So EA made a 2 billion move to acquire Take-Two. I'm not quite sure what to make out of this so here some thoughts about the parties concerned:
EA:
As the always-present Wedbush-Morgan analyst Michael Pachter points out Take Two Interactive’s 2K Sports unit alone makes acquiring the company a winning deal for EA.
Talking to GamesIndustry.biz, he said that he thought it would be cheaper for EA to compete with Take-Two and force them out of the sports business.
Gamepolitics got a similar response from Pachter:
Only EA can can make sense of [Take Two’s] sports assets. It doesn’t makes sense for anybody else to buy Take Two to engage in a battle to the death with EA for sports games, whereas EA can consolidate all the sports games and make a profit from it.
For EA, sports is enough to pay for the whole [$2 billion] thing. If you get rid of sports competition, you suddenly add Take Two’s $200 million per year in sports revenue and EA doesn’t compete on price anymore. So, theoretically, they could grow that business by $100 million [per year].
So the purchase offer makes sense for EA on that basis alone. GTA on the other hand is just "the gravy" for Pachter: Worth a ton but probably less of a driver in this acquisition than everything else. After all it is not guaranteed that EA will be able to keep the creative talent behind the franchise as Rockstar North has their very own way on working on things:
A Grand Theft Auto game right now comes along every few years, completely knocks us on our asses and then goes back to the drawing board, lurking in the shadows until they are damn well ready to knock us on our asses again..
Still, the whole thing makes sense for EA:
"At the same time, it is a modestly nice deal for EA because I'd say there is a ton of synergy here" says Pachter.
Under a business point of view I certainly have to agree with Pachter. It all makes sense for EA (also in view of other consolidations in the industry). Although: As thestreet.com contributor Priya Ganapati points out, the question remains if EA can stomach Take-Two, its baggage and the controversies that it brings with it. Under EA a third Manhunt certainly does not seem likely – which probably won't prevent a certain lawyer from Miami to launch attacks against Take-Two's potential future owners. These new owners also like to vehemently defend their games against mainstream media.
Gamer
I'm really not sure what to think of all this as a gamer. I don't play any sports games so I don't really have an opinion on that. But I can certainly see where the concerns are coming from; after all, without Take-Two EA holds a monopoly for licensed sports titles and without any competition there's the danger of complacency, lack of innovation and higher prices (which, I suppose, are pretty much a given).
However, the age of console exclusives would certainly end and stuff like this would never surface again. GTA on the Wii is certainly an interesting thought.
Which brings me to another common fear: Attack of the sequels. GTA 08, 09… spin-offs, the same stuff all over gain but this time with better animated boobs. Fair enough although I think these fears are exaggerated to a certain degree.
Especially in view of EA's recent high-profile acquisitions, namely Pandemic and Bioware it surely would be counterproductive to mess with the talent behind of some of the greatest game franchises there are - because in that process EA would not only destroy/ water down/ or otherwise negatively influence titles like Mass Effect and Mercenaries, but also BioShock, Civilisation, Mafia, Pirates!… And even though EA's image isn't the best already, this move would be absolutely deadly.
Also Michael Pachter thinks that as for Take-Two development studios such as Firaxis and 2K Boston / 2K Australia (formerly known as Irrational), EA will treat them with respect and give them the resources they need. Which, by the way, is also the reason why I believe that they would leave GTA and its concept untouched. I can't imagine EA to be so ignorant to replace the satirical content with real life advertising as this would completely change the whole basis of a game which was always grounded in irony (which also served as a very good defence against some of its content!)
At this stage EA also should have learned from past mistakes and the way it dealt with former acquisitions such as Origin, Westwood and Bullfrog. After all, it gave Will Wright the time and resources to work on Spore for several years; the game got delayed a couple of times, and I really would like to think it was because of the high quality standards they set.
It might just be an exemption, but I don't think so, particularly in light of EA's recent reorganisation that place a greater emphasis on developers over the larger EA brand (the city-state model).
Some of the comments over this planned acquisitions really just seem to bash EA for the sake of it, a sentiment Jim Sterling immortalised in this post. That said: Their evil, dark overlord image is something EA should work on; it might take a while but might be worth it. A good beginning would be stronger dialogue with their customers, similar to the likes of Major Nelson and his blog.
(On a different note: It's still a business after all and EA just tries to protect their interests. I mean they shelled out millions of dollars for those sport licenses, of course they are going to make as much money out of them as they can and not sit on them while trying to adhere to some confused, noble code of game development. And there still seems to be something good about them, because people still buy their titles like crazy. That's the reality of the medium and I can't blame them at all)
Take Two
Given the recent history of the publisher I'm actually kinda surprised that they didn't agree to the deal. Almost a year ago its board was kicked out by the shareholders and talks about a takeover surfaced regularly.
The price is judged fair by experts; the $26 offering price represents a better than 60% premium over recent Take Two share prices after all.
The synergies would indeed be enormous considering EA's publishing and distribution powers.
Another question certainly is: Who else would bid for Take Two? Its is unlikely that apart from EA someone is going to offer a competing bid (and certainly no candidate which would benefit as much as EA).
So what is Take Two's management waiting for? The GTA4 release to apply some more pressure on EA? On the other hand the GTA IV release had been factored into the Take-Two share price for months.
Or is it waiting for its plan to revitalise and streamline the company to take full effect? After all, although sales were down for the full year, losses also fell from USD 184.9 million to USD 138.4 million, with Take Two CEO Strauss Zelnick pointing to the improvement as a sign the company's revitalising plan is working. Maybe they believe it to be working even better in the future – even after GTA – to get the most out of a possible takeover.
Anyway, Pachter is baffled, I'm baffled – in view of Take Two's difficult history and the premium EA is willing to pay , the future remains interesting. Explains Screen Digest analyst Ed Barton:
"If [Take-Two] can convince its shareholders that it can offer them better prospects in the longer term than taking the money now, it was right to refuse,"
"If shareholders remain unconvinced, EA reserves the right to appeal directly to them. It's a very fine balancing act and Strauss Zelnick and his colleagues will be working hard to get a fix on what their shareholders think and how far they can push the process before shareholders start agitating, they begin to lose control and their ability to convince EA to increase its offer begins to diminish."
Personally, I'd take the money and run...
-Jens
