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From Madden to Manhunt?

From Thursday's Globe and Mail

Shortly before midnight on a cold Monday in downtown Toronto, a man in a brown leather jacket scowled as a trio of attractive female police officers handcuffed him and forced him roughly into the back seat of a waiting police cruiser.

But the car was not painted in the familiar white, red and blue of the Toronto Police. Instead, it bore the black and white markings of the Liberty City Police. This "arrest" was not a rogue police act, rather it was a staged performance as a part of the launch party for Grand Theft Auto IV, the provocative crime-themed video game that is the most anticipated release of 2008.

While such a kitschy scene is in sync with the ethos of Rockstar Games, the maverick studio owned by Take-Two Interactive Software Inc. that develops the Grand Theft Auto franchise, such scenes would seem out of step with Electronic Arts Inc., which is embroiled in a hostile takeover bid for Take-Two.

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At first glance, the pair seem like oil and water.

EA has built an empire on the safe bets — sports games like Madden and family hits like The Sims — while Take-Two, which also publishes controversial titles Bully and Manhunt, has built its reputation by taking risks that have raised the ire of anti-violence advocacy groups around the world.

This perceived incongruity has prompted analysts to question whether an EA takeover will stifle Rockstar's verve.

That's been considered — and rejected — says EA spokesman Jeff Brown, pointing to the company's recent track record integrating diverse studios into its global network.

"Two years ago it wouldn't have worked, because EA was a very top-down organization," he said. "But what [EA chief executive officer John] Riccatiello has done in the last two years is de-centralize the company. It's no longer one nation, it's a group of provinces."

EA knows first hand that it's not always easy being No. 1. Among gamers and industry observers, EA has a reputation of being seen as "the big bad," according to Jeremy Dunham, games editorial manager for IGN.com, a leading online video game magazine.

"It's not necessarily because they put out bad games or that they put out bad products," he said. "It's because they are the number one publisher out there, and if you are leading in a field, you're always going to be under a lot more scrutiny than those who aren't."

EA could use Rockstar to fill a hole in its current offerings; the company lacks a development studio that push the envelope when it comes to adult game content. Observers say Rockstar could provide EA with an arm's-length bad boy outlet, the same way Miramax Films allows Walt Disney Co. to bankroll films such as Kill Bill and Clerks.

EA's reputation as a cold, corporate entity can be traced back to a now-infamous blog posting made in November, 2004, now known online as the "EA Spouse Blog." In it, the author complains about the hours, labour practices and corporate culture her spouse endured while employed at EA's Vancouver development studios. The post spread across the Internet and continues to pop up on message boards.

That reputation in part led to Mr. Riccatiello issuing an open letter to Take-Two's employees and shareholders in February in the wake of the announcement of EA's takeover bid.

"Unfortunately, our industry has a spotty record on integrating creative teams," he said. "We've all heard the stories about teams that got mismanaged in a merger — I know I've got a few."

"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," he wrote.

Representatives at Take-Two's Rockstar parent office in New York and its Toronto studios did not return requests for comment.

In the past two years, EA has aggressively swallowed a number of smaller development studios as it strives to retain its position as the world's top game producer. Among those acquisitions were Edmonton's BioWare Corp. and California-based Pandemic Studios.

While Mr. Brown said EA has not had any internal discussions about how to integrate the Rockstar team, he said the company has taken great strides to help smaller studios maintain their creative autonomy while offering them human resources and financial assistance after mergers.

"Other than leaving them alone and letting them do their own thing, we're doing nothing," he said. "We're not dropping culture fertilizer on them."

In October of 2006, EA acquired Stockholm's Digital Illusions Creative Entertainment (DICE), makers of the popular Battlefield series of games. Although some of his 250 employees were nervous about the acquisition, said DICE head Patrick Soderlund, things have worked out better than expected thanks to EA's policy of treating individual studios as distinct "city states." "No one forced us to change the way we made our games, or what we were making ... it was just business as usual for us," he said. "That actually came as a little bit of a surprise, because we were expecting a bit of that."

Wedbush Morgan Securities analyst Michael Pachter said Rockstar employees are paid a share of the revenues from each game by Take-Two, and that EA may need to sweeten that deal to retain some of those employees. "EA would be left with the game engine, the code, and applications for the games ... but they could lose the employees," he said. "The thought is that Take-Two is extraordinarily generous with Rockstar, and that EA will have to be even more generous to keep them there."

ELECTRONIC ARTS

  • Founded: 1982
  • Headquarters: Redwood City, California
  • Studios: Five "hub studios" including Redwood Shores, Los Angeles, Vancouver, Orlando and Guildford, U.K.
  • Employees: 7,900
  • 2007 Revenue: $3.1-billion
  • Top Games: Madden NFL, The Sims series, Need for Speed series, Battlefield series, FIFA World Cup, NHL Hockey.

TAKE-TWO INTERACTIVE

  • Founded: 1993
  • Headquarters: New York City
  • Studios: San Diego, Vancouver, Toronto, Shanghai and Paris.
  • Employees: 2,000
  • 2007 Revenue: $981-million
  • Top Games: Grand Theft Auto series, BioShock, Max Payne series, Sid Meier's Civilization, 2K Sports titles, Bully and Manhunt series.

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