The EA Death Star getting close to Take-Two Tatooine?

Here’s an amusing satirical mash-up (note, the site works intermittently, I found) of Darth Vader and Electronic Arts CEO John Riccitiello. EA, of course, represents the evil Galactic Empire attempting to swallow Take-Two interactive with its “friendly” hostile $26 a share offer.

We didn’t create this, it’s the work of Rob Dunlop, a comic book writer in south London, who brings a little comic relief to a serious subject in the video game industry with his EatTake2.com web site.

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“Listen to the words of Lord Riccivader and you will see that we at Evil Acquirers, Inc. are both generous and merciful. You will accept us. You will respect us. Then you will kneel before us,” the site says.

This gets to the point. Is there too much consolidation?

With EA’s bid to acquire Take-Two Interactive and Activision’s pending merger with Vivendi Games, the ranks of publishers are getting smaller. Creators of games will have fewer places to go to, even as the independents try to eke out a market in emerging digital distribution alternatives such as casual games sites, cell phones, Valve’s Steam, Xbox Live Arcade, WiiWare and the PlayStation Network. It’s always hard to escape Imperial stormtroopers, or the Borg if you’re a Star Trek fan, wherever you go.

This will probably come to a head when the EA-Take-Two combination results in a lack of variety in sports games. Take-Two’s 2K Sports and EA Sports will have a lock on a lot of different sports games, leaving gamers with fewer options. The Justice Department under the Bush administration rarely looks at sub-markets to see if they are too concentrated. EA can argue that it has less than 20 percent market share in video games, so why should anyone care if it picks up a few more percentage points with Take-Two.

So what do I think? There are two sides. The two largest game players own 40 percent of the market, but on the other hand there’s always new talent emerging, and a new wave of companies that are opening their platforms to game developers in a way that may make these concerns moot.

Antitrust law calls upon regulators to define a “relevant market” when it comes to enforcing antitrust law. Does consumer harm result when there are no choices in baseball games? When there are no choices in sports games? Or when there are no choices in video games?

Big companies always try to get regulators to think of the market expansively. The satellite radio providers, Sirius and XM, are arguing that the relevant market isn’t just satellite radio companies. They say they compete with free radio, iPods, the Internet radio sites, TVs and other forms of getting your music. If that merger goes through, as is expected any day now, then you can bet that Justice wouldn’t care about EA-Take-Two.

Maybe a Democratic administration would look at this issue with more scrutiny, which explains why EA has to do this now instead of later.

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I have no doubt that small developers and publishers will find a way to get great games to gamers. That is the creative “Counter Force” of the industry, to put in the language of Thomas Pynchon fans. (Are there any out there still?)The site brings up the examples of EA’s previous mistakes, which Riccitiello himself admitted were mistakes at a recent speech at the Dice Summit. Westwood Studios, Origin, and Bullfrog were all acquisitions that went wrong.

But the site also should take note that investors apparently don’t agree with (me in this post) Take-Two shareholders who argue that the company is worth more than $30 a share. Take-Two’s stock price shot up to EA’s $26 a share offer quickly but the stock has been trading below that amount more recently. That means that EA might not be buying EA on the cheap as I suggested. (Yes, I’m admitting I made a mistake, as low as possible in this post, to minimize embarrassment.)

The satirist Dunlop and his partner Peter Lumby create comic books at Tozzer.com. They worked on the Karmageddon comicbooks version of the video game by SCi.

Watch how the stock moves as positive spin about Grand Theft Auto IV emerges as we near the April 29 launch date. Analysts say that the GTA sales are baked into the stock price. After all, as the site says, “$26 is enough to buy some twenty loaves of bread, a bottle of half-decent whisky, or a used HD-DVD player.”

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If EA succeeds as it is likely to do with Take-Two, there is always the chance that the developers will take off, form successful new companies, and begin anew this perennial cycle of start-ups and consolidation. It’s getting harder to do that, but not impossible.

In other words, as much as I think consolidation is a problem in video games, I view it with a certain fatalism. It’s going to happen, but it is part of a larger cycle of creation and destruction that will always happen in video games. You can join the empire or stay with the rebels, as you like.