When the CEO of the world's largest videogame publisher takes repeated shots at the runner-up, even a journalist must eventually take note and seek comment. That's exactly what we did after noticing three separate statements in which Activision CEO Bobby Kotick had taken a dig at Electronic Arts, including an accusation that EA has been "taking the soul" out of a lot of the studios it purchased. To address this string of criticism, we sent some questions over to Jeff Brown, EA's vice president of corporate communications, for the company's official response. Here's what he wrote back:

In a recent Q&A with Portfolio, Activision CEO Bobby Kotick had the following exchange with the interviewer:

Is there a key to Activision's growth?

It's about really being considerate of the culture in the game studios that Activision buys. That's the biggest difference between us and any of our competitors. We built a model that celebrates entrepreneurial, opportunistic, independent values. It's almost the opposite of Electronic Arts, which has commoditized development. It did a very good job of taking the soul out of a lot of the studios it acquired.

What was the reaction of the executives at Electronic Arts when they read that quote?

The truth is, everyone laughed. In the past year EA has made radical changes to decentralize the company and put creative control back in the hands of development teams. It's too early to declare victory but if you talk to people like Patrick Soderlund at dice in Stockholm, Mark Jacobs at Mythic in Virginia or Josh Resnick at Pandemic--they'll probably tell you that it's working. They get a lot of resources and creative freedom. That freedom has already contributed new start-ups like Dead Space, Mirror's Edge and Boom Blox and there's a lot of others to be announced soon.

EA CEO John Riccitiello has made numerous recent remarks about EA's shift away from a command-and-control model towards a city-state model, in which individual studios and teams have more control over their own destiny. Do remarks like this suggest that he has more to do to change the perception of EA among his peers, or is something else at work? Which studios would you point to at EA that still have their souls intact?

 Poster for the 2001 film "Antitrust," courtesy impawards.com

Oft-quoted Wedbush Morgan analyst Michael Pachter isn't just ubiquitous, he's also multifarious. Did you know that in addition to being a financial wizard (Level 60, no doubt) with 15 years of mergers and acquisitions experience under his belt, he also has a law degree from Pepperdine and a master of laws in taxation? We bring this up because in today's installment of Verbatim, we've got a full-scale legal battle among three parties over the best way to interpret the antirust implications--or lack thereof--in Electronic Arts' proposed acquisition of Take-Two. The combatants are as follows:

• Michael Pachter (see above for his extensive credentials)
• Justin Blankenship, Level Up legal affairs columnist; former Federal Trade Commission lawyer (in the Mergers 2 division, which reviewed mergers in the chemical, technology, and entertainment fields)
• Mark Methenitis, editor-in-chief of the Law of the Game blog; and lawblogger for Joystiq; and a licensed attorney in Texas

We've even got a journalist caught in the crossfire: GamePolitics' Dennis McCauley.

The idea behind Verbatim is that we scour the Internet for what various people have said about a particular topic; isolate the most salient excerpts; and compile them in a single, convenient location for your reading pleasure. To see how these lawyers (and journalist) debated this particular issue, click on the link below.

 Aerosmith singer Steve Tyler in concert

With the rising popularity of rhythm games like SingStar, Guitar Hero and Rock Band, is it only a matter of time before some acts start going exclusive in exchange for more loot. Ever since Harmonix and MTV Games revealed last year that they would be offering full-length albums for download in Rock Band, followed by Red Octane and Activision's announcement that they planned to build an entire Guitar Hero game around a single band like Guitar Hero: Aerosmith, we've wondered whether the game makers were locking up exclusive rights to featured acts. It hasn't been easy finding out, because the relevant developers and publishers have been surprisingly reticent to discuss this matter.

Still, we persevered, and with an assist from NEWSWEEK business reporter Ashley Harris, we've learned that Aerosmith is indeed exclusive to Guitar Hero for an unspecified period of time. "It's an exclusive deal for this game," Aerosmith publicist Marcee Rondon told Harris. We confirmed this with Tim Riley, Activision's vice president of music affairs, who told us through Activision PR that "I can say that we do have the band exclusively, and their catalogue should be exclusive to us beyond the one or two tracks they had licensed out to Rock Band before we made our deal." (According to MTV's Rhythm Game Track Finder, it's one song: "Train Kept a Rollin'.")

 Electronic Arts' famed "Can A Computer Make You Cry?" print ad, which departing exec Bing Gordon helped create 

Once we got wind last week of William 'Bing' Gordon's impending departure from Electronic Arts, we quickly sought a pre-briefing, to which the PR teams at both Electronic Arts and Kleiner Perkins Caulfield & Byers graciously assented. We spoke by phone yesterday evening with Gordon, whose laconic California drawl belies one of the industry's most colorful and outspoken characters. Last night's chat, however, found him in a more contemplative mood, as he looked back at his tenure at EA--where he's credited with everything from creating the EA Sports brand to founding EA's studio system--and forward at the challenges and opportunities that lie ahead as he enters the dizzying world of venture capital. To give you a sample of our conversation as quickly as possible, we've given Gordon the Just the FAQs treatment, but we plan to publish a more complete Q&A from our wide-ranging conversation in the days to come.

Why did Gordon decide to leave Electronic Arts for Kleiner Perkins Caulfield & Byers?

Three reasons. First, he's comfortable with the partners at Kleiner Perkins. "I've known the leading partners at Kleiner since John Doerr and Brook Byers made a founding investment in Electronic Arts in '82," Gordon told us. "Then Brook went on the board, and Brook was kind of the cool guy on the board; deeply believes in entertainment and entrepreneurial possibilities. So he shaped my thinking about what a board member can be."

Over the last decade, Gordon has stopped by Kleiner Perkins from time to time to see what they've been up to. This, he says, resulted in him being invited to join the boards of such Kleiner Perkins investments as Amazon and Audible. "I kind of have 25 years with them. Like 'em; get my best reading list from them. So that's kind of the first thing: long experience and love for the Kleiner way of doing things."

What's the second reason?

With an empty nest looming as his daughters go off to college, he's been wondering about the second act in his American life. "I've got 15 more years to do something—might be cool to do something else" says Gordon of his thought process. "The first thing that popped into my head was Kleiner. Just unbidden, popped into my mind."

And the third?

To read the rest of today's installment of Just the FAQs, click on the link below.

 Bing Gordon (far right) pictured with Jeff Bezos, Will Wright and Robin Williams,  courtesy valleywag.com 

The renowned venture capital firm Kleiner Perkins Caulfield & Byers has just announced something that we learned late last week. Electronic Arts chief creative officer William 'Bing' Gordon will join Kleiner Perkins as a partner in June, serving alongside such luminaries as John Doerr, Bill Joy and Al Gore. According to Gordon, with whom we spoke by phone on Sunday evening, the first week of June will be his last at EA before starting at Kleiner Perkins on June 9th. "Being on campus with young people in videogame classes; seeing what they're interested in; seeing what's going on with the Internet turning into new kinds of platforms, from iPhone to Facebook and Amazon Web Services--I've gotten fired up about an all-new ride," Gordon told us when we asked why he was moving on from the company that he helped build into a global power.

That's not all the generally outspoken Gordon had to say. To read our Just the FAQs post with chunks of our conversation, click here. To read Kleiner Perkins' press release announcing his joining the firm, click on the link below.

 

Whether it's the Knicks and the Lakers, the Brooklyn Dodgers and the L.A. Dodgers or Biggie and Tupac, there's always been a rivalry between New York and California. But when it comes to videogames, NY might as well be bringing a knife to a gunfight. Sure, we've got Take-Two, or as we like to call it, The House That Rockstar Built. There's Vicarious Visions, those masters of handheld development. Kaos Studios, which worked on Battlefield for EA and just did Frontlines: Fuel of War for THQ, is also located in our fair state, as are smaller developers like Gamelab, which brought us Diner Dash.

But compared to Northern California (Electronic Arts, Lucasarts, Sega and Namco's U.S. HQs, etc.), which even stole 2K Games from us, and Southern California (Activision, THQ, Warner Bros Interactive, Disney Interactive, Brash Entertainment and more) and, well, it's clear where NYC's interactive inferiority complex comes from. So when we got wind that a brand new publisher was debuting not only in our adoptive state, but a mere subway ride away from Level Up's midtown HQ, we pulled out all the stops to bring you this news--and an exclusive interview with the company's CEO--first.

The publisher in question is GreenScreen Interactive. "It was initially founded by Ryan Brant, Mark Seremet and Susan Cummings," CEO Ron Chaimowitz told us yesterday during an exclusive interview at his SoHo offices. "Mark and Ryan were founders of take-Two Interactive, and Susan was at Take-Two and actually worked with Ryan to build the 2K label very successfully from zero to $400 million over four years." Chaimowitz is himself no slouch, having co-founded GT Interactive Software in 1993 and published such well-known titles as Doom, Quake, Duke Nukem and Unreal.

To read the rest of our post on GreenScreen Interactive as well as the full text of the company's press release, click on the link below.

 Monopoly, developed by Bright Light and published by EA Casual 

Last week at a media event in New York City, Electronic Arts unveiled its take on Hasbro's enduring Monopoly. It's currently in development for Wii, 360 and PlayStation 2, with the Wii serving as the lead platform. The game will be released this fall by the EA Casual division, at the same time as the relaunch of Hasbro's board game Monopoly Here & Now: The World Edition, so named because Hasbro is retiring such famous spots as "Boardwalk" and "Park Place" with the names of cities from around, um, the world. We played it at the event, where EA's reps were focused on showing off The Richest, a new spin on Monopoly that blends mini-games with a sped-up version of the classic gameplay for a clever, highly entertaining version of Monopoly whose playtime is measured in minutes, not hours. See below for the press release, and be sure to check back for the newest installment of our Just the FAQs interview series, in which we speak with the title's U.K. developers.

To read EA's press release, click on the link below.

We've never quite been able to appreciate the phenomenon that is Second Life. Nevertheless, even the metaverse-averse like ourselves can appreciate the wizardry involved in our exclusive video demonstration of Second Life on a mobile phone. That wizardry is made possible by a startup called Vollee, which is capable of serving up games whose graphics and CPU requirements are more demanding than a typical phone can handle to the Vollee client which users install on their handsets. The folks at Vollee remap the menus and controls for each game to optimize them for the smaller screen and the limited controls. During a recent demonstration at Level Up HQ, we saw a PS2 board sports game running reasonably well on a phone. We'll have more coverage of Vollee in the weeks to come, as well as our thoughts on the implications of this technology, but for now, enjoy the video.

 

Senator? You can have my answer now, if you like. My final offer is this: nothing. Not even the fee for the gaming license, which I would appreciate if you would put up personally.
--Michael Corleone in "The Godfather: Part II"

For a deal that's yet to be consummated, there's been a whole lot of activity surrounding Electronic Arts' proposed acquisition of Take-Two. First came the news that the Federal Trade Commission had requested further information and additional time to complete its review of the deal--the "hard look" at the deal that Level Up's own guest poster and former FTC lawyer Justin Blankenship had predicted. Next, at its shareholders meeting last night, Take-Two's board continued to urge its stock owners to reject EA's tender offer.

Finally, this morning, EA announced that it had extended the deadline for its tender offer to May 16th--while reducing the value of its offer from $26 per share to $25.74 to reflect the additional shares of restricted stock that have been granted to Take-Two management. To make sense of all of the head-spinning feints and counter-moves, we shot an email over to the omnipresent Wedbush Morgan analyst Michael Pachter. Here's what he had to say:

What should we make of Electronic Arts' decision to extend its tender offer to Take-Two shareholders to May 16th, 2008?

They extended because they fully intend to wage a proxy battle over the next month. That will essentially involve nominating a new board and soliciting the vote of 50.01 percent ofall shareholders (including those who could not vote yesterday because they bought after February 19). If they win the proxy battle, they will take control of Take-Two.

Is there anything significant about that date?

 The cover for the Pixies' 1989 album "Doolittle"

During our phone briefing yesterday with Harmonix CEO and co-founder Alex Rigopulos and Paul DeGooyer, senior vice president of Electronic Games & Music, we uncovered a slew of tidbits about their philosophy regarding future releases of albums, tracks and the overall Rock Band "platform," as term Rigopulos used on more than one occasion during our chat. We'll serve up the full text of this interview at a later date, but in the meantime, here are some of the highlights, in the form of an FAQ:

When is the next album coming out?

Next month.

What is it?

"The Cars," by, um, The Cars.

Anything after that?

In June, they plan to release "Doolittle," by the Pixies. "This is the beginning of what will be a regular flow of full albums," says Harmonix's Rigopulos.

"Who Are You"? More like "Where Are You"? Why wasn't The Who's "Who's Next" the first album release, as previously expected?

Because Harmonix does not yet have everything it needs to create all of the tracks. "We do require specialized audio mixes in the form of stems," says MTV's DeGooyer. "And to be perfectly candid, [Judas Priest's "Screaming For Vengeance'] is the first one that was ready."

Can I play "Screaming For Vengeance" as Rob Halford or Glenn Tipton?

To read the rest of our FAQ on Rock Band's full-length albums, click on the link below.

 The cover for Judas Priest's 1982 album "Screaming For Vengeance" 

Harmonix and MTV Games have just announced that the first complete album for their popular rhythm game Rock Band will be released next week. Even though last year Harmonix cited The Who's 1971 record "Who's Next" when it first revealed that entire albums would be made available through its online store, its inaugural full-length release will be Judas Priest's 1982 hit "Screaming For Vengeance," boasting such classic songs as "You've Got Another Thing Comin'" (already featured in Guitar Hero and SingStar Amped, according to MTV News' own Rhythm Track Finder) and "Electric Eye" (already featured in Guitar Hero Encore: Rocks the 80s).

Each of the ten tracks on "Screaming For Vengeance" can be purchased individually for the standard price of $1.99 per track (160 Microsoft Points on Xbox 360), while the entire album can be bought for $14.99 (1200 Microsoft Points on Xbox 360).

For the full text of Harmonix and MTV Games' press release, click on the link below.

 A mock-up of the Kaplan SAT Prep DS, under development by Aspyr Media

Oh, Brain Age: what have you wrought?

Later today, Kaplan Test Prep and Admissions (a division of Kaplan, which is in turn owned by Newsweek's own parent company, The Washington Post Company) will announce that it is partnering with Aspyr Media to develop an as-yet-untitled SAT test prep game for the Nintendo DS. Versions for Windows-based PCs and Macs are also in development. According to Aspyr co-founder Ted Staloch, Aspyr reached out to Kaplan Test Prep last summer to see if the two companies might be able to work together on a game that would hit the sweet spot of Brain Age fans and students studying for the SAT. "This is not a study break," Staloch told us last week during a phone interview. "This is a way to prepare for the test."

Staloch and Kaplan's director of pre-college programs Kristen Campbell were reticent to share many details, as the game is still early in development. Campbell did say that part of the appeal to Kaplan was the ability to reach young people through videogames, just as it has done via iTunes and manga. "The reality is that for a lot of students, the way they study has changed," says Campbell. "This is a great way to supplement our tutoring or classroom programs."

As the caption says, the image above is a mockup of what the game's menu will look like, as well as its main character. We asked Aspyr for more detail about the main character; here's what the publicist told us via email:

At last year's Consumer Electronics Show, one of the more unusual gadgets that we saw was the Falcon game controller from Novint Technologies, which allows users to feel objects and interactions in a 3-D manner. We were intrigued by the device's potential--its unique approach to force feedback (explained here) let us experience the sensation of touching different surfaces and materials--but expressed a good deal of skepticism about it's chances in the marketplace. Why? Because while there had been a number of recent runaway successes in the alternative input category--SingStar's microphone, Buzz!'s buzzers, Guitar Hero's guitar and the Wii remote--the first three were built around what proved to be killer exclusive software, and the fourth additionally benefited from being included with each and every Wii sold. By contrast, the Falcon was essentially an after-market, would-be mouse replacement peripheral with no exclusive software; and as such, we had a difficult time imagining it breaking through.

Still, slow and steady wins the race. Last week, Novint and Electronic Arts exclusively revealed to us their agreement by which Novint will license several EA games, which Novint will then patch to support its Falcon peripheral.

 The Pixar film "Wall-E"... 

As reported on MTV Multiplayer (and confirmed by us), the North American release of the rumble-enabled Dualshock controller brings with it the (timely? untimely?) demise of the Sixaxis. "It'll no longer be offered after it's completely sold through at retail (likely by the summer time frame)," a Sony Computer Entertainment spokesperson told us via email. That seemed like a rather casual dismissal of a device once heralded as the "next generation" of input devices, so we've decided to honor the Sixaxis' passing...with one quote for each axis from its brief, troubled history. Sayonara, Sixaxis.

***

The Date: October 2006
The Man: Kaz Hirai, president, Sony Computer Entertainment
The Source: Kikizo
The Question: If the new Sony is less arrogant, where's our rumble?
The Quote: "The issue when we're talking about trying to have motion sensing as well as a vibration feature, is trying to isolate the vibration feature from the motion sensors. Is it technically feasible? Absolutely. But the other problem, or the balancing act that you need to do, is to be able to present the controller to the consumer at an affordable price. We have one controller in the box, but many consumers will want to go out and get an extra controller. And if we have to come up with technology - which you can technically do - to isolate the vibration from the sensing, if that means that the controllers are going to be so expensive, then we're doing the consumer a huge disservice by coming up with a controller that is not very affordable. So it's a balancing act that we need to do. And we felt that ultimately, the vibration feature, which is a feedback feature, as compared to the motion sensing which is an input functionality, when you compare the two, we decided that the input device or methodology is a lot more important that feedback, and that has been a strategic decision that we've made."

The Date: October 2006
The Man: Phil Harrison, former head of Sony Computer Entertainment Worldwide Studios
The Source: ThreeSpeech via GI.biz
The Question: Any regrets? And why not have both gesture and rumble?
The Quote: "I think that the next generation interfaces that can be created built on Sixaxis motion sensitivity give tremendous gameplay benefits that far outweigh a reactive vibration function….[T]he decision that we've made to build in the Sixaxis functionality, and Bluetooth wireless, and great battery life, and all the other functionality that comes with it, far outweighs the chatter that we're getting on vibration. And, it's incredibly light! Just pick it up!"

To read the rest of our Verbatim selections, click on the link below.

 

Here at Level Up, our inbox is chock full of press releases, PR pitches, notes from my editors, a fan mail or two, and the occasional bit of Viagra spam that slips through our email filters. But every so often, something genuinely compelling comes across the transom--so compelling, in fact, that we have no choice to share it with you. In February, we appeared on the G4TV show X-Play to discuss Electronic Arts' bid to acquire Take-Two. A viewer of the program, Justin Blankenship, is also a regular reader of Level Up, and he wrote us to share his thoughts about the deal. His words were sufficiently compelling that we asked him to shape them into a formal post, which we present to you following our introduction.

What made Blankenship's opinions particularly intriguing is that from Fall 2001 until early 2004 he was employed as a lawyer at the Federal Trade Commission in Washington, D.C. More specifically, he worked in the Mergers 2 division, which reviewed mergers in the chemical, technology, and entertainment fields for potential violations of Section 7 of the Clayton Act, in search of potential anti-competitive concerns that would hurt consumers. So as part of his division's jurisdiction, Blankenship examined similar mergers while at the FTC, and in his email to us, he expressed his opinion that the FTC would take a hard look at the EA Sports/2K Sports part of this deal for antitrust reasons. " Although you've yet to see antitrust law rear its head in a videogame merger, this is the best case I've seen where it could happen," Blankenship says below. Read on to find out why EA could have more problems on its hands than just Take-Two's wily CEO Strauss Zelnick and the merry band of arbitrageurs holding out for a higher sale price.

There seems to be a lot of chatter in the videogame industry about the inevitability of Electronic Arts' takeover of Take-Two. Although EA's offer may eventually prove too lucrative for Take-Two to pass up, I wouldn't assume that this deal will get a rubber stamp from government antitrust regulators. I'm specifically referring to comments by Wedbush's Michael Pachter, who stated: "Currently [EA and Take-Two] compete in pro basketball, college basketball and hockey. So by taking out all of that, EA has a monopoly in sports. If these guys have a monopoly, they're not going to cut pricing on sports games as quickly. We've been seeing sports games come down [in price] before Christmas the last couple of years. That'll never happen again."

Until 2004, I worked in a division of the FTC that spent a lot of time looking at technology-related mergers, and had at least taken a good look at mergers like this one. I also have every reason to suspect that my former colleagues would give this deal a hard look, especially in light of Mr. Pachter's comments, of which I'm sure they're aware.

Section 7 of the Clayton Act forbids the acquisition of stock or assets when "the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly." (15 U.S.C. § 18) This case, like most merger cases in antitrust, would likely be resolved by the definition of the market (anyone interested in the details of this analysis can refer to the Joint DOJ/FTC 1992 Horizontal Merger Guidelines). If a given market is defined narrowly, it means there are fewer competitors, and concentration levels are consequently likely to be much higher. In a broader market, more competitors are included, concentration levels are lower, and competitive issues are far less likely.