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.

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.