EA, Take-Two, and why I love games

Electronic Arts, the biggest video game maker in the world, offers $26/share of Take-Two, a 49.8% premium. This comes a pretty good second on my list of "Dream Deals To Work On", after a potential takeover of Limited Brands. Sometimes (relatively OK capital markets aside) I absolutely hate working in this backwater colony of a city.

Take-Two board and management will be hard-pressed to justify rejecting this deal, given current markets and the relatively high premium on the table. Other thoughts on the matter:
- it will be interesting to see what the "crucial initiatives" are, and how certain these are to create value for shareholders.
- at the heart of it, video game creation has common characteristics with other R&D businesses. It is a capital-intensive enterprise, even more so for Take-Two, who have specialised in creation of large, complex and immersive 3D worlds. It has a bit of a "hit or miss" nature, and missing is very costly. Eventually, franchises will have to be revamped or replaced with new ones, and the result may or may not appeal to players.
- The very nature of Take-Two's most popular franchises (M-rated or higher) means a fair portion of the gaming population (kids under 15, females) are unable to get into the games, and a fair few others who can play it, won't, because of the large time investment involved in some of these games (a general criticism for most game makers, but still applicable).
- On the other hand, having a successful stable of franchises is half the battle, both as sources of relatively dependable revenue (from sequels), and as a legitimising factor when launching new franchises ("these guys created Grand Theft Auto; they know what they're doing"). Success breeds success, and all that.
- What exactly does EA see that the market didn't? Do they really think the franchises, the game brains, and the marketing team are worth 50% more under EA management than on their own? Is there alot of fat in this business? Is it just to take out one of its serious competitors? And is that really good for gamers?

On a somewhat related note, given the current development in video game technology (both computing power and the ability to create highly complex worlds with realistic and causal parts), why is there such an utter lack of good business simulation games? I think we are well beyond the "Tycoon" and "Sim" simulators that keep getting churned out, which tend to focus on closed systems (zoo, theme park, etc) rather than a full-scale corporate environment with many industries all interacting, competing, cooperating, and co-depending. If I build a theme park, I want to be able to sell the damn thing to Disney! While of course remaining as owner of the plot of land, charging exorbitant rent, and using this cash cow to fund the growing army of politicians I employ.

Imagine playing as a private equity barbarian, a hedge fund activist, or the CEO of a Fortune 500 (or a startup!). Imagine getting calls and emails through your Blackberry, which causes you to rush out of some inane meeting, just so you can send instructions to your "executives" about that hostile takeover! Imagine being Greenspan or Bernanke, overreacting in a dizzy panic and unwittingly setting off the start of a new bust several years in the future!

I love games.