The Political Game: One vote against an EA Take-Two takeover
Each week Dennis McCauley contributes The Political Game, a column on the collision of politics and video games:
Unless you've been watching Grand Theft Auto IV trailers nonstop for the last few weeks, you probably know that game publishing giant Electronic Arts is attempting an "all your base are belong to us" maneuver on GTA series publisher Take Two interactive.
Captained by new CEO John Riccitiello, EA launched its acquisition campaign in February by offering a bonus of 60% over Take Two's then share price. T2, led by chairman Strauss Zelnick, told EA to stick it, at least until after next week's GTA IV release. EA then appealed directly to Take Two shareholders. So far, however, that strategy is not working out. EA has accumulated less than 10% of the outstanding T2 stock and has been forced to extend its deadline until May 16th.
It's unclear how this will play out, of course. But let's hope it ends badly for EA. While acquiring Take Two may line the pockets of a few fat cat investors and transform some workaday EA execs into game industry Big Swinging Dicks, there's no way in Hell that this deal is good for gamers.
Look, I'm no EA hater. And, unlike some gamers, I'm certain that they wouldn't dare tinker with the sacred cow of the deal, the GTA franchise. But what EA surely will do is consolidate its monopoly on sports games. And that means higher prices and fewer choices for gamers. And that means you lose. In fact, it was Wedbush-Morgan analyst Mike Pachter who told me that Take Two's sports games – not GTA – were driving the deal. It breaks down like this:
EA and T2 currently compete on basketball and ice hockey games. EA has an exclusive on NFL and NCAA football, while T2 has a third-party exclusive on Major League Baseball. If EA buys Take Two, the competition in basketball and hockey goes away. As Pachter told me, "By taking out all of that [competition], EA has a monopoly in sports. 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."
Indeed, we've been down this road before with EA, and it was a train wreck for gamers. Some Joystiq readers will recall the NFL 2K series from Visual Concepts. It was a very good pro football game franchise that originated on the Dreamcast but later migrated over to the PS2 and Xbox. Some reviewers actually came to prefer NFL 2K to EA's Madden series. What's more, Take Two, in a competitive effort to win market share in later years, priced it very aggressively ($19.99). Declining to go that low in price, EA was forced to reduce Madden to $29.99 just to stay competitive (there's that word again).
So what happened next? EA secured an exclusive license with the NFL and NFL Players Association. Quicker than a LaDainian Tomlinson sprint to the end zone, the NFL 2K series ceased to exist. The next edition of Madden, no longer facing competitive pressure from NFL 2K, jumped up in price to $49.99. EA's revenues, of course, shot up. Gamers, however, had to plunk down twenty bucks more than the previous year and lost the opportunity to choose their pro football game based on a competitive comparison of features and price. You either played Madden – at EA's price - or you went home.
Is this legal? Apparently. Is it fair? Only if you are an EA investor.
In any case, it was refreshing to learn recently that the Federal Trade Commission is taking a good hard look at potential anti-trust (i.e., monopoly) concerns in the proposed EA-T2 deal. Let's hope the FTC investigators don't forget EA's history with the Maddenopoly.
The bottom line? While I enjoy a number of EA franchises like The Sims, Command & Conquer, Battlefield, Burnout and, yes, even Madden, I cast my vote against the EA takeover.
It's a bad deal for gamers.
Dennis McCauley is the Political Editor for the Entertainment Consumers Association (www.theeca.com), tracks the political side of video games at GamePolitics.com and writes about games for the Philadelphia Inquirer. Opinions expressed in The Political Game are his own. Reach him at
