Sunday, March 16, 2008

EA and Take-Two

LOOK IT'S YEAR 2008 AND EA IS BUYING
It's yesteryear and more when I last updated this blog, but it sure looks like yesterday. Electronic Arts is at it again - buying smaller game industry rivals. Some might think that I have something personal against EA, why else this is the news that makes me write after such a long silence...

WELL MANAGED COMPANY
On the contrary, I cannot but admire their business management and strategic skills. EA is a company that does it better than any other company in game industry. They buy assets to increase turnover and streamline cost structure by booting redundant workers (marketing, distribution, finance, office and non-performing developers...). This generates profits, which in turn can be used to buy more assets, which generate even more profits. No end at sight for this company. Well, maybe News Corporation will place EA as one step on their road map of world domination.

FOCUS ON GAMES AND GENRES
Unlike many professional analysts I don't think (not anymore anyway) that Electronic Arts minds about countries or market areas when they make their acquisition plans. Instead, I believe that they focus on on market share of post-deal combined product slate. You see them having two separate approaches - cement their current genre dominating position OR pushing boundaries of their present game genre reach.

IMPACT ON GAME MARKET?
In their genre conquering strategy they flirt with classic monopoly setting. Marketing and distribution dominance make competitors to shy away from these genres. If this doesn't increase genre specific profits... So all that anticipated financial muscle can be used to garner more market share in other genres.

SO WHAT WAS THE IMPACT ON GAME MARKET?
We will have less companies and developers will have less choice what comes to publishing and distribution channels. Let's say EA is totally happy with their success in genre of "watch the paint to dry" -games. Now if I have the killer idea of adding more colours to my upcoming WTPTD title and I already have a working demo, it very well might be that EA doesn't want to finance it and everybody else are afraid of the huge financial push (rendering drying paint can be horrendously demanding on engine department).

EA's motive would be their cash cow that doesn't need anything but cosmetic changes like new shade of white paint. It will go on for years to the point that developers start to have mental problems for coding the same game over and over. Also there is no need to educate gamers about new title in this genre, there's just that one household name, which purchase even mom can't fuck up if you ask her to go and buy it for you.

So, yet more difficult to get your game published and quite possibly less choice of games, the turnover growth will instead come from increasing game prices.

MY ADVICE
GO BUY GTA IV, BETTER YET, BUY THE WHOLE SERIES. If you still have some money left, use it to buy Take-Two stocks... if some day it is bought, it is good that you have something that somebody else wants.
Post a Comment