EA's Bid For Take-Two Not Just About GTA4
After Electronic Art's failed attempt to purchase Take Two Interactive this weekend, much of the media's attention has been focused on T2's Grand Theft Auto 4, which is set to be released on April 29th. True, Grand Theft Auto is a very lucrative series, but is it what EA really covets?
Wedbush-Morgan analyst Michael Pachter told GamePolitics that the true plunder of the EA purchase would be Take Two subsidiary 2K Sports. 2K Sports, of course, is the major competitor to EA Sports and the purchase would be a major coup in that regard. While a new Grand Theft Auto game might get released every couple of years, sports franchises have new installments every year. They produce arguably the steadiest profits of any video game genre.
Said Pachter:"Only EA 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."
2K Sports and EA Sports have been fierce rivals for years and have tried to crowd each other out from the market by securing exclusive rights agreements with sports associations. EA, for example, has exclusive rights to make video games featuring the NFL and its players. The two companies openly compete with their NBA, NCAA basketball, and NHL games but that would end if EA gained ownership of 2K Sports. Presumably they would acquire 2K Games' exclusive rights agreement with Major League Baseball in the purchase as well (even if they didn't, who else would the MLB sell it to?). In short, EA would have a virtual monopoly over professional and college sports video games.
As Pachter notes, this might be great for EA but not so much for gamers. "If these guys have a monopoly, they’re not going to cut pricing on sports games as quickly. We’ve been seeing sports games come down [in price] before Christmas the last couple of years. That’ll never happen again." The idea of EA having a monopoly would also be very disconcerting to many gamers who have criticized the developers for only adding marginal improvements to new installments of its sports titles. It's surprising that such a huge aspect of an EA takeover hasn't caught the attention of most media.
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