Dave Kemick

Seems like I’ve been hearing the term “hostile takeover” a lot lately. Recently the term was appended to Microsoft’s interest in accruing Yahoo, and then this past week the gaming community was going nuts because EA is trying to buy out Take Two (publisher of both Bioshock and the Grand Theft Auto series). Basically what a hostile takeover is, at least as far as this example goes, is when the pursuing company (EA) offers stockholders in the pursued company (Take Two) a huge chunk of money for their shares. So for instance I believe Take Two’s stock was somewhere in the middle teens, and so EA will offer shareholders about $26 per share. It’s hard for the shareholders to pass that kind of offer up, and if they go ahead and take the deal and EA gains more than 50% of Take Two’s stock then obviously they have enough say to get Take Two to agree to being acquired.

Does that make sense? I re-read it and I wasn’t sure…either way it doesn’t really matter. The important thing is that EA is trying to buy a really awesome game publisher and a lot of people are concerned about what will happen to their favorite Take Two franchises if this deal goes down. EA has had a rivalry of sorts with Take Two for a long time, because Take Two used to have a competing NFL franchised football game on the market that a lot of gamers preferred over Madden. Then, in what some people consider to be an “evil corporation bent on world domination”-type move, EA gained 100% exclusivity to NFL gaming franchises, pushing Take Two (and the NFL 2K series) out of the market. Now EA has a monopolistic grasp on NFL games so they don’t have to keep their products up to snuff in order to sell. Competition is good for everyone, and if anything the lack of competition tends to kill innovation. A lot of people say that’s the reason that for the most part the Madden series is the same every year without any new additions to the gameplay. Of course others will say there’s only so much you can do with a football game…

This news really doesn’t bother me. Although I didn’t like when EA pushed Take Two out of the NFL game market, they’ve already said that if they get ahold of Take Two their stance will be relatively hands-off allowing developers to continue to develop games like they would EA or no EA, and so the end product won’t be effected. That’s all I worry about. If the game is good I don’t care who’s publishing it, Take Two or EA it’s all the same. Still, there’s the “anti-corporate” side of me that makes me lose some respect for EA. This isn’t the first publisher EA has tried to swallow up, they also went after Ubisoft not too long ago (creators of the Tom Clancy series of games, Prince of Persia, etc.). Like I said if all of these developers are under EA there isn’t much incentive to innovate or put out a truly great game because there’s no competition in the market. The thought of Take Two, Dice, and Ubisoft all getting sucked into EA turns my stomach a little.

I guess all we can really do is wait and see at this point. The idea behind a hostile takeover is that the company will be sold whether it wants to be or not, so I guess it’s sort of inevitable at this point? Take Two is undoubtedly telling their shareholders to hold off, saying that even at the increased stock price their company is being undervalued, particularly with Grand Theft Auto 4 on the horizon. Projected numbers for GTA4 are easily in the millions, upwards of 9 million copies sold in some cases. That’s a cash cow for Take Two, so if investors are told to just hold back and wait until GTA4 comes out Take Two might be able to avoid EA because, by that time, they’ll have made enough money to be too costly for EA to purchase.

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