EA flips off Take Two

The finance sector is caught up today with the collapse of some of the biggest and oldest banks in the US.  This has largely overshadowed a more interesting piece of news to gamers:  EA has walked away from Take Two after 7 months of negotiating to purchase it.

As a result, Take Two’s stock price has taken a swan dive, as all kinds of speculators unload the shares of TTWO stock that sadly, EA is not going to buy from them at a premium.  What I find interesting is that analysts seem to think this is a mortal blow for Take Two.

EA saw a good opportunity to buy Take Two because they have some extremely talented people working there, and several key franchises EA would like to get their fingers in.  From my point of view, this little breakup is better for everyone involved, including you.

EA’s new CEO has been doing a fine job of diversifying their development portfolio into new IP, but you can’t do this entirely buy purchasing studios.  The value in a studio, even more so than in most companies, is in the people who work there.  Intellectual Property they own certainly has a premium attached to it, but no IP in the world is going to be profitable if you don’t put it in the hands of talented developers.  But buying studios wholesale is a risky business, because if those developers think you’re going to mess with the way they run things, they tend to jump ship, leaving you holding the empty - and expensive - bag.

EA needs to look across the continent from Vancouver to Montreal, and look at what Ubisoft has managed to do by developing highly innovative titles in house, much to the delight of their shareholders and the gaming community.  A purchase of Take Two would have consolidated the entire suite of sports franchises under EA’s grip stifling innovation in that arena even further - not something anyone wants to see.  Take Two has quite a few studios, and as much as analysts talk about EA being able to integrate these studios under their own technology stack, this has historically not worked out well for companies that tried to do so.

Take Two isn’t exactly bereft of cash.  GTA has historically been the foundation upon which Take Two operates, but they have other gems as well (Bioshock, Civilization).  If they can retain their top talent - and continue innovating new IP - I expect we’ll continue to see both shareholder value and excellent titles out of Take Two in years to come.

The Electronic Arts Revival

Once upon a time, I was a wee lad in college applying for internships.  I had an interview with EA over the phone, at the end of which they asked me if I had any questions.  I asked them what they thought they were doing to advance the medium of Video Games.

They didn’t like that so much.

See, inherent in a question like that is the implication that I don’t really think you ARE doing anything to advance the medium, because if I did, I wouldn’t have needed to ask.  The interviewers mumbled something about graphics, and we ended the interview there, neither of us being particularly impressed with the other.  I went to go work for Microsoft instead, which eventually resulted in my position with Xbox now.

EA has in the past decade purchased and then eviscerated some of the most best and most promising studios the world had to offer.  In addition to this lovely practice, they had the unfortunate habit of working their employees to death and discarding their burnt out husks, primarily on insipid franchises which change only incrementally from year to year, and yet are released for full price.

John Riccitiello said he was going to turn this around.  Apparently I’ve assumed that CEOs and Politicians seems to share the trait of spewing whatever bullshit the public wants to hear, but it seems EA has actually gone and done it.

Dead Space, above, looks scary and fucking awesome.  Do you know that this game is banned in three countries?  That’s a far cry from the policies of the old EA.  Spore (say no more) comes out on Sunday.  Mirror’s Edge, a critically acclaimed first person runner, is a game that does not contain the color green.  BattleForge is an RTS that uses a collectible card game mechanic to drive gameplay (through micro-transactions even).

EA, you’ve either totally lost your shit, or you’re starting a Renaissance.  Either way, I forgive your past sins, and I look forward to what you’ve got to say for yourself in the future.

A Week in Cuba

As previously mentioned, I went on vacation last week, and apparently the world does not stop while I’m laying on the beach.

Big news of the last week.  Apparently it was GDC or something.  I wasn’t there, so if you want juicy GDC goodness, you’ll have to look elsewhere.

Microsoft

• Microsoft, in a new initiative called Dreamspark is making much of its developer software free to students.  This software includes Visual Studio 2008, SQL Server, XNA Game Studio, XNA Creator’s Club Subscription, and Expression Studio.  That should be plenty of tools for would be game developers to muck about in.  Details are here.
• Microsoft is dropping support for HD-DVD with the discontinuation of the add-on for the Xbox 360.  All remaining units are being cleared at firesale for $50.  I would not be surprised if there was a Blu-ray add-on in the future.
• Microsoft announced during the GDC 2008 Keynote a new service, the so-called Xbox Live Community Games.  Under this service, users can build a game using XNA Game Studio, and then upload it directly to a community portal where the game is democratically reviewed.  The reviewing process is intended to look for infringing or objectionable material.  The best of these games get automatically uploaded to Xbox Live for the masses to enjoy.  No specifics on pricing, or if the developer is getting kickbacks (as one would assume they would if Microsoft is collecting on their work).

Sony
On the Sony side of things, Phil Harrison, one of the founding members of Sony Computer Entertainment, and the president of SCE Worldwide Studios, has submitted his resignation.  Changes in leadership often come with widespread changes across the board, but it depends on the size and momentum of the company in question, and Sony is rather largeish, so I would not anticipate a massive change in the direction of their games.

Australia

Australia is talking about finally getting a new rating that will allow more mature titles to be sold there.  Unfortunately, I doubt this will alleviate the massive delays they usually incur before North American/Japanese release, and release to the land down under.

Electronic Arts

EA is offering to buy Take Two!  I would suggest in reaction to the recent Activision/Vivendi merger, EA is looking to add some more meat to its already colossal frame.  EA’s new CEO John Riccitiello has mentioned that he’s extremely unhappy with the scores EA’s games have been getting of late, so there might be some incentive to own some games that are critically acclaimed (which might have fueled the recent acquisition of Bioware as well).  Take Two is brimming with talent, including the developers of the Grand Theft Auto series (Rockstar), Bioshock (2K Games), and Civilization (Firaxis).  While EA’s initial bid is a bit lower than Take Two is looking for, most analysts are expecting this deal to go through eventually at some price point.

On a side note, Take Two is the current owner of one of my favorite IPs of all time, the Tex Murphy series.  This series was created by Access Software (later renamed to Indie Built) in the 90s.  Microsoft acquired them for the Links Golf series, and then sold the company to Take-Two who then shut it down.  While a revival is not likely at EA, it’s marginally more likely than at the parent who shut them down in the first place.

EA has a habit of killing great teams by using simple business math.  If you have everyone using the same tools and processes, costs are lower.  Unfortunately, this slows down and breaks the dynamic that produced the great team in the first place.  This is something you can do with teams that are having trouble realizing their full potential, perhaps due to infrastructural problems, but when you acquire a really solid team, it’s important that you just leave them alone to do their thing.  Riccitiello seems to be aware of this, so perhaps Take Two’s properties are not going to join the legacies of Westwood, Bullfrog, and Origin.

Havok

Havok is free, to which I say, OMGWTFBBQ.  Well, okay, it’s only free on the PC, but as of May 2008, you at home will be able to download your very own copy of Havok Complete (which includes the Physics and Animation packages).  This is a non-commercial license, but it allows hobbyists to get their hands dirty with the most widely used physics engine in the PC gaming space, which is good for companies looking to hire people who know Havok already.  This theoretically lays some groundwork for Havok’s more specialized products for behavioral animation, deformable solids, and cloth rendering.

And that’s all that happened this week, I’ll be posting on a more semi-regular basis now.

On Console Commoditization

Denis Dyack is an interesting character. While you have to respect someone who’s that vocal and passionately committed to his craft, I do have to disagree with his point of view on a regular basis. Electronic Arts and Dyack have both been quoted in popular press advocating for a single console that all developers can target without having to port their code.

Gamasutra published a summary of a talk Dyack gave at GDC Lyon 2007 this morning where he stated that not only was it desirable, it was inevitable. I have some major problems with most of the points he brings up. He implies that all technology will inherently become commoditized in the long run, distinguishable only by brand, and cites automobiles, cameras, and cell phones as examples of this.

Here’s a fun experiment you should try at home. Go to your nearest auto shop, tell them your indicator lights are burnt out, and you need new ones. Surely if automobiles are commodities, and are standardized, you should be able to do this. Except you can’t, in fact it doesn’t even help if you tell them the manufacturer of the car in question. You need to know the manufacturer, model, and year of manufacture to be able to nail down something as simple as indicator lights. This is true for nearly every component in your car.

Try buying a new lens for your DSLR camera. If you walk into a camera store and say you want a new 120 mm lens, but you don’t know the manufacturer and mount of your camera, you’re going to get some strange looks.

The entire industry of companies who’s sole purpose is to wrap existing software in their Java-based framework, and port it to every cell-phone known to man. This is not trivial, they need to maintain databases of all cell-phones they support, and adjust display sizes, input mappings, color depth, etc. to support this supposedly ‘open framework’. If you ever wondered why cell-phone games are such shit, this is a major contributing factor.

Nevertheless, all of these industries do have certain standards. These standards exist because it is beneficial to all of the manufacturers of these devices that they are inter-operable with each other. This is why cameras will all save in JPEG format, cars all run on relatively similar gasoline, and cellphones all connect to networks using a very small scope of protocols. There are infrastructural costs that are prohibitive for manufacturers to independently build on their own, so it behooves them to adopt standards for individual benefit. The fact that this happens to benefit the public is incidental.

I would argue that there already exists an ‘open-platform’ for game development. It’s called Microsoft Windows, and it runs on a PC. Using DirectX, you don’t need to care specifically what hardware a user has, you just write it such that it can handle a certain spectrum you’re willing to tolerate. Dyack dismisses the PC as a standardized platform, I assume he means that all PCs do not have the same hardware, and thus are not standard. This seems to be at odds with his previous statements regarding the standardization of cars, digital cameras, and cell phones, as none of the above have the same hardware either.

He’s right about one thing though. In a one console future, the publishers, the developers would win big time. This is probably why you only hear about this kind of thing from developers like Dyack who are feeling the portability pain, and publishers like EA that have to pay for it. While consumers would theoretically win, I would argue that they largely don’t give a shit at the moment. Most people are not going to buy more than one console, and certainly not all three. Fortunately for them, most games are available on multiple consoles, so it doesn’t affect them (and Dyack argues that exclusive content is becoming more rare anyway, thus making this a moot point).

Unfortunately, the people who don’t win in this scenario are the manufacturers. Nintendo’s entire business strategy is built around differentiating their hardware in unique ways to spawn entire genres of games that only work on their systems. A one console world is not a good place for Nintendo to be in, and they will fold up shop before they agree to that deal. The ‘economic realities’ don’t snuff up against real innovation, and Nintendo has been taking innovation to the bank since the release of the Wii.

If you believe the reports on hardware pricing, Microsoft and Sony both lose money on hardware. The method by which they regain profits is then by issuing licensing fees against developers who want to make games for their console. Selling commodity consoles completely undermines this business model. Game by their very nature push the boundaries of what is possible with hardware, so unless studios stop being interesting in creating beautiful photo-realistic graphics, this medium is going to require some expensive hardware, and that means licensing costs.

Unlike in the car industry, the cell phone industry, and the camera industry, console manufacturers have nothing to gain by adopting an open standard against which all game will run, and certainly have no interest in becoming a commodity - trust me. Nokia doesn’t want to be a commodity either, it’s just an unfortunate artifact of adopting standards due to prohibitive capital costs of not doing so. The console industry does not suffer this problem, and thus I wouldn’t be advising Silicon Knights or Electronic Arts to be holding their breath for the arrival of the one true platform. I know it sucks gentlemen, but unless you have a way to force the market conditions in a different direction, I would suggest focusing on making great game experiences and leave the economic talk alone.

As a disclaimer, I was not at Lyon GDC 2007, and so I may be misinterpreting the reports of what Dyack actually said. If by some bizarre artifact Denis ends up reading this, I would encourage him or anyone else who was at the talk to set me straight.