First, Electronic Arts (Nasdaq: ERTS) wooed the NFL, shutting rival Take-Two Interactive (Nasdaq: TTWO) out of video-game football for the next five years. Then EA stole ESPN for the next 15 years, robbing Take-Two of its main brand strength. But now it's Take-Two's turn to fire back -- sort of.
On Monday, the Major League Baseball Players Association announced that it had signed a seven-year deal granting Take-Two "exclusive" rights to use its players in Take-Two's games for both consoles and handhelds, starting in 2006. However, this exclusivity relates only to the independent publishers, including Electronic Arts, Activision (Nasdaq: ATVI), THQ (Nasdaq: THQI), and Midway (NYSE: MWY), and not the console manufacturers, including Sony (NYSE: SNE) and Microsoft (Nasdaq: MSFT).
In reality, this means just EA. The other two contenders in baseball simulation, Acclaim and 3DO, are both bankrupt and no longer exist. Midway has a series called MLB Slugfest, but that's more of a smash-mouth, arcade-style game that Midway won't need an MLB license for, similar to the way it will get by without an NFL license.
Sega's World Series Baseball, the game that Take-Two will distribute in partnership with Sega, has long been the best MLB simulator series, hands-down -- at least until EA made a splash this spring with MVP Baseball 2004. World Series Baseball will continue to be a full-priced game, unlike Take-Two/Sega's NFL football, NBA basketball, and NHL hockey offerings this past summer and fall, which sold at $20 each.
There are some potential snags in the deal. Technically, Take-Two has an exclusivity agreement with only the MLBPA and not with Major League Baseball. That means EA and Midway could, hypothetically, continue to use major-league team names but not player names. In addition, Sony's 989 Sports already makes a baseball series labeled MLB, but Take-Two's exclusivity deal doesn't necessarily preclude EA from, say, teaming up with Microsoft -- a more familiar partner as of late -- to make an Xbox/Xbox 2-exclusive baseball game.
Before last year, I never could have imagined that we'd see brand-new A-plus quality football, basketball, and hockey games sell for $20 or that one company could come to own the exclusive rights to the NFL in video games. The exclusivity isn't good for gamers, but I think the game publishers are better off, since the $20 games were sapping profits from all competitors.
On a related note, Take-Two signified its commitment to the sports video game yesterday, when it announced the purchase of Visual Concepts, Sega's California-based sports game developer, and its wholly owned subsidiary Kush for $24 million.
Although it ultimately depends on how EA deals with the situation, Take-Two does appear to have claimed a small victory. But if EA somehow manages to get an MLB game on the Sony, Microsoft, and Nintendo platforms in 2006, this exclusivity deal will have been a waste of money for Take-Two, since there are no other independent competitors to shut out. As for EA, this is only a slight negative at worst, given that baseball is one of the less popular sports games and accounts for a relatively small portion of the company's industry-leading game portfolio, with 26 other platinum hits last year.
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Fool contributor Jeff Hwang owns shares of Electronic Arts.
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