Microsoft in talks to buy Electronic Arts!?

[AmFreak]

From a Euro perspective, FIFA would be a big coop for MS. AmFreak's list of big franchises doesn't look so great outside of the sports IMO

Sure EA Sports is the jewel in their crown And i think you are right - nobody would buy a 360 because of an exclusive Battlefield for example, but he could buy it for Battlefield, Mirrors Edge, Dead Space, Biowares RPGs, Maxis Games, Need for Speed etc ...
It's just the sheer amount of games Sony and Nintendo would loose.

 

[Nesh]

Oh my I hope not

 

[AzBat]

Could the rumor be come from MS desire to offer a unified system? Could it also be that MS might spin off the Xbox & MGS divisions along with EA to an indpendent company? Kind of like they did with Bungie. So they would have a controlling interest? I agree with others that an outright buy & absorb doesn't make sense.

Tommy McClain

 

[Neb]

Wut?

Money talks but...

 

[joker454]

Why lay off a load of MS dev-houses only to buy a job-lot up again?

To get the ip's, the dev houses themselves are often considered expendable in those cases. If MS did indeed buy EA, then I imagine there would be mass layoffs and/or entire studios cut loose.

 

[Cheezdoodles]

1) How much would this cost MS?
2) What would the likely revenue of MS onlyu platforms be, considering EA would lose the majority of its market (assuming an MS owned EA doesn't support the other platforms, although they could release software with an XB advatnage to encourage their machine while not cutting off all income)?

Seems like a lot of expense to buy into an annual loss to me. To turn such a purchase around and turn it into profits and platform domination would be a herculean task, and set up another massive multi-billion dollar 'investment' on MS's part. Wouldn't it be cheaper to sell XB360's at $100 each?

To answer the first question. EA market cap is 6.4 billion USD, if they where to buy it and not be clever about it, expect 20-40% higher prices. They only need 51% for complete control thought

 

[Acert93]

Could the rumor be come from MS desire to offer a unified system? Could it also be that MS might spin off the Xbox & MGS divisions along with EA to an indpendent company? Kind of like they did with Bungie. So they would have a controlling interest? I agree with others that an outright buy & absorb doesn't make sense.

Tommy McClain

Well it could "explain" why they have cut a lot of internal studios. (not that I think it does) It also would corner a huge market. Not that I think it would pass regulators, but imagine if the Xbox 3 was the only place to play Madden--for NA and a mindshare perspective that nails a lot of casuals and hardcore gamers. Not that I think it is the best strategy, but if they wanted to force a more "profitable" stream of income and want to spend some of their billions this would be a quick way to put another nail in Sony. Whether it would be better for the bottom line, ignoring the up front cost is another issue ... but MS likes to dream big even if they play small.

 

[obonicus]

Well it could "explain" why they have cut a lot of internal studios. (not that I think it does) It also would corner a huge market. Not that I think it would pass regulators, but imagine if the Xbox 3 was the only place to play Madden--for NA and a mindshare perspective that nails a lot of casuals and hardcore gamers. Not that I think it is the best strategy, but if they wanted to force a more "profitable" stream of income and want to spend some of their billions this would be a quick way to put another nail in Sony. Whether it would be better for the bottom line, ignoring the up front cost is another issue ... but MS likes to dream big even if they play small.

MS wanting to kill Sony isn't a reason that makes much sense. Another thing to keep in mind is that if this turned to be true, MS would become the primary competitor to just about every single 3rd party.

 

[obonicus]

They only need 51% for complete control thought

But then they'd still have to perform due diligence to prove they're trying to actually make money with EA, right? As opposed to 'winning the console war'. And EA's had a hard enough time doing that while supporting every platform out there.

 

[catisfit]

Spend a lot of cash on a publisher, only to reduce its potential install base to <10% and see it lose the licenses which made it so worthwhile buying in the first place? I guess stranger things have happened, but not often.

 

[Silent_Buddha]

Usually if MS wants an IP they'll just license it. MS usually only outright buys a company if they want the engineers/programmers as well as the IP.

This whole rumor just makes no sense no matter how you think about it.

Regards,
SB

 

[Acert93]

MS wanting to kill Sony isn't a reason that makes much sense. Another thing to keep in mind is that if this turned to be true, MS would become the primary competitor to just about every single 3rd party.

Killing off the competition for an 80-20 market split ala the PS2 has its advantages. It isn't about Sony per se, but market share/ownership. Being the only player in the "high tech" gaming market would have its advantages.

 

[AmFreak]

Microsoft says EA purchase rumor is false

http://blog.seattlepi.com/microsoft/archives/180058.asp

 

[catisfit]

Killing off the competition for an 80-20 market split ala the PS2 has its advantages. It isn't about Sony per se, but market share/ownership. Being the only player in the "high tech" gaming market would have its advantages.

The problem is, FIFA/NFL etc wouldn't stick around long. If they're smart, the licences will already state that if EA goes platform exclusive, they'll be able to sell the rights crossplatform elsewhere. If they're not, they'll be tied to EA until the end of the current renewal period and then they'll go elsewhere. MSEA couldn't afford to keep those licences to an install base of 30m, when other publishers out there could bid based on an install base >10 times that.

Rather than "killing off the competition", it would do far more damage to Microsoft themselves - spending a few billion on something to turn it into a shell of its former self.

 

[wco81]

MS should be targeting Nintendo, not Sony.

Anyways, maybe they would use EA to boost maybe not Zune but WM7?

After all, buying Bungie help them bust into the console business, maybe EA would be the lynch pin for stopping the iPhone, although it's doubtful EA mobile games are that big a draw.

In fact, what success iPhone has had as a gaming platform is due to cheap, shallow games. Then again, $60 console games are only offering 6 hours of gameplay these days.

 

[Rangers]

The problem is, FIFA/NFL etc wouldn't stick around long. If they're smart, the licences will already state that if EA goes platform exclusive, they'll be able to sell the rights crossplatform elsewhere. If they're not, they'll be tied to EA until the end of the current renewal period and then they'll go elsewhere. MSEA couldn't afford to keep those licences to an install base of 30m, when other publishers out there could bid based on an install base >10 times that.

Rather than "killing off the competition", it would do far more damage to Microsoft themselves - spending a few billion on something to turn it into a shell of its former self.

I definitely dont think MS is buying EA, nor that it makes sense, but I've seen this argument a few times and I must ask, you think MS can afford to buy EA but cant afford the sport licenses??

Also I think if this happened, there would be serious questions about the PS3's viability going forward. So if MS could consolidate the market going forward..then it could make financial sense. It would only take another publisher or two (Activision?) going 360 exclusive to basically turn this into a one horse race, and once it's a one horse race the whole "EA cant afford to drop PS3 support" thing loses validity fast. at least I think that would be their planning.

I also think an MS bought EA would definitely continue to support all Nintendo platforms (which arent in as direct competition) and PC, iPhone etc. Really you just lose PSP, PS2, and PS3, with the first two being negligible.

I think Shifty hit it right about the "why not sell the 360 for $100" too. Although I guess, it's probably debatable which would actually be the bigger blow to Sony.

On the other side, IIRC MS and Sony employee in the range of 2000 developers in first party. I think EA has 10,000! The idea of MS taking that on, when EA lost $1 billion already last year, seems absurd. Then with losing Sony revenue, they'd have to probably make massive cuts to have any hope of profitability.

I also saw a lot of good comments on GAF that, EA's most attractive property are it's sports, and those might not be able to be platform exclusive due to licensing issues (whereas say, Activision wouldn't present the same issues). So again, not a lot of sense.

I also saw Take Two mentioned as a good target on GAF, theoretically GTA is a big deal and obviously, it would be miles cheaper. Personally I think GTA is on it's way out though.

But overall yeah, so much going against this no way I can see it happening. Yet when oddball stories like this happen you always wonder a little bit.

 

[Tap In]

ok probably not true.... but if it is.... I predict they let Ea operate, business as usual, and profit form it letting them license to other consoles just maybe leveraging some things in their own interest.

if it were to happen it would be more for a 10-20 year long term plan

 

[Brad Grenz]

I think this story is the result of runaway speculation following the THQ rumors that drove up stock prices for THQ, Take-2 & EA this week. Utterly without foundation, completely senseless and not worth the attention. But that's the American financial system for you!

 

[catisfit]

I definitely dont think MS is buying EA, nor that it makes sense, but I've seen this argument a few times and I must ask, you think MS can afford to buy EA but cant afford the sport licenses??

Yes.

Let's assume for a minute that FIFA/NFL etc only care about the money. In that case a crossplatform publisher would bid based on being able to ship PS3/PS2/PSP/360/Wii/DS/iPhone/mobile/whatever versions of those licenses, so a hypothetical MSEA would have to beat that bid based solely on a 360 version. So Microsoft end up spending ~$4bn or more on EA, only to instantly reduce EA's revenue to <10% of what it currently is, and to inflate the per unit cost of the licenses of what is left by several times. It's an incredibly good way to lose a hell of a lot of money.

Of course in the real world it's likely that if EA took FIFA or NFL exclusive to a platform, they would then be allowed to negotiate exclusivity deals on other platforms or even crossplatform, like how MLB 2k and MLB The Show work.

I guess there's two senses of the word "afford" here. I could technically afford(1) to throw my life savings into a river, as I have that amount of money available to me, but I couldn't afford(2) to do so because it would wipe out my life savings which are a lot more valuable to me as they are, or spent on something else.

 

[TheWretched]

Wasn't it rumored that WB wanted to buy THQ? I read so at Gamasutra or Develop.