Theft Auto Online, Red Dead Online and the addition of Playdots, as well as strong performance from Red Dead Redemption 2, PGA Tour 2K21 and the Mafia Definitive Edition and Mafia Trilogy.
We expect growth over the prior year from NBA 2K, Grand Theft Auto Online, Red Dead Online and Social Points mobile games to be offset by lower results from Borderlands 3, Grand Theft Auto V and Red Dead Redemption 2. The largest contributor to net bookings are affected me NBA 2K, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, Social Points mobile games, Borderlands, Sid Meier's Civilization VI and PGA Tour 2K21. We expect the net bookings breakdown from our labels to be roughly 55% 2K, 35% Rockstar Games, and 10% Private Division, Social Point and Playdots.
As we forecast our geographic net booking spread to be about 60% United States and 40% International. We now project digitally delivered net bookings to increase by approximately 15% as compared to our prior outlook of 3% growth. This growth is being driven by recurrent consumer spending and digitally delivered sales. As a percentage of our business digital is projected to represent 87% of net booking, up from 82% last year. Our forecast assumes that 70% of current generation console game sale will be delivered digitally from 55% last year.
We now expect the current consumer spending to grow by approximately 30% as compared to our prior outlook 16% growth, and to represent approximately 63% of net bookings as compared to 51% last year. This growth is being driven primarily by NBA 2K, Grand Theft Auto Online, The addition of played up, Social Points mobile games and Red Dead online. We are increasing our non-GAAP adjusted unrestricted operating cash flow outlook to more than $650 million from our prior outlook of more than $500 million. We plan to deploy approximately $75 million for capital expenditure.
We expect GAAP net revenue to range from $3.05 billion to $3.15 billion, and cost of goods sold to range for $1.44 billion to $1.49 billion. Total operating expenses are expected to range from $1.21 billion to $1.23 billion. At the midpoint, this represents an 8% increase over the prior year, driven by the addition of played up, higher headcount, research and development expense and charitable contributions, partially offset by lower marketing and stock compensation expenses. And we expect GAAP net income to range from $372 million to $403 million, or $3.22 to $3.49 per share.
In closing fiscal 2021 is poised to be another year with record net bookings. Despite a light release late with our industry leading creative assets, strong financial foundation and unwavering commitment to operational excellence. Our company it's a perfectly positioned to navigate these uncertain times, capitalize on positive industry trends, and to deliver strong results for our shareholders over the long term.
Thank you. I'll now turn the call back to Strauss. Thanks.
Strauss Zelnick
Already I apologize. Thanks, Lainie and Karl. On behalf of our entire management team, I'd like to again thank our colleagues for their hard work commitment, excellence and for delivering another exceptional quarter. To our shareholders, I like to express our appreciation for your continued support. And we'll now take your questions and apologies for my failure with the mute button.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] First question comes from Mario Lu with Barclays. Please proceed with your question.
Mario Lu
Great. Thanks for taking the questions. I have one on NBA and then one high level. So the one on NBA, the city the on next gen was pretty amazing. And you're also bringing back affiliations, which is exciting. I believe this year is also the first time NBA 2K will have two different NBA seasons within three months of its release. So with that being said, anything you could provide in terms of the left team builds on both the city and a second NBA season, and their impact on Cisco PQ guide would be helpful? And then secondly, Strauss just curious if you have updated thoughts on the overall subscription model within video games.
I think I agree with you that subscription may not translate well in this industry. The users only played a few titles a year. But we've seen recently companies like Microsoft push hard, but the game pass description. And then with the overall gaming audience expanding to sheltering in place and more casual titles, like poll guys and among us being more popular. So just curious if your stance has on prescription has changed at all? Thank you.
Strauss Zelnick
Hey, Karl, I'll take the first question on NBA. Obviously, yes, this is really the first time that we've got this kind of overlap in the season not only just our own, not only just the basketball season itself, but our own game. Obviously, with what Strauss has said before, it's had a really positive impact with us because it would net bookings for our series with 28% in recurrent consumer spending grew, I think was 76%. So these are really incredible results.
And it's really exciting. It's a, but it's a bit of uncharted territory. And I can tell you that we couldn't be more thrilled about it. Because with the new platform coming out, and with the NBA, 2K21 being built from the ground up, and also all of the new features that are coming up, well, I don't have a specific lift numbers for you that are associated with the city itself.
Obviously, that was a huge commitment made by the team at visual concepts, and 2K and we're really, really excited about it. And anytime you do come out with something that could be a game changer for any game, but specifically for our game, we tend to see really excellent results. And we've already seen great, great results. And I think it's going to be even better when we launch our next-gen platform. And we're very excited about it.
Karl Slatoff
And Mario, regarding your question on subscriptions. I know I don't think our views have changed much we're open minded. We're highly skeptical that subscriptions will be the only way or the primary way that interactive entertainment is distributed. And that's because of the way people consume it. And the price point for owning a title, which is very reasonable and very, very low, actually, on a per hour basis.
So I think it's unlikely that subscription sort of plants from my video game, failed as the primary business model. Subscriptions can play a role in delivering catalogue. We've supported numerous subscriptions, subscription offerings with catalog titles, I imagine we'll continue to do so. And in any case, at the end of the day, the consumer will decide and we will be where the consumer is.
Mario Lu
Right. Thank you.
Operator
Our next question is from Eric Handler with MKM Partners. Please proceed with your question.
Eric Handler
Yes, sir. Good evening. Thanks for the question. Wondered if you can give us any updates about your thoughts on pricing you've announced NBA 2K is going to have a $10 price increase console system, next-gen versus current gen. How you are thinking with that? And then all the follow up question.
Strauss Zelnick
Yeah. Thanks, Eric. Pricing is determined on a title by title basis. We already explained that the reason for the price that we set for MBA 2K21, for next-gen reflected the fact that there hasn't been a from on price increase since 2005. And production costs have gone up two or 300%. On the one hand, also, because we believe we will deliver vastly more value to the consumer than the price we charge. That's our goal at all times. As I said, on a per hour basis, interactive entertainments, an incredible bargain and the US has the lowest frontline pricing of any anywhere on Earth. So we think it makes sense, and we believe consumers are fine with as a result.
Eric Handler
Okay. And then as a follow-up, played out looks like it's potentially a very nice tuck-in acquisition. As you look at the M&A landscape is there much out there for this acquisitions? It seems like there's more mobile type deals to be had rather than console specific tech companies. But maybe if you could just give us some color on the M&A landscape?
Strauss Zelnick
Look, we have seen an acceleration in M&A activity. Obviously, Microsoft is acquiring Bethesda, for example, which is a significant, I believe seven some odd billion dollar transaction. And so I think you're going to continue to see increased M&A activity, just because of the heat around the category and the amount of capital that's being deployed by big companies to pursue it.
From our point of view, we have almost $2.4 billion in cash. We have no debt. And we are anxious in it to build our business aggressively doing so. And we use our capital to support for organic for primary story at take 2. We also will use our cash to acquire companies when they're strategically consonant and when those deals are accretive, and we return capital to the shareholders on a regular basis through buybacks. And that'll continue to be our approach.
Eric Handler
Thank you.
Operator
Our next question is from Drew Crum with Stifel. Please proceed with your question.
Drew Crum
Okay, thanks. Hey, guys, good afternoon. For Strauss or Karl, can you comment on cross platform play and how you think about this across your portfolio and specifically, it's the next gen version of G that will feature cross play? and then I have a follow-up.
Karl Slatoff
Hi Drew, its Karl. We do think about cross-play a lot and I think for a lot of games that are out of the market that do support cross-play, it makes a lot of sense. It's certainly something that's very intriguing to us. It's something that we're capable of doing and obviously, it's not just our decision alone, there's platforms involved as well.
We haven't made any specific announcements about cross-play. We are enabling certain cross-generational opportunities within our games. But in terms of cross-play, it's very interesting. I think it's a -- from a player liquidity perspective, it can be a very compelling thing. But it also has some -- for some games, it also has certain limitations. If you're cross-playing between mobile and console games, it's not always the best experience for everybody. So, there are considerations that you have to make when making those types of decisions. But obviously, we do consider it. It's a great opportunity for our industry in general going into this next generation.
Drew Crum
Got it. Okay. And Lainie if I heard you correctly, you indicated the RCS would be up 5% in the December quarter, is that correct?
Lainie Goldstein
Yes, that's correct.
Drew Crum
Can you talk about the assumed deceleration and how that aligns with the timing of the big updates for Rockstar Online?
Lainie Goldstein
So, for GTA we have for Q3, we have it coming down in the third quarter versus last year. And when we look at GTA, we always sort of look at this being out for seven years and we think about the quarters going forward. And since -- it's something that it's been out for so long, we tend to forecast, it is coming down each quarter. And it's always beat our expectations. So, when we go out into the future that seems to be how we guide for that title.
Drew Crum
Okay.
Lainie Goldstein
So the growth in the quarter is coming from the NBA title.
Drew Crum
Okay, got it. Thanks guys.
Operator
Our next question comes from Mike Ng with Goldman Sachs. Please proceed with your question.
Mike Ng
Great, thanks. Strauss, I was wondering if you could provide your view on using free-to-play experiences to enhance the reach of your franchises. For instance, in the spirit of Call of Duty: Warzone, and Call of Duty: Modern Warfare, would it ever makes sense to make a free-to-play component available for GTA or NBA 2K? Thanks.
Strauss Zelnick
Well, look, we're pretty open minded and at the same time, we deliver the highest quality experiences in the business and we charge much less for them than we believe they're worth to consumers. And then we deliver typically an ongoing component that is free. And that's already a great deal of value at any monetization, of course, it's totally optional. And unlike many sort of casual titles, the monetization is not necessarily to enjoy the experience, it's an additional benefit. But there are no toll booths in any of our online games that are attached to our core games.
We have on occasion promoted our games very cheaply, or in a couple of instances, free, which effectively means you have access to the online component free as a promotion. And I wouldn't rule out the possibility of doing that.
And of course, Rockstar has announced that GTA Online will be a standalone experience for next gen coming in second half of 2021. And then it'll be free for PS 5 users for about three months.
So, as you can see, we're open minded about our business model, and I wouldn't rule out the possibility that at some point, certain experiences can become free as a matter of the entry point. I like -- what I consider sort of tethered free-to-play where, 100% of the people acknowledge the value of the title and pay to play it. And on an ongoing basis, you have what is effectively a free-to-play experience attached to that can go on for many years. Grand Theft Auto Online, of course, has been successful for seven years and is expected to set a new record in this fiscal year, amazingly enough.
I think that you're also implying another question, which is some of our competitors have taken legacy IP and created standalone mobile free-to-play titles related to that IP and branded that IP. And we have not done that yet. We have not announced any plans to do it. And in the world in which we would do it, of course, would be when our labels are excited by the opportunity creatively and when we think we can deliver something to consumers that's absolutely stellar.
Mike Ng
Great. That's incredibly helpful. Thanks Strauss.
Operator
Our next question is from Garrett Johnson with BMO Capital Markets. Please proceed with your question.
Garrett Johnson
Great. Thank you. Good evening Strauss, Karl, Lainie. On NBA 2K, I have two-part question. So you decided to not offer free upgrades from current to next-gen, but you did release Mamba Forever, dual-access for $100. So, what did you see people do? Do you see people mix up immediately to Mamba Forever? Or maybe delay the purchase of 21 until next-gen comes out. So maybe we see a second wave.
Karl Slatoff
Yeah, I mean, I don't have any specifics to share. This is Karl by the way. I don't have any specific, it's a great question. I don't have specifics to share with you about what activity we've seen. And by the way, it's kind of hard to know, because we're still pretty early in it. We sold already 5 million units. And we've had lots of action around all of our SKUs. But we don't know what people would otherwise be doing.
So it's sort of hard for us to know whether people are waiting or whether they're going for the Mamba now or they're just buying the current gen, on to buy the next-gen later or just by current gen. That all remains to be a little bit of uncharted territory, and it remains to be seen. But what we were very gracious for and proud of is the fact that the activity and the engagement around what we've seen so far has been incredible. So no matter how much it breaks down by SKU, I think we're looking at a really good release for NBA 2K21.
Garrett Johnson
Okay. Thank you, Karl. And by the way, there's $100,000 worth of virtual currency in Mamba Forever. So how much of that contributed to the 76% recurrent consumer spending growth in And NBA?
Lainie Goldstein
We don't share that level of detail.
Garrett Johnson
Okay. Thanks.
Operator
Our next question is from Brian Nowak with Morgan Stanley. Please proceed with your question.
Unidentified Analyst
Hi, everyone. Thanks for taking my question. It's Matt on for Brian. So kind of following up on the city content in NBA 2K, are you seeing any new types of behavior particularly in the last few months inside of the games, whether it's people socializing more rather than just playing games or kind of like new used cases that you're noticing players eke out and to these kind of an opportunity to expand on that and sort of like keep users stickier by adding new sorts of in-game activities?
And then just secondly, I was just wondering if you could provide an update on the progress with some of the newer studios like 31st Union and Cloud Chamber is down everything in place to sort of hit the pipeline that you guys shared earlier this year? Thanks.
Karl Slatoff
Hey, Matt, it's Karl. In terms of the city, I think the real quick answer to the question is really since the park came back out in 2014, we've seen more social activities in an NBA generally speaking. And as the environments got more sophisticated, there is more things to do that social activity has been increasing all along. And you see big jumps in that as well when you come out -- when we move from the park to the neighborhood, we saw a market difference in how people play in the game. You create events, people create their own events within the communities themselves.
And the more that you give -- the more that you content you give within these communities and within these spaces, within these worlds, it encourages people to spend more time there. And that's a really great thing from an engagement perspective. Because number one, I think it does actually people love it. And driving engagement also drives economics for us.
And that's one of our objectives. So the fulfilling of the city was a huge endeavor that VC took on, we think it's going to be really well received. We think people are going to spend a lot of time in the city. And it really will take that whole concept of open world social gaming to another level in the context of NBA. So we're very excited.
A – Strauss Zelnick
Yeah. In terms of how things are going at our studios, particularly our new studios, the answer is very, very well. We have an extraordinary pipeline. We've doubled our pipeline of releases over the next five years. You mentioned two our studios, I'd really talked about all of our studios, and there are many now, and everything is looking great and is on target.
We did not expect to see any slippage. And while I think working from home is really tough, and I admire our colleagues for doing such a great job of doing it. It isn't the same as being in the office and yet we have not seen any slowdown in our expected cadence of releases.
Unidentified Analyst
Great. Thank you.
Operator
Next question is from Todd Juenger with Sanford Bernstein. Please proceed with your question.
Todd Juenger
Hi. Thanks. One for high level one, and then one housekeeping. Higher level one, just following on, you've been asked so far about subscription and free-to-play and really every permutation of business model and platform, I'm going to ask the sort of the mobile question version of that, if you don't mind, especially given you've seen some other AAA publishers be very aggressive.
And you could argue successful in taking what used to be console IP, finding a big home for it, relatively big home port and mobile. When you started to think about the role of mobile across your IP portfolio and studios, I wonder if you have any big ideas there think that fits for your big IP? And if so, do you have the sort of resources you need in-house to make that sort of development effort? Thanks.
And then that the super quick one is, if you don't mind so I know typically, you guys aim to release AAA frontline title generally every year outside of 2K, NBA 2K. You didn't have one this year. I wonder when you look at next year, do the re-mastered versions of GTA and RDR, does that fit your definition of a AAA console release or not? Thanks.
Strauss Zelnick
Yeah, thanks. In terms of the portfolio of own intellectual property of which we're very proud, we have 11 franchises that have sold over 5 million units with an individual release and over 60 that have sold over 2 million units. And there's some of the most extraordinary franchises in the entertainment business, never mind, the interactive entertainment business.
I think I alluded to this earlier, we wouldn't rule out the possibility of making a standalone mobile title based on that intellectual property would be driven by the labels creative desire to do so in a belief that we can do an extraordinary job at it. We have a lot of talent in the mobile space now at numerous labels played at Social Point 2K and others. And I don't doubt that we could put together the resources for the properties that make sense. So stay tuned on that topic.
It is not lost on us that the biggest hits in the mobile business are native to the mobile business. They're not based on licensed IP. They're not based on console IP, the biggest hits are native to the business. And in terms of our ongoing release schedule, we haven't said very much at all about fiscal 2022. We have said that GTA Online and GTA 5 are coming for next-gen in the second half of calendar 2021. We set the Kerbal Space Program to is coming in fiscal 2023. But we will be talking about our release scheduled for 2022 in due time, and our goal remains the same, but it's too early to comment what the release schedule will look like.
Karl Slatoff
And to answer your question specifically, though, about the platform extensions, and whether we consider them the part of our core gaming experience, we do. So we did say before the 93 titles, 63 that we mentioned that are in our pipeline, which more than double what it was five years ago, by the way. 63 of those are core gaming experiences. And that includes 15 platform extensions.
Todd Juenger
Got it. That's helpful. Sorry for the redundancy on the mobile there, but I appreciate that. The additional comments was helpful. Thanks, everybody.
Operator
[Operator Instructions] Our next question is from Alex Giaimo with Jefferies. Please proceed with your question.
Alex Giaimo
Great. Thanks for the question. Strauss, I think the messaging recently has been -- has still been for growth from the company, as we think about next year, as we think about fiscal 2022. Does that change at all as you continue to beat and raise expectations for this year and the comp gets any more challenging or if the expectations still for growth next year? Thank you.
Lainie Goldstein
So for fiscal year 2022 to get it that we now expect next bookings of over $3 billion this fiscal year. It's too early to predict whether our business will grow next year. Our results this year have benefited from sheltering at home and it remains to be seen whether that will continue to lapse into next year. So it's just a little bit too early to call at this point.
Alex Giaimo
Got it. Thanks, Lainie.
Operator
We have reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to Strauss Zelnick for closing comments.
Strauss Zelnick
Thank you very much. On behalf of everyone at Take-Two, I'd like to wish you all a very happy and healthy holiday season. These are extraordinary times and I wish you all the best through them. And once again, I'd like to thank all of our colleagues for their incredible work and for these extraordinary results. Have a great evening.
Operator
This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.
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