Take-Two CEO Strauss Zelnick is convinced game streaming can offer a long-term solution to the rising costs of gaming hardware. During a recent earnings call focused on the success of upcoming titles like GTA 6, Zelnick suggested that streaming could eventually eliminate the need for expensive consoles and powerful PCs. The idea is simple: if players can stream AAA games from their phones, tablets, or basic laptops, they no longer need to spend over $600 on a PlayStation 5 or a high-end gaming rig.
Zelnick admitted that the current spike in prices for gaming hardware, especially for components like RAM, is creating a barrier for many potential players. He argued, however, that this challenge won't last long because he sees streaming as a way to expand the market. The CEO predicts that within three years, low-latency streaming will be commercially viable. If that happens, it could reshape the industry by reducing dependence on traditional gaming hardware. He further explained that this could increase the installed base of gaming devices tenfold, opening access to broader audiences for desirable titles.
Technical and consumer barriers remain
Despite Zelnick’s enthusiasm, cloud gaming has yet to live up to its full potential. Problems like input lag, the high cost of licensing content, and consumer preferences for physical controllers and large TVs are keeping streaming on the sidelines. Platforms like Xbox Cloud Gaming and GeForce Now are available, but they are treated more as optional extras than as replacements for owning a console or gaming rig.
This highlights a big issue for streaming: the industry still sees hardware as the main way to bring players into the fold. For cloud gaming to truly replace physical consoles, it must overcome major technical and logistical hurdles. These include ensuring stable, fast internet connections and convincing consumers to shift their habits.
Zelnick’s timeline may be optimistic
The idea that streaming could become the dominant way to play games within three years may not be realistic. Despite much hype, cloud gaming has been described as just around the corner for over a decade. Today, it works best for users with strong home Wi-Fi but often struggles on mobile networks or in regions far from data centers. Network conditions and regional differences in internet infrastructure play a big role in how well streaming services function.
Another challenge is the ongoing global memory shortage, which is driving up the cost of hardware components. Streaming may seem like a fix for this problem, but data centers that power cloud gaming also rely on memory and compute resources—resources that are becoming more expensive and harder to obtain. As demand grows, the benefits of streaming could be canceled out by rising server costs.
Is streaming the real solution?
Zelnick is right in thinking that streaming could give more people access to high-end games without requiring them to spend a fortune on hardware. However, as long as memory shortages and rising console prices persist, the solution he imagines is unlikely to arrive quickly. The gaming industry may need to rely on traditional consoles and PCs for the foreseeable future. For now, streaming remains a promising but incomplete answer to the problem of accessibility.
Machines that weren't game machines before will become game machines: Take-Two CEO predicts that streaming will help fix the industry's hardware pricing problem. Strauss Zelnick expects a shift towards "commercial streaming mode" in three years.
Zelnick doesn't think Take-Two's revenues will go up ten times alongside the adoption of low latency streaming, because people will continue to play on home hardware, but he does think it'll "create great opportunity" to sell games in less affluent regions outside Take Two's "core markets". Elsewhere in the call, Zelnick observed that "companies like Take-Two, and there aren't many of us, but there are some, basically derive about 80% of their revenue from the US, Western Europe, and one or two countries in Asia." He'd like to "flip" that percentage, commenting that "the rest of the world's really underrepresented, even though they love video games, of course, and even though they have devices, typically low-res, low-capable mobile devices, but devices nonetheless".
Promises of a great streaming Rapture and an associated democratisation of access to high-end gaming aren't new. Indeed, you have probably forgotten how sick you were of hearing them. Google bet the farm on streaming with their Stadia handheld and cloud service, announced to much fanfare in 2018 and eventually retired in 2023. Nowadays, streaming services have become part of life - Nvidia have GeForce Now, Amazon have Luna, and PlayStation and Xbox offer streaming as part of their subscription packages – but streaming doesn't show any indication of taking over from downloads, mostly because even in richer countries, the digital infrastructure isn't there. And also, possibly, because people would rather their access to art and entertainment didn't depend on their internet connection.
Later in the earnings call, another analyst brought Stadia up with Strauss, commenting that "it feels like we've been down this road at least twice", and asking whether Strauss had seen any solution to the fundamental problem of latency. "It is a very fair and accurate comment," Strauss replied, before rolling out a load of bluster.
A base PS5 or Xbox Series X|S console costs far more today than it did almost six years ago, but despite that, GTA 6 publisher Take-Two Interactive doesn’t believe that the more-expensive gaming hardware will slow down its business or sales of the upcoming game. Speaking to investors as part of a briefing on its recent financial quarter, Take-Two CEO Strauss Zelnick did mention that lower-priced gaming hardware would still be preferable, but the current state of the technology could have a surprise silver lining. “The rising cost of hardware is not a good thing. I don’t think it will slow us down any because, you know, we’re delivering, we believe we’re delivering experiences that people want,” Zelnick said. “However, a lower price point for hardware would be a good thing because there’d be more hardware in people’s hands. Probably the most relevant thing is the world continues to move to open systems, and that will continue.” Zelnick added that PC used to make up a fraction of sales 20 years ago–around 2%–but in the years since then, the platform accounts for up to 50% of sales. The CEO believes the gap will only continue to grow, and cloud-streaming could also play a big role in bringing more games to more people–and that future isn’t too far away, Zelnick believes. “If you believe in streaming, and to be clear, we really do, and I’m happy to put a timeline on it. I think we’ll be in commercial streaming mode within three years, and by commercial, I mean low latency. That can 10x the effective installed base. Now, it doesn’t mean we’re going to 10x our revenue–and we wouldn’t project that we would–but because obviously your avid consumers already had access to video game machines. But I do think it creates great opportunity for titles that are broadly desirable, even outside of core markets.” While the idea of cloud-streaming games isn’t new–RIP, Google Stadia–the technology behind it has continued to improve over the years, with Microsoft making big strides in this space. As for consoles, if you haven’t bought one yet for highly anticipated games like GTA 6, you might not want to delay that decision for too much longer. Prices look set to increase again next year, while PC gamers are facing another tough year as the biggest manufacturers of RAM chips have reportedly sold out all their production for 2027.