A Double Take of Take 2
Several months back, Electronic Arts (EA) filed an unsolicited buyout offer of Take 2 Productions (T2) at a price of $26 per share. To the casual hardcore gamer, these events usually don’t get noticed. Games just get made. Now, if you are a fan of the Grand Theft Auto (GTA) franchise, and you’re one of the teeming masses that can’t wait for the fourth number in the series, you really should have been paying attention.
Ostensibly, what this meant for you was that if the buyout was successful, GTA 4 probably would have been delayed until the 4th quarter of the year in order to make the holiday season more profitable. Take 2, on their own, needed this title to come out as soon as possible. Don’t get me wrong, they aren’t in dire straights. GTA simply would allow a greater cushion for the next year. Among their own intellectual properties, they have a larger number than EA does.
This seemed strange, overall. EA has the best selling game in history in its lineup, The Sim, which just recently got major press attention for having reached the coveted 100 million-unit mark, as well as a number of other AAA titles. Upon thinking about the rest of the games that EA has, Madden NFL 08, NHL 08, NBA Live 08, etc, and about T2’s titles: NBA 2K8, NHL 2K8, I realized something. EA really doesn’t need T2 for their innovation, what they could want is a monopoly over the sports titles.
You can see where this has already happened, in the missing acronym above, T2 has no NFL games for this year, or for the past 3 years. EA secured NFL and NFL players licenses after a pricing war ensued in 2005 where T2 offered their products at $19.99, and in order to stay competitive, EA released theirs with a price point of $29.99. The next year, when EA had the licenses, the games’ price rose to $49.99 and players either bought that or went home empty handed.
Take 2 originally stated that EA had undervalued their stock at $26, and declined the initial offer. Shortly thereafter, EA put in another bid, again at $26, going far enough to open a section of their website regarding their offer. Overall, it was laughable. On April 17, Take 2 had its shareholder’s meeting, where they encouraged their stockholders to deny the bid. I wholly stand by this position. Monopolies are bad. Go directly to jail. Do not pass Go. Do not collect $200. Do not get lube as contraband.