EA to take Take 2?

By Kieron Gillen on February 24th, 2008 at 8:51 pm.

CONSUME!

“Consolidation” has been mentioned time and time over in the last few years, and it’s taken an interesting turn. Electronic Arts have made an offer of $26 per share to gain control of Take 2 Interactive – two billion GB Pounds, over sixty percent more than their worth when the offer was made. The offer was made to the Take 2 board of directors – who rejected it. EA have now made it publicly known to Take 2′s shareholders. The take-over would give EA ownership of all of Take 2′s brands and studios, which includes everyone from Rockstar North to Irrational (aka, hnnnggghhh, 2K Boston). Lots more over at Yahoo.

Initial thoughts: This has be taken as a vote of confidence in the forthcoming GTA4′s quality, yeah? [Answer: yes - read on]

EDIT by Mr Walker: It seems so. EA aren’t being so subtle about this. In fact, they’ve set up a site called www.eatake2.com. On the site is an FAQ answering a lot of the questions currently appearing in your head, apart from the one that goes, “Isn’t it incredibly weird that EA are making a website for their £2bn proposed take-over of a company?”

So are they going to stand behind R* the way Take Two have? It seems, yes.

Do you intend to kill or restrict any of the R* franchises?
We strongly believe that behind all the controversy is a core of great intellectual property and development talent. These titles don’t sell millions because they’re controversial; they sell because they’re great games. We have no plans to change that.

Terrified Take Two management have no such reassurance, however.

Where would Take-Two roll up within EA’s new label structure?
It’s too early to discuss plans for managing and integrating the Take-Two team. What we can say is that EA’s new decentralized structure and Label-based model can give these teams the freedom and responsibility they need to continue making great games.

When asked, “Will you be buying the Earth’s soil and 90% of the sea, EA did not reply,

How much?

PPS: Take Two have posted their reasons for rejecting the initial offer.

, , .

30 Comments »

  1. Nick says:

    I’d say that they are quietly confident in massive sales of GTA4, yeah…

  2. Crispy says:

    Remind me again who EA don’t own?

    This after the “we’re sorry for swallowing up all the best studios and starving them of creative control, we won’t do it again, honest” stunt (which I’m calling a stunt precisely because this latest takeover bid validates it as such).

  3. Dinger says:

    Not necessarily. Cringely has an interesting take on the Microsoft-Yahoo deal that might be relevant here. T2 has two major assets that EA could want: their title franchises (GTA), and their “elevator assets” (the folks who work on GTA). Franchises are nice, but there’s the tendency to view the market as a Zero-sum game. Let’s say GTA4 sucks. I mean, really sucks. There will be a GTA5. But if that sucks too, the franchise will go the way of Lara Croft. Meanwhile, EA could view a drop in GTA sales affecting their bottom line the same way the makers of AD&D online are praying for an asteroid strike on Blizzard’s HQ.
    Elevator assets, on the other hand, matter: good programmers, artists, developers, designers, and so on, are scarce commodities. They make the franchise, not the other way around.

    On the other hand, didn’t we read somewhere recently EA’s talking about the need to respect teams, and admission of “mistakes made” in past acquisitions? When were those comments made, and what was the board of T2 doing at the time?

  4. CrashT says:

    Given Ken Levine, and Irrational’s past with EA, do you think he might consider walking if this comes to pass?

    Or could this potentially lead to Irrational getting to work on an actual System Shock 3?

  5. Evan says:

    If this results in Irrational (well 2k Boston and 2k Australia) working on System Shock 3, I’m all for it.

    Its obvious why EA wants this, GTA is such a huge moneymaker, and Rockstar has some great talent too.

  6. RichPowers says:

    Yay, because we all know EA doesn’t ruin/bastardize/dumb-down games, right?

  7. Briosafreak says:

    All the letters between Zelnick and Riccitiello were made public by Take Two.Very interesting read.

    One wants to buy now, before GTA raises T2s stock value, the other wants to wait for after the release, in order to get a better deal or to be able to say that they don’t need it anymore.

    This should be interesting to follow.

  8. luminosity says:

    Obviously the title should have been “EA to take Take 2, too?”

    That aside, with EA’s admission of past mistakes I’m cautiously optimistic that this might not be a bad thing. Although, these 800 lb industry gorillas never seem to work out that well. That said, with all the strong indie games coming out at the moment, I’m finding it somewhat hard to get too concerned.

  9. fluffy bunny says:

    “So, that’s it. We’ve made a proposal to buy Take-Two. Our preference is to make this a friendly transaction and I’m hopeful we can achieve that.” – Don Riccitiello

  10. MedO says:

    > These titles don’t sell millions because they’re controversial; they sell because they’re great games.

    Sounds to me a bit like “they would sell just as well if they were made a bit less controversial”

    Om nom nom nom.

  11. Nick says:

    “We’re gonna make them an offer they can’t refuse..”

  12. Rook says:

    It would be good for EA to have the 2K sports guys work on their franchises in a kind of leap-frog developer model, each with 2 years to produce 1 game could help out games like Madden quite a bit.

    Also, interesting side note from EA when they released their Q3 fiscal results, but PC was their third highest revenue stream coming behind PS2 and 360, but beating DS, Wii and PS3.
    http://www.bit-tech.net/news/2008/02/06/ea_profits_from_ps2_most_of_all/1

  13. josh g. says:

    This deal probably has a lot more to do with sports titles than most people want to acknowledge. But I doubt the solution would be to alternate which team is putting out a new title each year.

  14. Yhancik says:

    I was thinking the same, Josh.

    Also I was thinking* that it would increase the pool of “old EA franchises”. Project RedLime could become a new Lemmings game :p

    *not seriously

    Also, isn’t Take2 supposed to publish Duke Nukem Forever ?

  15. Mike says:

    If I had GTA4 as a bargaining chip, I’d be asking the earth.

  16. mister slim says:

    Will EA give 2K Boston back their real name? That would be a plus. I’m not a fan of consolidation, but I doubt EA’s management could screw up Take 2 any more than T2 already has.

    Yhancik, Sony owns Lemming, via Psygnosis.

  17. The_B says:

    I do love how EA have to give a disclaimer to “Forward Looking Statements” – it really does make me wonder how stupid (or perhaps rather how anal) some people might be…

    Statements including words such as “anticipate”, “believe”, “estimate” or “expect” and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements.

  18. Jonathan says:

    Is it just me or is Take 2 changing Irrationals name really stupid. In one fell swoop they distance themselves from Swat 4, Shock 2, Freedom Force not to mention Looking Glass. This is crazy. Now I don’t even know who Levine works for, is it Boston? Is it Austrailia?

    Also, Luminosity, don’t encourage the PCGamer writers after the pun they got away with this month. You know the one…

  19. Stromko says:

    Don’t underestimate EA’s ability to screw things up. We haven’t yet seen a GTA where dozens of features were ripped out in order to be re-packaged as ‘microtransactions’ or a long series of anemic expansion packs.

    The only way I’d see EA taking over yet another company as a good thing, is if a day later all the skilled people quit and start new studios. That would never happen of course, I’m sure they all have to sign contracts where if they ever quit they can’t ever work in software development again.

    EA doesn’t have a monopoly on sucking by any means. I mean, look at JoWood. But I can just not buy anything JoWood publishes because I’m sick of their buggy sh*t. No matter how many times I get crapped on by EA there’s really no avoiding them.

    Probably only 10% of what they produce is so interesting that I have to play it, and that little number ends up being 50% of what I buy because there’s just not that many games out there. They have the power to shrink that percentage for any reason they feel like, and should they feel less competition to compete they will gladly do so and turn everything into ‘Roster Update Year of Publication’.

  20. Gameraotaku says:

    The_B:

    Welcome to business law. A publicly traded company can’t say anything official financially these days without pages upon pages of disclaimers like that. Ugh.

  21. Slappeh says:

    Don’t do it!!!! It’ll all crash and burn!

  22. Butler` says:

    It’s hard to tell from the outside whether this is a really good time to bid for Take 2, or a really stupid time.

  23. Jay says:

    I’ve just done a medium length post on the same subject on Preys World
    ( http://www.preys-world.com/forum/viewtopic.php?t=22361&highlight= ) stating why this isn’t necessarily a bad idea, (although I think the asking price is a bit low anyway)

  24. Crispy says:

    Obviously the title should have been “EA to take Take 2, too?”

    But “EA to take Take 2″ has a certain chiasmic quality to it.

    Reading the published letters from EA is a laugh riot. How can they lie so barefacedly?

    We believe that moving quickly to negotiate and conclude our proposed merger is in the best interest of Take-Two and EA. Waiting for a later date leaves open significant uncertainty regarding the timing, the probability and the value of a potential transaction and is not in the best interests of either company or Take-Two’s stockholders.

    Yerrrrrrrrite.

  25. Tak says:

    That’s not a lie, Crispy. The way I read that is corporate-speak for ‘we need to buy now before the company gets a fresh release and is valued at what they’re actually worth’.

    Also, you could consider that EA wants to be careful with their ‘image’ as the family-friendly publisher (though everyone here knows they’ll Butt-Darts 4 if they think it’ll sell). Most of their revenue makers/best sellers are sports and casual games (at a safe guess). GTA4 releases, PTAs and Jack Thompsons the world over get unlimited press time due to the thirteen seconds that the player is in a strip-club (or some other rediculousness) and what’s this? EA wants to buy the company responsible for this affront to all human decency?! They make sports and kids games! OH THE HORROR! Think of the chir’rin, etc. etc.

    Them buying now means any project currently nearing completion would most likely mean, contractually, that it’s non of EA’s business. They can claim ‘we had no part in this and assure you it won’t happen under our watch’ or whatever PR-BS they need to, and sit there with their money.

    Buy after the comercial success and not only are they paying more, they appear to be a bunch of cash-seakers at the expense of children’s innocence, terrorist, flat tires, and sticky theatre floors.

  26. Taxman says:

    Everyone thinks this is about GTA (understandably so) but I think this is more to do with sports. 2K games sport franchises are the last remaining serious competition to EA in the sports arena which is a huge and very profitable market (also it’s were you can pump out yearly updates that the consumer base will continue to buy unlike GTA games which would cost a fortune and introduce fatigue within the franchise).

    By EA taking over 2K they can eliminate the 2K sports games that compete with their own properties & lock up the sports market just for themselves.

    GTA/Bioshock/Civ are just side deserts nice ones none the less and EA isn’t going to mess with their recipe for success in fact they could help particularly with Civ games on consoles.

    2K is not financially healthy as one analyst pointed out, when they are not selling GTA they are losing money & had to take out 150 million loan recently just to stay afloat, it’s only a matter of time before the shareholders give the okay for EA to take over.

  27. Lightbulb says:

    “Dinger – Elevator assets”

    The problem with that logic is that people WILL leave is taken over by EA. Warm bodies are not a reason to buy companies – they will just leave and you are left with nothing.

    IP is a safer bet.

  28. Dinger says:

    Yup. So either you buy the company, and start the employee retention offensive before you seal the deal(which, to be honest, appears to be EA’s strategy), or (and this was my point above) you don’t buy the company, but threaten to do so. In the latter case, the takeover attempt does two things: it rattles employees, making them consider other work; it also (and in conjunction with the rattling) may help identify the key players. If they think their company’s going to get parted out, or bought up, they’ll be even more interested. So basically, they take the company, and shake it out, seeing what precipitates.

    As it stands, I see EA’s move as a bet that GTA IV is a marginal title. Oh, it’ll sell millions of copies regardless. GTA is a huge franchise. But EA is saying: “look, you guys have cutbacks and a major reorganization in the past year. GTA IV is way overdue — heck somebody around here even has a GTA IV tattoo that’s starting to sag –, we’re betting it’s not going to be a huge success. And by the way, if you don’t agree, we’ll make it even more difficult for you guys to deliver.”

    Yes, it isn’t all about GTA. In any case, if all you want is IP, then T2′s collection isn’t worth $2 Bil. In that case, you get a better ROI from destroying the company.

  29. Soren Johnson says:

    It would be pretty funny if 2K Boston/Australia got to change their name back to Irrational… :)

  30. mister slim says:

    Oh, I figured it out. This is all part of an elaborately choreographed conspiracy to merge Maxis and Firaxis. A certain Spore hire is just an advanced pawn. Will Wright and Sid Meier are playing the most devious game of all. We’re on to the -axis Illuminati, Soren!