The past few days have not been the relaxing post-GDC weekend hoped for by the Multiplayer crew. Thanks, Electronic Arts!
The blogosphere has been digging deep into EA's public attempt to purchase Take-Two Interactive, but while most of the world is wondering "what's next?," Multiplayer figured it was worth a trip into the past, too.
How did a company responsible for some of our industry's most influential and controversial video games become a source of financial instability and a revolving door of managerial problems?
Take-Two emerged in 1994 with FMV-heavy adventure game "Hell: A Cyberpunk Thriller" (a project we're sure Dennis Hopper was quick to forget) and 3D space combat title "Star Crusader." Both actually appeared on the ill-conceived 3DO platform.
Their first notable move -- in retrospect, at least -- came during the release of 1996's "Grand Theft Auto" from then-DMA Design (who they eventually purchased in 1998, when picking up BMG Entertainment's games division). Knowing how big the series would eventually become, the box art's description of the game is especially funny:
"Grand Theft Auto -- Murder, road rage, pimping, bank raids, hijacking, armed robbery, extortion, adultery, smuggling, petty thievery, drug busts, police bribes, unlawful carnal knowledge and double parking!"
I wonder if they'll bring back pimping in "Grand Theft Auto IV"?
While Take-Two is best known for "GTA" these days, that hasn't always been the case. Read on for more about how Take-Two became the Take-Two of today, and a look at the strangely simultaneous rise of "GTA" and corruption within the publisher's upper echelons.
The PC realm would prove one of Take-Two's strongest assets in the early years; in 2000, they acquired Gathering of Developers after more than a year of flirtation. GoD's track record was mixed. Gamers did see "Max Payne" and "Mafia" come from the outfit. Then again, so did "K.I.S.S.: Psycho Circus." D'oh.
Between the release of the original GTA and the sequel that would forever put the series on the map, Take-Two was also responsible for working alongside one of the industry's biggest present-day shakers, Bungie Studios. Take-Two published beat 'em up "Oni" in January 2001; less than six months later, Microsoft purchased Bungie to work on "Halo" for Xbox's launch.
In October 2001, however, everything changed: "Grand Theft Auto III" was released. The release itself came and went without much fanfare, but it didn't take long for word of mouth to springboard the open-world crime fest to the top, with the game going on to sell over 12 million copies worldwide, establishing itself as one, if not the, most important IPs in gaming.
Not-so-coincidentally, this parallels periods when Take-Two's financials headed into shady territory. As reported in the excellent post-Hot Coffee Fortune magazine article "Sex, Lies and Videogames," Take-Two's publicly reported sales figures didn't match with those of the NPD Group. In the months and years to follow, as company shares skyrocketed with every new GTA, more and more disturbing financial issues and management shakeups cropped up.
The highlights include the obvious dollar signs around the releases of "GTA: Vice City" and "GTA: San Andreas," but also a seemingly never-ending revolving door in upper management. This includes ex-CEO Ryan Brant pleading guilty to stock backdating and not only receiving five-years probation but incurring a fine to the tune of $7.26 million. Jeff Lapin left the CEO spot in April 2004 for no discernible reason. Paul Eibler, voted worst CEO of 2005 by MarketWatch, held the position until last March, when the shareholders fired him and replaced him with Benjamin Feder, who remains the head of Take-Two today, albeit Executive Chairman Strauss Zelnick is traditionally seen as the figurehead of the company.
Yet, none of those issues even touches on the Securities and Exchange Commission investigation pressing Take-Two to restate financial results for the seven quarters prior to February 2002, and later forced to restate everything during 1999 to 2003. Oh, and there was that whole Hot Coffee scandal in the summer of 2005, where an Entertainment Software Ratings Board inquiry and looming governmental action had Take-Two restocking shelves with modified versions of "GTA: San Andreas," and spending millions refunding customers.
Now, EA is making a move towards a buyout, but this is little shock to Take-Two. They've been at the negotiation table with EA before, and the primary reason Eibler was ousted was a failure to find someone to acquire the company. Soon, shareholders may finally get their wish, but the implications are vast. Multiplayer has been exploring these implications since news broke on Sunday, including a look at EA's past acquisitions, what analysts think of the move and EA's surprisingly open conversation with consumers.
It's certainly been a bumpy road for Take-Two. So far, BioWare and Pandemic Studios seem to be happy under the EA's corporate umbrella. Do you think the rebellious Rockstar North will, too?
Oh, and we should point out the most overlooked implication of this deal: EA would be responsible for publishing "Duke Nukem Forever."