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My Take On Take-Two And EA

Monday, 25 Feb 2008 | 11:07 AM ET
The Electronic Arts headquarters in Redwood City, California.
Paul Sakuma
The Electronic Arts headquarters in Redwood City, California.

So we've just learned that Electronic Arts made a $2 billion bid to take over Take-Two last Tuesday.EA went public with the news Sunday after Take Two's board denied the deal.

The notion of such a deal probably makes sports gamers cringe, much in the same way that trading card buffs feared Upper Deck's attempts at buying Topps last year. It's basically the same deal--lack of competition could lead to a more inferior product and higher prices.

Sports gamers are plenty familiar with an EA monopoly. They've had an exclusive on making an NFL-licensed game since 2005 and recently extended that deal through the 2012 season. For what it's worth, EA also has exclusive deals for FIFA, NASCAR, NCAA Football, Arena Football and the PGA Tour.

So when deals like this come close or are done, there's an immediate outcry. But, trust me, these fears are unfounded. Why?

Because, with the Nintendo Wii, the game has totally changed. Two years ago, if you were to tell me that EA was acquiring Take-Two, I would have told you that this was a virtual sports monopoly (remember Activision still has the Tony Hawk franchise) and that it was going to be bad for consumers. You see, because of the Wii, licensed properties will start to lose steam in coming years. It's not about having the players. It's about you BEING the player.

No one has said this yet, but I believe the reason why EA's "Madden 08" saw such a significant drop in sales (13 percent), was because it was one of the first games that saw the Wii effect.

EA Sports is in a very tough position for one reason. It has spent so much money on these exclusives and developing the latest and greatest in technological advances to live up to its motto, "If it's in the game, it's in the game." And then, the Wii comes and we return to dot-matrix play. It's much like the situation Nike found itself in, spending all this money on technology and then the 18-year-old kid asks for the white Air Force Ones.

Sure, EA has its licensed games for the Wii and will be a big player because of its size and power, but the simplicity of those Wii games has turned into a great equalizer. Ubisoft makes Wii's Nitrobike. Mud Duck Productions published AMF Bowling Pinbusters. And Aksys Games put out Hooked! Real Motion Fishing.

So fear not, sports gamers. The future is not in officially licensed league exclusives. It's in creativity with user controlled game action. That means that EA can never buy what will lead to greater success. And smart shareholders already know that.

Questions? Comments? SportsBiz@cnbc.com

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