Take-Two Swats Back at EA with MLB Deal

Take-Two Interactive Media may not have hit a home run, but the video-game maker swatted a solid double against its major opponent, Electronic Arts (Nasdaq: ERTS), when it cemented a deal with Major League Baseball.

Take-Two, developer of the wildly popular Grand Theft Auto franchise, signed a long-term agreement with MLB and the MLB Players Association for third-party rights to develop, publish and distribute licensed video games.

Third-party rights means that console makers Sony (NYSE: SNE), Microsoft (Nasdaq: MSFT) and Nintendo can still create their own MLB games, but no other software manufacturer may do so.

Staying in the Game

"Take-Two in conjunction ESPN/SEGA posed a real threat to EA in the sports market," Jay Horowitz, senior analyst at Jupiter Media, told TechNewsWorld.

"Moving into the next console cycle, EA has been making some big moves to ensure the ongoing success of its sports franchises by locking up long-term exclusive licenses. This deal was important for Take-Two to remain relevant in this category."

In January, EA Games lured rights for ESPN content away from Sega and Take-Two. The company also has locked up exclusive rights to National Football League games for five years.

Take-Two needed the signing in order to get back in the sports market game, a lucrative one for software makers.

Key Category

"The sports game category overall is the most important game genre," Horowitz said. "These titles are persistently in top 10 games sold, have strong support from marketing and enthusiasm generated in real life league play, and are stable revenue generators in a market characterized by changeable consumer tastes. Platform suppliers have made a variety of attempts to gain share in this segment with limited, if any, success."

Take-Two will need some help scoring with its deal, which begins in spring 2006; football games far outdistance baseball in terms of popularity, Horowitz said.

The company also announced it has signed Yankees shortstop and celebrity-about-town Derek Jeter to a multi-year contract to promote the 2K Sports baseball series and appear on its cover.

Take-Two reported annual sales of US$1.1 billion with a net income of $65 million in 2004; EA Games reported close to $3 billion in sales with a net income of $577 million.