Exclusive outtakes from industry leaders
The video game sector is often seen as being particularly ripe for consolidation, with some expecting old line media giants such as Time Warner to swoop in and scoop up a publisher to diversify their entertainment rosters.
But Strauss Zelnick, chairman of "Grand Theft Auto" publisher Take-Two Interactive, remains surprised by the lack of action on the consolidation front. “I think the legacy media companies have not been especially aggressive about interactive entertainment,” he said at the Reuters Global Media Summit in New York on Wednesday. His company, of course, fought off Electronic Arts' hostile takeover bid in 2008.
“I have to admit there are times when I’m surprised they’re not more exposed."
He said media world executives have long memories, which may explain in part their reluctance to buy a video game outfit. He said one name in particular, Atari, remains a cautionary tale. Warner Communications bought the iconic video game name in 1976 in what turned out to be a disastrous deal.
Forget sports tournaments or new movie releases as boosters for game demand. Electronic Arts' latest hero is America's most famous chat show host.
Chief Executive John Riccitiello, at the Reuters Media summit, went out of his way to praise Oprah Winfrey, whose recent shout-out of Scrabble gave a new lease of life to the not-so-new word game.
Still unsure whether economic recession is good or bad for video-games sales, more than a year in? If so, you’re in good company — neither does the world’s biggest games publisher. Electronic Arts’ head of European publishing says the company still hasn’t figured out whether people cut spending on big items like housing and cars first, or whether those kinds of decisions are just too hard.
“We really wonder, hmm, in economically difficult times would people in order to have SOME fun actually play more games or less games, and then, would they spend more or less? It’s really, it’s impossible to say,” Jens-Uwe Intat told the Reuters Global Technology Summit in Paris.
Unlike many of us, media executives know what it’s like to play around with large wads of cash. So it seemed natural to ask them about what kind of investment opportunities they’re seeing when they gathered in New York this week for the Reuters Global Media Summit.
We gave each media honcho $10 million in hypothetical cash and told them to put the money to work without buying stock in their own companies.
But not all companies see a need to buy their way in, as Electronic Arts did with its $275 million purchase of Playfish last month (the deal could be worth as much as $400 million if the company meets certain future financial milestones).
Restructuring: You shouldn’t be afraid to do it, even more than once if you have to, and even if your own family doesn’t understand it. Just ask John Riccitiello, chief executive of videogame publisher Electronic Arts. Here’s what he said at the Reuters Global Media Summit on Tuesday:
A company that doesn’t restructure in the face of that dramatic transformation, I don’t know what they’re doing. GM had a great decade in the ’70s building large cars… They didn’t restructure in the face of what was obvious. The music industry kept telling us they wanted to buy albums, and then they tried to sue us. It didn’t serve them well. … We look at the future and we are aggressively embracing it… .
How do entertainment retailers come up with the prices they charge? Why is a movie theater ticket $10, a music CD $15, a rental DVD $3-$5 and a top video game $60?
We asked Strauss Zelnick, executive chairman of game publisher Take-Two. He says it's simple math, based upon the value of that experience.
Microsoft's videogame chief Shane Kim came by our New York office this morning for the Reuters Media Summit and shared his thoughts on XBox 360 sales ("cautiously optimistic") and the outlook for the gaming industry amid the economic doom-and-gloom ("Who knows, maybe flat performance will be considered a remarkable achievement").
He also gazed into his crystal ball and served up some insights on the trends shaping the gaming business.
The spectacular debut this month of Take Two’s blockbuster video game Grand Theft Auto was no better than expected, EA’s head of international publishing, Gerhard Florin, told the Reuters Technology, Media and Telecoms summit in Paris.
EA on Monday extended its public offer for Take Two by a month after failing to win more shareholder support for its $2 billion hostile bid but did not up the price. Florin said he was surprised there had not been a more negative approach to the violent game, which instead was hailed as a work of art, even in Germany, which tends to shun violent video games.