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Sega exits sports market as Take Two signs MLB deal

Tue 25 Jan 2005 9:42am GMT / 4:42am EST / 1:42am PST

Take Two Interactive has taken over complete control of Sega's sports game business, with development studio Visual Concepts changing hands for $24 million as Take Two signs an "exclusive" deal with the MLB Players Association.

Take Two Interactive has taken over complete control of Sega's US sports action game business, with development studio Visual Concepts changing hands for $24 million as Take Two signs an "exclusive" deal with the MLB Players Association.

Formerly an internal Sega studio, Visual Concepts and its subsidiary Kush (which is also included in the deal) developed the entire ESPN range of games for Sega, which is now published by Take Two.

The sports sector has been difficult for Sega for some years, however, and after handing over publishing rights on the titles to Take Two last year, it has now bowed out entirely - selling off Visual Concepts for the low $24 million price after EA threatened to extend its dominance of the market by signing exclusive deals with the NFL and ESPN.

The company's only remaining interest in the sports field is its long-term development partnership with London-based Sports Interactive, creator of the successful Football Manager and Eastside Hockey sports management titles.

The move is one of the first to be made by new Sega of America CEO Naoya Tsurumi, who said that the ESPN range "has not been a key profit driver" for Sega, and said that despite recognising the strength of the franchise, "[Sega] must remain committed to growing content that will help boost revenues across all western territories."

Take Two, meanwhile, seems resolute to continue fighting to build a sports business despite EA's moves to crush opposition in the sector, and has announced the signing of a seven year exclusive deal with the Major League Baseball Players' Association.

This deal will preclude any other third party publishers from using official player names and likenesses in their baseball games - although Take Two will still potentially face competition from platform holders Sony and Microsoft, who are reportedly not covered by the exclusivity clause.

Take Two will still need to negotiate a separate deal with the MLB itself if it wants to prevent the MLB brand and team names being used by its rivals, but the MLBPA deal alone will be damaging to EA's MVP Baseball, which will now be prevented from using real player names and data - unless, as some have speculated, EA can come to an arrangement with a platform holder to publish the title via them.

Analysts cautiously welcomed news of the deal, although several market watchers questioned the amount of money which Take Two is believed to have paid for the license.

"We believe that TTWO overpaid for its agreement with the Players' Association," commented Banc of America Securities' Gary Cooper. "The Wall Street Journal cited a source that valued the agreement between $80-90 million, although the deal may be as high as $150 million. While Take-Two's increased focus on diversification is a prudent move, we believe that Take-Two overpaid for the license given the lack of exclusivity and relatively small size of the baseball category."

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