We've issued a press release that explains why the deal is attractive for the shareholders of both Take Two and EA. Now I want to share some perspective on why it would be good for the people who make Take Two's games and, just as important, the people who play them.
In a recent presentation, I told a group of developers that our industry is facing big challenges. Development costs are rising dramatically and games that aren't big hits struggle to reach profitability.
Most independent studios don't have much margin for error. The result has been consolidation – large publishers are merging and independent developers are more amenable to being acquired. Unfortunately, our industry has a spotty record on integrating creative teams. We've all heard the stories about teams that got mismanaged in a merger – I know I've got a few.
I like to think that we learn from our experience. When I came back to EA last year, we introduced a new organisation model that respects creative cultures and gives developers more freedom.
We call it the Label” model because it treats each of EA's four labels as a sovereign entity responsible for its own creative decisions and business results. We expect each team to operate on a profit plan and, in exchange, we provide investment, infrastructure and a lot of creative freedom.
Has it worked at EA? It's too early to say for sure, but the initial feedback is encouraging. Many of the people at Digital Illusions in Stockholm, Criterion in the UK, Mythic in Virginia, and more recently BioWare and Pandemic will tell you that so far, the experience at EA has been good. If you know people who work for these studios, I'd encourage you to talk to them. Ask them about our Label organization model. It's the model we hope to use with Take Two.
Right now, Take Two's future is uncertain. Take Two's creative teams make fantastic games and the company has gotten some good interim support from a group of new corporate leaders.
But Take Two is facing a host of threats and – with or without combination with EA – we believe there is a strong likelihood that the company will be sold in the not-too-distant future.
We also believe that EA's proposal to acquire Take Two is a good one for the people that make the games or are involved in leading these creative teams.
We're offering stable management with an executive team that truly understands games. EA has a powerful publishing capability. We want to offer these and other advantages to Take Two's creative teams and provide them an environment that shields these teams from unnecessary interference and allows them to keep making great games.
For people who buy and play games, know that we too are fans of Take Two and Rockstar products and feel we can provide their creative teams with the support they deserve to continue to bring you more of their great games in the future.
So, that's it. We've made a proposal to buy Take Two.
Our preference is to make this a friendly transaction and I'm hopeful we can achieve that. We've sent this proposal in the genuine belief that combining EA and Take Two would be good for the people who make games and good for the people who play them.
I sincerely hope we get a chance to prove it.