Report: Houser Bros. Loomed Large in Collapse of EA-T2 Deal

gamesindustry.biz reports that the uncertain status of GTA masterminds Sam and Dan Houser (left) may have played a key role in sinking an EA-T2 merger. The brothers’ current contract with Take-Two expires in February.

Moreover, as GP has alluded to in the past, chemistry was lacking between EA and T2 execs. Along that line, gamesindustry.biz reports comments by analyst Doug Creutz of Cowen and Co.:

We think EA’s decision to walk was motivated by some combination of the following: a desire to appear fiscally responsible after several years of capital misallocation, concern about EA’s ability to retain the development talent at Rockstar, personality conflicts between the management teams of the two companies, and scepticism about Take-Two’s multi-year release lineup.

 

The main question mark is the status of Rockstar’s key talent [i.e., Dan and Sam Houser], with their contract due to expire in February 2009.
 

Meanwhile, in a note issued this morning, Wedbush-Morgan analyst Michael Pachter foresees a bidding war for the Housers:

While neither [Houser brother] writes game code, we believe that they are analogous to the director of a Hollywood film, instrumental in determining the final shape of the ultimate games released. We expect a bidding war for the Housers’ services in February 2009, and remain convinced that Take-Two faces two equally unpalatable options: either lose the Housers to another bidder, or pay more to retain them…

 

Should the Housers depart to Activision, Ubisoft, or even to EA, we think that Take-Two will suffer lower future sales of its GTA games. We draw an analogy to EA’s Medal of Honor brand, which saw sales decline by over 40% following the departure of key members of its development teams in 2003. Those teams produced Activision’s Call of Duty franchise, which has consistently outsold Medal of Honor since the departure…

 

On the other hand, should the Housers remain at Take-Two, the price of making future Grand Theft Auto games will go up…

Nor does Pachter anticipate any other publishers stepping up to acquire T2 – again, it’s the Houser factor:

We do not think that any offers will come in from third parties. The risk of losing key talent is too great, and the Housers’ contract is up for renewal in February. Should a third party (including EA) be interested in an acquisition, we think that the first step is to secure the services of the Housers. Thus, we do not expect competing offers to materialize until after February 2009, when the status of the Housers’ contract is better understood.

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