Monday, January 24, 2005

Take Two Buys Visual Concepts

That didn't take long (from Gamespot):
Following this morning's announcement that Take-Two had secured exclusive third-party publishing rights from the Major League Baseball Players' Association, Sega confirmed to GameSpot that it is selling Visual Concepts to Take-Two.

According to sources, Sega parted with the critically esteemed developer of ESPN NFL 2K5 and ESPN NBA 2K5 for just $24 million...

Though the exact terms of the deal were not disclosed, Take-Two will become the sole owner of Visual Concepts. It will also own VC's Kush Games subsidiary, which developed ESPN NHL 2K5 and ESPN Major League Baseball 2K5. Presumably, the studio will also create Take-Two's upcoming pro baseball game.

So Take-Two is willing to gamble that sports games can still be a major growth driver for the company. That is quite a gamble. For sports gamers, though, it's great news, because without Visual Concepts/Kush making sports games, the market would be very, very thin--basically just EA, Sony, and Konami (with the Winning Eleven series). Konami actually has an excellent baseball series as well, but it's never been released outside of Japan.

Here's Take Two's problem: the Sega team sports games (now all developed by VC/Kush) have never sold well enough at a conventional price point to significantly grow revenue. They sell very well at $19.99, but they're not profitable. So Take Two isn't buying a sure thing, by any means: it's a huge gamble in a market with which they're unfamiliar. The price-cutting strategy was brilliant, but all that proved was that they understood the market's sensitivity to price. Taking that strategy and converting it into a profitable one will still be a real challenge.

Site Meter