Coming to Praise ERTS, Not to Bury Them
By way of following-up/ continuing the narrative on the video game wars I've been following, I've got to hand it to Electronic Arts (ERTS). I thought ERTS was going to stagger a lot longer after getting rocked down to their heels by Take-Two's (TTWO) aggressive move into sports titles (with ESPN) last fall. The company responded in the short term by cutting prices, engaging in muddled "Buy 2, get One" promotions and generally stumbling around somewhere between "value" and "premium". The crown was teetering.
Whether they were playing opossum or really hurt, ERTS has come storming back from the brink like a champ. If the NFL deal had already killed TTWO's move into sports (and it had), today's deal between ERTS and ESPN for 15-years starting in '06 was a merry jig on TTWO's grave. Joe Buck should be outraged at the brazen taunting of a fallen foe.
And the '06 start date is a nice kicker, eh? TTWO should make a video game of the next meeting with ESPN to finalize the titles for the balance of this year... it figures to be more violent than GTA and it would certainly be a fresher concept.
ERTS is still going to miss their numbers for the year (in my opinion, but I'm right). It no longer matters. They've got a stack of available one-time charges that would choke Boo and a stack of cash to fund more deals to match. No one cares about EPS for them now. That's perfect... ERTS shouldn't really care about EPS either on a down year in the platform cycle. They should be hammering the competition relentlessly with the spoils collected from this platform cycle war; putting the money to work on winning the next one.
That's exactly what they're doing and they are being smart and aggressive about it. There hasn't been a strategic brain-power 180 like this since Michael took over the Corleone family after Sonny had some toll-booth problems. I'm not short ERTS and I wish I were long it.
While I'm handing out props at my personal expense, Eagles fans please note that you already got your shout-out.
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