By now, I'm sure many of you have heard about EA's acquisition offer to Take-Two over the weekend for $26 per share. And, if you haven't heard, you can take a look at EA's website explaining their reasons for the acquisition. A lot will be made over the coming days about the implications of this merger, but much of it will center around the idea that EA milks franchises dry and stifles creativity. While those may be legitimate concerns, John Riccitiello has highlighted the new "label" organization of EA and has pointed out that Bioware and Pandemic are both having positive experiences under the EA umbrella. Let me put aside those fears for the moment and discuss a matter of monopoly.
Currently, EA has an exclusive deal with the NFL through 2012. To cover their bases, they also signed a deal with the NCAA to gain exclusive rights to college football through 2011. Aside from All-Pro Football 2K8, EA already has the football video game market locked down. While I wasn't aware that there were NASCAR video games (it just doesn't fall into my sphere of interest), apparently EA has the license for that property locked down until 2009. EA also has the dominant FIFA franchise. The most impressive asset they have in the realm of sports, though, is the ESPN integration. This is a 15-year deal that will carry EA through 2020 and make available all manner of ESPN content on EA sports games including exclusive articles and live game stats.
Take-Two, in the form of 2K Sports, is the only substantive competitor in the marketplace for sports video games. Until EA acquired that exclusive NFL license, there was a period in which the NFL 2K games were getting better reviews than the Madden series. They are not entirely without exclusive licenses either: they own the third party rights to MLB video games.
As for the other major sports, assuming one still considers hockey a major sports, EA and Take-Two have the most prominent franchises within each. For the NBA, EA has NBA Live and Take-Two has NBA 2K. For the NHL, EA has NHL and Take-Two has NHL 2K.
If these two companies were to merge, there would one publisher for virtually all sports video games. Such marketplace domination rarely leads to creativity and innovation.
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February 27th, 2008 at 11:57 am
[...] certain that the launch of GTA4 is the focus of EA’s bid. As has been discussed previously here and by analysts, with 2k Sports under EA control, the combined entity would hold an effective [...]
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