Archive for the 'business' Category


EA Bids for Take 2

Reported from Kotaku

Electronic Arts just called me to let me know that they are making a bid to aquire Take-Two Inteactive in an all-cash merger of about $2 billion.

The offer set Take-Two’s stock at $26 per a share, about 64 percent over the company’s closing stock price prior to the company’s Feb. 15 offer.

More details to come.

I’ve speculated that Take Two would be sought after in the past.  When the Activision/Blizzard merger happened, I had expected them to be the be the biggest potential buyer of Take Two. Although most would point to Take Two’s hold on Grand Theft Auto 4 as the primary driver of a buyout, I believe (and still believe) Take Two’s most appealing asset is Take Two Sports division.

Sports games are a very lucrative sector of the gaming industry. They have mass market appeal and attract a market outside the regular “Gamer” demographic. They’re also easy to annualize – add a few gameplay tweaks and a roster update and you have a brand new game.

In recent years, the Sports genre in games has been dominated by EA and their EA Sports brand – specifically, Madden. Madden has had a stranglehold on America’s favorite sports primarily because of their exclusive license with the NFL.

On other sports games, EA has had to fight the competition for dominance, mainly Take Two.  For example, T2 Sports and EA year after year fight each other over being the better NHL game. Looking at some of the big review sites through Gamerankings , both of their NHL franchises have been alternating for being the better NHL game in the last few years – a sign of good competition. Take 2 even has their own exclusive franchise through baseball and the MLB. Although not as popular as football, it’s still popular and nothing to sneeze at.

A buy in Take Two would be a buy into the Sports genre.  So, with EA bidding on Take Two, EA is keen on locking down Sports as their genre. Great for them, but not necessarily for the rest of us. Today, if one was to pick up a copy of Madden 08 and play Madden 05, the not a lot of difference – infact, there’s less in ’08 than ’05 in terms of straight up content. Without competition to force developers to make games more fun, how long will it take before players realizing they’re buying the same game year over year?

I’d like Take Two to refuse the bid but I doubt they will. It’s been well known that they’ve been grooming themselves for a buyout for a while. Also, EA is the biggest third party developer out there. They have the most money and can afford a bigger bid than, perhaps, Blizzard Activision.

I don’t like the bid but I don’t blame EA. After making so much money off of Madden, locking down the Sports genre just makes too much sense. And I guess Grand Theft Auto 4 and Ken Levine is kinda nice too.


Acquisitions –Why Take Two Could be Next

Huge waves where made when Activision and Blizzard announced they would be merging together to create the largest third party publisher in the industry. With ever increasing costs of making games, teaming up makes good business sense. For example, not only does it allow resources to be pooled together (money, technology, etc), but it also a prevents a single blockbuster flop jeopardizing a company’s financials. With consolidation being more attractive in the industry, other publishers may be looking to buy out or be bought out.

Take Two had been rumored to be bought out in the past multiple times, and each time, it was believable for good reason. Compared to EA and the recently formed Activision-Blizzard, it’s not a huge company. It doesn’t gross nearly the same amount of money, though conversely, it also means it’s small enough to be affordable to buy. But even though they might be smaller, Take Two still brings a big amount to the table.

Sports games important to the industry because they provide companies with a predictable and substantial amount of income on an annual basis. Take Two’s subsidiary, 2k Sports, is a big player in the sports genre and are outdone only by the much larger Electronic Arts and its “EA Sports” brand. Unfortunately, they don’t have the much valued (possibly, most valued) sports license, the NFL – EA has exclusivity until 2009. However, 2k Sports compensates by putting up a good fight on the other mainstream sports by producing officially licensed NBA and NHL games. To top it off, they even have exclusive rights to MLB games. 2k Sports could be especially valuable to the newly created Activision-Blizzard as their combined portfolio of games is still absent of the mainstream sports – a must if they really want to go head to head against Electronic Arts.

Another Take Two subsidiary, 2k Games, is also worthy of big attention. After acquiring Ken Levine’s Irrational Studios (now 2k Boston), a number of critically acclaimed new IPs where created. These include the cult favorite Freedom Force series and the more recently released blockbuster, Bioshock. 2k Games also includes subsidiary Firaxis which is the home of an even bigger name in the industry, Sid Meier. With gamers tiring of sequilitis, having talented minds is important to keep jaded gamers excited (and paying) through new properties.

And then there is the elephant in the room: Grand Theft Auto. Rockstar Games’ GTA is a huge title and its impact on the game industry is up there with Final Fantasy and Halo. GTA4 is expected to sell millions of copies and there isn’t even a release date yet. Ironically, the biggest reason to acquire Take Two could also be the biggest reason not to. Already expected to bring home millions of dollars, Grand Theft Auto 4 would make an acquisition very costly to potential buyers. There’s also the huge amount of negative PR associated with Grand Theft Auto. Picking up the series is practically begging for trouble from many, including a certain attention grabbing attorney.

Despite the controversy it’s sure to stir up, Grand Theft Auto 4 will generate millions for Take Two. But, with Rockstar’s contract ending in early 2009, Take Two may have to face going on without new Grand Theft Auto games under its belt. With the possibility of losing their golden goose egg, Take Two becomes even more attractive to pick up or sell out.


Hi, I'm a nobody. But I want to be Somebody - specifically when it comes to games. I've always thought I'd grow out of them, but ever since I was a little kid, I've been playing them. On my quest of becomming Somebody, I've been looking at The Biz and had some crazy ideas of my own. Instead of abandoning them to memory, I've decided to keep a log of them here. It just might come in handy some day.
July 2018
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