EA Should Acquire THQ for UFC License
by MMAEruption on Jul 11, 2009 8:04 AM EDT
24 comments
Hi guys, I recently wrote an article for the popular investment web site Minyanville.com that MMA fans would find interesting. I argue that EA should acquire THQ, primarily to get its hands on the enormously lucrative UFC license.
EA has a mountain of cash in the bank collecting dust, while THQ is an extremely cheap company with some incredible assets that is being weighed down by some product-management snafus. We know what EA wants in on the growth of MMA, and the easiest, lowest-risk way to do it is to simply buy THQ.
Sure, EA has a shot at making a good MMA game, but it doesn't have a brand like the UFC to go with it. Among the general public, UFC is a MUCH better known term than MMA. And the UFC certainly isn't making things easy by laying out threats to fighters considering going with EA.
Here are some highlights of my article:
But the real kicker would be THQ's Ultimate Fighting Championship (UFC) license. The UFC is the leading brand in mixed martial arts (MMA) -- a sport combining fighting disciplines such as boxing, wrestling, and jiu-jitsu. Once derided as human cockfighting by John McCain, the sport has become increasingly mainstream to the point that Bud Light and Harley-Davidson grace the UFC's famous octagonal cage.
Luckily for THQ, the 18- to 34-year-old male demographic that makes up a great deal of the UFC fan base likes video games. A whopping 2 million units of UFC 2009 Undisputed were shipped within 2 weeks of its May 19 release. And since this sport is still illegal in New York and Massachusetts, there's still plenty of room for growth.
EA is planning a rival title comprised mostly of non-UFC fighters. But according to a Sports Illustrated report, UFC president Dana White put the word out that fighters considering signing with EA had better think twice -- an ominous warning given the company's virtual monopoly on the sport in North America.
In fact, an extremely conservative free-cash-flow model indicates that the UFC license alone is easily worth hundreds of millions of dollars over the long term. Moreover, EA would be getting its hands on other THQ licenses -- including the cash cow WWE, and some valuable intellectual properties such as Company of Heroes.
I'd love to hear what you guys think, and if you could Digg this article for me, I'd really appreciate it!
The FanPosts are solely the subjective opinions of Bloody Elbow readers and do not necessarily reflect the views of Bloody Elbow editors or staff.
1 recs |
24 comments
Email
Print
Comments
this would be a crazy amount of money and well outside what the value of the UFC license would give in return.
In some ways I like that THQ is doing the game, sometimes the smaller company has the incentive to do something different, something good. Not saying EA isn’t capable of that (Dead Space last year was fucking awesome and totally not expected from EA) but they’re less likely to take risks.
THQ has been on a roll really. UFC, Red Faction both being well received and selling really well. I doubt EA would pay the amount that THQ would require to cover the assets and properties.
From pr0cs
by Nick Thomas on Jul 11, 2009 9:34 AM EDT reply actions 0 recs
I have a feeling that this purchase would make Zuffa buying Pride purchase look like one of the best business decisions ever.
Why buy the whole company and take on all the shit when they can just wait a few years and put in a bid for the UFC license for much less money?
by Phildo on Jul 11, 2009 10:01 AM EDT reply actions 0 recs
I disagree with this. THQ has Saints Row 2, Red Faction, UFC, and WWE. These are great licenses and terrific games. If you believe that THQ will go out of business in a few years, then I’d say you’re wrong. Furthermore, if you believe that the UFC license would be cheaper in a few years, I would also say you’re wrong.
Pride was a dying organization in an anti-foreigner market. THQ is nowhere near that. Analogies failed.
by cyph on Jul 11, 2009 10:32 AM EDT up reply actions 0 recs
THQ was/is still not doing very well. Their stock, while on the upswing right now, is still down 60% over a year. They may have good game licenses, but they are a not doing very well as a company, maybe if EA wants to get into all of those other games it would be worthwhile, but spending 240 million (half of the stock) to just get the UFC license seems foolish when they can put in a much lower bid to get that when it becomes available.
That’s also assuming that they could just buy the company and get the license. We know how much Zuffa likes to be in control, they knew THQ was in bad shape when they signed the deal, it wouldn’t shock me if there would be some issues transferring the license, just like there were issues transferring fighter contracts from Pride and Elite.
by Phildo on Jul 11, 2009 10:58 AM EDT up reply actions 0 recs
THQ is not doing well, but that is why the article was written. You buy when it’s cheap, not when it’s expensive. THQ was a 1 billion dollar revenue company a few years ago. With Red Faction and UFC selling well, they are turning it around this year. 240 mil (more than that now) will get them licenses for Red Faction, Saints Row 2, Companies of Heroes, etc. That price is not just for the UFC license.
As for the licensing, I don’t know how the contract was written. Obviously, if EA buy for license, they would vet that it’s transferable. EA being EA, they will wait for their new game to fail spectacularly before they consider buying THQ.
by cyph on Jul 11, 2009 11:05 AM EDT up reply actions 0 recs
But that’s my point. 240 million gets you half the company right now. 200 would have got the whole thing a month ago.
EA’s been looking to get int for a while, the time to make this move has passed. I think that if this was a possibility they would have done it before Undisputed came out and shot the stock price back up.
by Phildo on Jul 11, 2009 11:11 AM EDT up reply actions 0 recs
Who else could the license go to? EA dominates sports, and THQ has vast experience in wrestling, and now MMA games. It would take anyone else a minimum of 2 years to develop a new MMA game – and that’s this generation. Next generation, game development timelines are going to get even longer.
Zuffa’s not going to want to skip a few years of collecting millions and millions in royalties. EA and THQ are the only viable partners.
by MMAEruption on Jul 11, 2009 11:37 AM EDT up reply actions 0 recs
They don’t have to keep all the sh*t. They can dump the stuff that isn’t working.
by MMAEruption on Jul 11, 2009 10:52 AM EDT up reply actions 0 recs
Why pay for it if you’re just going to dump it?
That would piss off the fans of those games. How pissed did everyone get when Zuffa sat on some pride contracts like Mark Hunt? Same thing would happen in the video game world.
I really doubt they’re going to end up paying 250 million for the UFC license in a few years, so why should they do it now. Maybe when the stock was really in the shitter a few months ago, but not now when it’s on the upswing.
by Phildo on Jul 11, 2009 11:05 AM EDT up reply actions 0 recs
The stock was obviously a bigger bargain a few months ago – but it is still incredibly cheap.
by MMAEruption on Jul 11, 2009 11:49 AM EDT up reply actions 0 recs
Recession Strategy: BUY!!!! BUY!!!!! BUY!!!!!!!
Keep firing Assholes!
Out out, you demons of stupidity!
by Ubernoober on Jul 11, 2009 10:59 AM EDT reply actions 0 recs
Actually, we (family business)
are doing that now.
by Riney on Jul 11, 2009 11:48 AM EDT up reply actions 0 recs
If you want to sell high, then you gotta buy low.
by subo on Jul 11, 2009 12:37 PM EDT up reply actions 0 recs
Best business lesson I ever learned, “You don’t make money when you sell something, you make your money when you buy it.”
by Riney on Jul 11, 2009 1:04 PM EDT up reply actions 1 recs
I thought Red Faction: Guerrilla wasn’t doing so well? I do like Saints Row—I’m part of that contingent who preferred Saints Row 2 to GTA IV.
by An Old Friend on Jul 11, 2009 3:56 PM EDT reply actions 0 recs
Funny, I actually found GTA IV to be a little too much – just didn’t want to dedicate so much time to a game that I might never finish.
by MMAEruption on Jul 11, 2009 5:54 PM EDT up reply actions 0 recs
I finished it, but I don’t have any interest in the DLC.
You know what that game really needed? An mp3 player option, so I don’t have to listen to the radio stations. I want to be listening to “Orgasm Addict” or “Wouldn’t It Be Nice?” as I blast through the streets, not some dipshit NYHC.
by An Old Friend on Jul 11, 2009 6:08 PM EDT up reply actions 0 recs
Play “The lost and the damned” it is a LOT better than the original GTA4, they finally remembered what made GTA fun.
That being said Saint’s Row is a lot more fun if you’re looking for crazy shit and less about the story.
Both are must owns (along with Red Faction) if you’re even remotely into open world / sandbox games.
by pr0cs on Jul 12, 2009 1:26 AM EDT up reply actions 0 recs
Walmart should just buy the world
and be done with it.
by Riney on Jul 11, 2009 4:25 PM EDT reply actions 0 recs
MMA isn’t illegal here in Massachusetts. There are fights (pro and amateur) on a regular basis. It’s just not regulated, iirc.
by thekiltedwonder on Jul 12, 2009 4:05 PM EDT reply actions 0 recs
Comments For This Post Are Closed
Secondary Sidebar
User Tools
FanPosts
Community blog posts and discussion.
Recommended FanPosts
Recent FanPosts
MMA Rankings
Certain photos copyright © 2009 by Associated Press or Getty Images. Any commercial use or distribution without the express written consent of Associated Press and Getty Images is strictly prohibited.
