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Take-Two on the future of video game revenue

Video game industry should pin its financial hopes on microtransactions, downloadable content, and subscriptions, Take-Two's executive chairman says.

When Take-Two Interactive Software's executive chairman envisions future revenue for the video game industry, he sees microtransactions and downloadable content as the "biggest opportunity" and calls subscription revenue the "holy grail."

"The holy grail is taking a business, already a very large and successful business that's focused on packaged goods...and turning that into a subscription business or a semi subscription business where we have an ongoing relationship with consumers, giving them products that they want," Strauss Zelnick said Thursday at a BMO Capital Markets' conference in New York. "Who's better positioned to do that than the company that has the top franchises?"

PC/console game companies are starting to apply some of the newer models we've seen from free-to-play online games and virtual goods in order to keep players engaged and attached to the games.

Realistically, the trends and challenges in online gaming aren't much different than PC/console games with the exception that the game makers get revenue from the sale of the game. But online games by their dynamic nature have a much easier time adding features and monetization mechanisms.

Subscription models have become commonplace for software and online services, and even though many of those commenting on Zelnick's remarks in the Kotaku article were vehemently against subscriptions, I suspect that when they are priced correctly, people will be willing to subscribe for additional features.