The White Knight rides in at Take Two

Forbes magazine are now speculating that Take Two are going to avoid a predatory takeover from Electronic Arts by instead merging with Ubisoft. This makes a lot of sense.

  • From a game culture point of view this is a much better fit. Both Take Two and Ubisoft are good at nurturing original IP to create brands and at giving studios a lot of creative independence.
  • One problem with the proposed Electronics Arts deal is that it takes over $2 billion of equity finance out of the industry. Like the industry needs to increase it’s gearing when it is expanding at a phenomenal rate. The Ubisoft merger would retain the equity within the industry, a far better long term idea.
  • Another problem with the proposed Electronic Arts deal is that it would give them a near monopoly in sports games. With the proposed Ubisoft merger we would still have two competing sports games publishers. And competition is good.
  • Conventional video game publishing has massive economies of scale. A Ubisoft/Take Two merger would give the industry three big global publishers, the other two being Vivendi/Activision and Electronic Arts. These three would then be able to pick up second rung publishers like Sega, EIDOS and THQ.
  • If Electronic Arts are to get the best value out of spending $2 billion they may well be better off spending it on quality game development than acquiring a competitor. They are still some way short of where they need to be on putting their own house in order game quality wise.

And of course Electronics Arts win with either outcome because since 2004 they have owned 19.9% of Ubisoft, one of the best investments they could have made.