January 24, 2005 10:56 AM PST

Take-Two out to the ball game

After being locked out of the football market, game publisher Take-Two Interactive Software threw a curveball at the video game industry Monday by snagging semi-exclusive rights to Major League baseball.

The Major League Baseball Players Association (MLBPA), the union representing players, announced it had reached a tentative agreement with Take-Two granting the publisher a seven-year license to portray Major League players in video games. Take-Two still needs to reach a separate agreement with Major League Baseball for the rights to portray teams and stadiums.

"Baseball games have been very challenging to do right."
--David Cole, DFC Intelligence

Terms of the deal were not disclosed, but analysts estimated Take-Two could end up paying close to $200 million to satisfy both entities.

A Take-Two representative did not immediately respond to a request for comment.

The MLBPA license gives Take-Two exclusive rights among third-party game publishers. That means game console makers Microsoft and Sony could continue to make baseball games for their respective Xbox and PlayStation 2 game consoles, but companies purely in the software business could not. Most notably, that shuts out leading game publisher Electronic Arts, whose "MVP Baseball" was one of the top-selling baseball games last year.

EA rattled the game industry late last year by signing a contract with the National Football League and the NFL Players Association giving the game maker exclusive rights to portray NFL teams and players in video games. The move was widely seen as an effort to protect EA's lucrative "Madden NFL" franchise, which received its first serious commercial competition in years from the low-priced "ESPN NFL," jointly published by Sega and Take-Two.

EA tried to further solidify its sports assets--which also includes exclusive rights to NASCAR auto racing, FIFA soccer and PGA golf--last week by forging a new alliance with sports broadcaster ESPN, currently affiliated with Sega and Take-Two.

David Cole, president of research company DFC Intelligence, said that exclusive rights are becoming the norm in sports games, with professional basketball likely to be the next game to go that route.

"Baseball has never been a huge one for EA, so I doubt they bargained that hard for this one," Cole said. "Basketball is a lot bigger for EA, and they're going to make sure that stays their baby."

An EA representative confirmed that the company had been involved in bidding with the MLBPA and wasn't bothered by Take-Two's decision to pay more. "It proves there's plenty of competition in sports games," the representative said, adding that EA still plans to release a new version of "MVP Baseball" in a few months. "We're exploring our options long-term," the representative said.

Baseball in general is a considerably smaller prize than pro football. Three of the 10 top-selling video games last year were pro football titles, according to research company NPD Intellect, while baseball didn't even make the list.

The MLBPA said in its statement that it hoped the Take-Two deal would change the market by encouraging stronger marketing of baseball titles. "The baseball video game business has been underdeveloped for years," said John Olshan, head of the MLBPA's interactive games division. "We have no doubt that Take2's proven creativity and innovation, combined with their incredible distribution strength and powerful commitment to baseball, will add real excitement and depth to the video game marketplace."

Cole said Take-Two will still have a tough time making much of a profit off baseball. "Baseball games have been very challenging to do right," he said. "There is potential to grow the baseball market, but it's still going to be a just small fraction of what football does."

 

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