The Big Issue: First Take-Two, next EA's own console?
Deputy Editor Wesley Yin-Poole wonders if EA plans to challenge Nintendo, Sony and Microsoft with a stunning entry into the home console market.
Why would Electronic Arts want to buy Take-Two, the company behind gangster sandbox Grand Theft Auto IV, critical darling BioShock and the embattled 2K Sports publishing label? Power, prestige and printing money? No doubt. But are they EA's only reasons for tabling the $2billion bid? I'm not so sure.
When I first heard of the astonishing deal it got me to thinking that maybe, just maybe, EA wanted Take-Two not just because it wants to sell more sports games at a high price, but because it believes that now, finally, the time is right to take on the might of Nintendo, Sony and Microsoft by releasing its own video game console.
It's not so improbable. Indeed, I wonder why it's taken EA so long. Pre Activision Blizzard, EA was the world's largest independent game publisher. For years the company, often criticised by gamers for churning out poor quality annual updates of its most popular franchises, has been one of the game industry's biggest and most influential players. Its recent purchase of Mass Effect developer BioWare Corp and Mercenaries: Playground of Destruction creator Pandemic Studios didn't surprise anyone. EA has a long history of gobbling up independent developers like an ant-eater devouring a packed nest, and with differing results.
EA has demonstrated its commitment to change with the purchase of Mass Effect creator Bioware.
But things have changed. EA has changed. CEO John Riccitiello, who joined in February 2007, has breathed fresh air into a company that was growing stale in its comfort zone. BioWare and Pandemic, two super-talented development studios, have been bought, and their critically acclaimed games added to the collective. New IP has been announced, including Dead Space, Spore, Army of Two and Mirror's Edge. Pandemic is working on interesting WW2 stealth game Saboteur, and BioWare is, no doubt, currently embroiled in Mass Effect 2. These aren't the kind of games EA has built its reputation on.
That's not all. There is a drive within the company to allow its development studios to foster a greater sense of identity and independence. When I sat down recently for a chat with a member of EA's UK team, this change in direction, this reorganisation implemented by John Riccitiello, was hot topic of conversation. EA is trying to show gamers that game quality is more important now than it has ever been. Army of Two developer EA Montreal for example, was granted extra time to polish when the game received negative previews prior to its planned release late last year. Burnout Paradise developer Criterion was allowed the freedom to shake up the action driving series by implementing a seamless open world driving experience - somewhat of a risk given the popularity of the series in its previous, more traditional form.
What does it all mean? Is the purchase of hardcore titles like Mass Effect and the investment in new IP an attempt to soften the animosity towards EA from hardcore gamers prior to the announcement of its first games console? Does it want to give such a console a greater chance of success by "getting in" with hardcore early adopters?
Whatever the answer, EA's bid for Take-Two got me thinking that there's never been a better time for EA to enter the home console market. As analysts have already said, EA is most interested in Take-Two's 2K Sports label, not Rockstar and GTA 4 (some analysts have suggested developers at Rockstar North would leave if Take-Two accepts EA's offer). By ending its biggest competition in the lucrative sports video game market, EA would have an even bigger share of the sports pie. A veritable virtual sports monopoly if you will.
An EA console would command the exclusivity of some amazing games.
Imagine EA brought that virtual sports monopoly exclusively to its own console. That's FIFA, Madden, Tiger Woods, MLB, NHL and NBA, not to mention Cricket, Rugby, Nascar and God-knows what else, on EA's machine and NOT on the Xbox 360, PS3 or Nintendo Wii. That's a hell of a lot of exclusivity right there.
That's not even including exclusivity on the inevitable GTA 5, BioShock 2, Mass Effect 2, the next Spore, the Sims franchise and the Burnout, Command & Conquer, Crysis, Medal of Honour, Battlefield and Need for Speed series.
Having all those franchises exclusively on its own console would deal a severe blow to Microsoft, Sony and Nintendo, who currently rely on EA's games to shift millions of units. And we haven't even started to talk about Ubisoft, the French publisher behind the Tom Clancy series of games and Assassin's Creed. While it has already come out and reaffirmed its resistance to EA, the US company already owns 15 per cent of Ubisoft's shares. And what about Tomb Raider publisher SCi, whose shares rose following the EA Take-Two news?
Entering the home console market does require an insane amount of investment, both financially and intellectually. The amount of commitment required to make a success of it (indeed MS has only recently started to make money out of its game business), especially in today's super risky climate, is stupendous. But if any video game company outside the big three can do it, EA can. It has the cash, the brand awareness, the portfolio of games and the development talent to make it happen.
No company right now is better placed to make a success of entering the console manufacturing business. Indeed I can see a potential EA console doing extremely well, not just because of what it might offer gamers, but because of what it would take away from the competition.
Some commentators have started to look past what many feel is the inevitable takeover of Take-Two and begun to predict what might be next for EA's collective. Ubisoft has been mooted, as has SCi. I would say this - don't discount an even more surprising, and more exciting, move - the announcement of an EA console.
Do you think EA will release its own console? If it did, would you buy it and why?
User Comments
Anonymous
Wozza
No, I would say that the biggest reason for buying Take 2 would be to monopolize sports games and to raise their share values on the market.
jj
Also mass effect is co-owned by microsoft as they own the IP. Microsoft won't just give it to them.
Dave
Now if this were to happen i could see MS edging sony out of the market. all it does is splash out a few billion dollars, buy up the best developers, form an alliance with EA and maybe Activision Blizzard. Nintendo could survive catering for the casual market and Japan along with handheld dominance, it allies itself or buys Capcom, Konami etc. leaves the hardcore, western and PC markets to MS, who will inevitably turn to digital distribution whilst maintaining the conventional disc format.
not saying this will happen but a variant of it is a distant possibility
doobi
Firstly EA already make a bazillion dollars across all platforms and cutting off those streams would be suicide, just look at the cross platform sales of something like NFS, or madden. They're big, but not indispensable.
On the other hand, developing hardware is a massive risky undertaking, when for all intents and purposes they're best buds with Microsoft swapping execs like some incestuous hick family. All they would do is offer MS total EA exclusivity in exchange for 100% royalties and MS would snap it up in a second - they'd make their money of their first parties and royalties on the other 3rd parties trying to hang on to the EA juggernaut.
martin
Montrealien
Yes better
Dont even dare to dream EA no body cares for you.
Dorf
#1. Developers LOSE money on consoles for the most part unless you build an underacheiving system (See Nintendo) Hardcore gamers require newer technology in the consoles.
#2. The biggest problem is IF EA ever did this, what do you think Microsoft would do to EA's massive PC side fo the business? Microsoft could just refuse to publish them on the PC, which might be good for Apple or Linux users.
deadmoshun
ollie
oldest gamer
FantasyMeister
If they were to produce anything at all on the hardware front it would probably be a unit that you could download games to rather than use discs in, totally driven by content downloaded to storage and running directly from that storage. For want of another word they could call this new machine a 'PC' and most gamers have one already.
This would allow them to develop for just one format, publish and, most importantly of all, distribute their own games without a middleman, all of which means huge profits.
The problem for EA is that both Microsoft and Sony, and to a somewhat smaller extent Nintendo, are also looking in this direction, so really once EA feel they've consolidated their No. 1 publisher position there's no need for them to go into competition with their biggest customers other than pure vanity.
And because electronic distribution appears to be the way forward, it would seem a certain loss-maker to go into hardware design and production at this time. They'd never recoup their initial R&D expenses if they brought out a dedicated games console that gets replaced a decade later by electronic distribution. There's also the issue of who would develop for it other than EA's own stable, and could it survive running nothing but EA games? Doubtful when you consider the number of great first party titles from Nintendo, Microsoft and Sony.
The cynic in me sees EA's latest drive of attempted acquisitions simply as a means to killing off competition, I think their sights were set firmly on the 2kgames brand in the Take Two portfolio.
And whilst there were some rumours kicking around last year regarding EA going into the hardware market, I think since then they might have seen sense and given up on the idea.
If they did bring out a console would I buy it? No. It's all about the games, and I can't see EA ever having a diverse enough portfolio to justify a purchase.