The document that will change GTA forever (EA Acquisition)

[ssj12]

alpha_dk said:

Dodece said:
Electronic Arts is particularly overvalued. Thus they are not a prime candidate for acquisition by Microsoft. The recent acquisition spree will drive down dividends, and year to year the company is actually becoming less profitable for share holders. There is no reason to expect that this trend will abate this year or within the next five years. Electronic Arts is actually succumbing to the competition.

Electronic Arts actually generated three billion dollars in profit last year. To the best of my knowledge the company is valued at over twenty billion dollars. That means realistically Microsoft would not generate profits from the venture for ten years. While it most assuredly would win them the high definition console war in short order the short term losses would be substantial.

Electronic Arts may be big but it is not substantially healthy. Further more the multiple platform doctrine while it is the companies strength on one side of the issue is also its weakness on the other. You could never refit this company into a console specific developers. Without incurring massive losses.

While the concept is amusing it is highly unlikely.

 Dodece says it perfectly.

 I will just add: in the act of acquiring EA, MS would hurt its chances to profit.  Right now you have them releasing on all consoles for the most part, and serving every segment of the market.  If they were bought by MS, then they would now only be releasing on 1 console (unless they kept Madden on all consoles to keep their NFL exclusivity).  Not only would this overserve that 1 console and cut into their profitability, but it would also lead to a resurgence in new studios filling the gaps in the non-MS's console's games lineup. 

All of a sudden EA would have to compete to even get people onto a console that they serve, which is a foreign concept to them.  I would assume they'd be able to adapt eventually, but perhaps not quick enough.  EA's entire business model is dependent on being able to prevent competition from taking hold in any significant form; if they start to ignore segments of the market, they run the risk of a company that isn't ignoring those segments becoming large and rich enough to start to eat into EA's segments.  The act of buying EA would intrinsically lessen EA's power.

That's something that EA can't risk, and the reason MS would be somewhat stupid to acquire EA.  It's also the reason that an EA console would go the same way as the 3DO.

 So basically we would want M$ to buy out EA. lol