The finance sector is caught up today with the collapse of some of the biggest and oldest banks in the US.  This has largely overshadowed a more interesting piece of news to gamers:  EA has walked away from Take Two after 7 months of negotiating to purchase it.

As a result, Take Two’s stock price has taken a swan dive, as all kinds of speculators unload the shares of TTWO stock that sadly, EA is not going to buy from them at a premium.  What I find interesting is that analysts seem to think this is a mortal blow for Take Two.

EA saw a good opportunity to buy Take Two because they have some extremely talented people working there, and several key franchises EA would like to get their fingers in.  From my point of view, this little breakup is better for everyone involved, including you.

EA’s new CEO has been doing a fine job of diversifying their development portfolio into new IP, but you can’t do this entirely buy purchasing studios.  The value in a studio, even more so than in most companies, is in the people who work there.  Intellectual Property they own certainly has a premium attached to it, but no IP in the world is going to be profitable if you don’t put it in the hands of talented developers.  But buying studios wholesale is a risky business, because if those developers think you’re going to mess with the way they run things, they tend to jump ship, leaving you holding the empty - and expensive - bag.

EA needs to look across the continent from Vancouver to Montreal, and look at what Ubisoft has managed to do by developing highly innovative titles in house, much to the delight of their shareholders and the gaming community.  A purchase of Take Two would have consolidated the entire suite of sports franchises under EA’s grip stifling innovation in that arena even further - not something anyone wants to see.  Take Two has quite a few studios, and as much as analysts talk about EA being able to integrate these studios under their own technology stack, this has historically not worked out well for companies that tried to do so.

Take Two isn’t exactly bereft of cash.  GTA has historically been the foundation upon which Take Two operates, but they have other gems as well (Bioshock, Civilization).  If they can retain their top talent - and continue innovating new IP - I expect we’ll continue to see both shareholder value and excellent titles out of Take Two in years to come.