It's time for the Take-Two Interactive E3 2008 press conference! What mysteries lie beyond the jump? Will they talk about GTA DS? Will they concede and hand over the company to EA right then and there? Will they...I dunno...talk about an upcoming movie for an hour?

God I hope not.

Now, it's a different story — Grand Theft Auto IV and BioShock are some of the highest-rated titles on Metacritic, and Take-Two is the number three publisher in the industry. The turnaround strategy seems to be working.

Feder credits the success to focus on the part of the publisher's creative studio teams. "They had their heads down, not focused on what was going on outside of what they were doing," Feder said. One of those outside things is an ongoing and aggressive acquisition bid by Electronic Arts, which Feder declined to discuss.

He was happy to discuss GTA IV's unprecedented debut. Since he's a business kind of guy, I asked him how much he deals with the Rockstar team:

"I deal with them all the time," he said. 'We are really proud of [Rockstar's] performance, and they're proud of GTA IV. it's been an unmitigated success, not just from a financial standpoint but from a creative standpoint... it's stunning success on any metric."

Feder said Take-Two prioritizes giving its studios creative freedom - what's his strategy for nurturing that creativity in the publisher's studios? "We need to protect our creative folks," he said. "We need to make sure that the outside world doesn't interfere with their creative process. We then need to provide the resources, and finally, we cant get in their way... [by] putting something in a box whether it's ready or not."

"We serve no wine before its time. We respect their work and their creativity, and that's not a strategy that everybody takes in this business."

Letting that wine take its time often means delays, however. "Title slippage is the bane of this business," said Feder. "We may have gotten lucky in the past, but titles slip."

Does that mean we can expect delays, then, with titles we're expecting? "We're on track," said Feder. "We try to operate with financial discipline and operational discipline. First and foremost, we need to delight and amaze our customers."

Since Feder mentioned "protecting" the creative talent, we asked about the ways that GTA IV has been strung up as a social whipping boy in the past for the so-called horrors of violent video games. Does Feder feel Take-Two's done a good job of standing up for Rockstar's work?

"I think we defend our work all the time," he said. "First and foremost we need to start with the notion that an M-rated game is not for kids... don't call it a game then, call it interactive entertainment, but it's not for children."

"But one of the great things about GTA IV iis that the parameters of the debate have completely shifted. It's not about any of the controversy... because the initial reviews were, it is an artistic tour de force, a technological tour de force, a success on every stretch of the imagination, it stretches the definition of an interactive experience. That was the bookend by which all discussion began, so any controversy that came out had to combat all that positive momentum."

So is Take-Two finally winning the PR war? "I don't think of it that way," he said. "I think it was just a hugely impactful and culturally important product."

Whatever you think of the law or those who practice it, this guy's out there lawyerin' and lobbyin' for your rights to play — well, Take Two games, at least.

According to the profile, Krauss came on board when Strauss Zelnick took control in 2002. Other fun facts:

• When Krauss took over as general counsel, Take Two had only two in-house attorneys. In the six years since, they're up to 15, handling the company's never-ending concerns with intellectual property and First Amendment cases.

• Even after beating a case he still finds it has strong replay value. "Take-Two operates in 20 different jurisdictions, so every legal issue 'has to be replayed over and over again,'" the profile says. These include global jurisdictions, of course, but surely they also cover some U.S. state-level cases. Some lobbying is a part of his duties, Krauss says.

• Quoting the profile: "Take-Two has had to defend itself against those who consider this form of entertainment scary and dangerous. Krauss works with his counterparts at other game companies and other allies to meet criticism by politicians and critics "who try to politicize the video game industry."

• Krauss' dad was a Broadway producer; he considers his job "a happy and welcome return to working with creative people." He's a Duke undergrad and Washington University J.D. Krauss also worked for the Manhattan D.A., where he probed the financial institutions implicated in Enron's collapse.

Start Game [Law.com, via Gamepolitics]

According to GamesIndustry, the ASA did find the game distasteful, but was not glorifying violence because of its "comic and exaggerated" nature:

"Although many might find the name and content of the game to be in poor taste, the content of the ad was unlikely to cause serious or widespread offence," it said.

ASA dismisses Bully advertising complaints [GamesIndustry.biz]

That is, unless the FTC finishes its investigation sooner. It's now got the information it needs from EA in its quest to determine possible antitrust issues, but Take-Two has appeared to struggle with fulfilling the broad-ranging request; when it was initially uncompliant, the District Court of Washington, D.C. had demanded it show cause, with Take-Two risking an injunction if it failed to pony up.

However, Tiffany Steckler of EA's corporate communications said that the August 21 timeline applies regardless of what Take-Two does:

"Whatever happens with Take-Two's process doesn't impact [the FTC's] timing, because our agreement with the FTC provides that they complete their review within the 45 days," she said.

Take-Two eventually reached a compromise with the FTC through which it'd be able to provide all the necessary information, but it has yet to fully certify compliance with the FTC, as EA has done as of market close yesterday.

EA's offer still remains at $25.74 per share, which for the past several weeks has been slightly below Take-Two's daily average share price — but now, things have changed:

Take-Two is currently trading at $23.99, which might make a sale to EA a big gain for shareholders in an economic downturn. Why has Take-Two's price been slumping?

Many analysts had theorized that, once the hype around Grand Theft Auto IV's launch began to ebb, Take-Two's share price would see a gradual adjustment back downward. Prior to EA's offer, the price per share had lingered at about $17 before the stock saw a spike largely on anticipation of the offer, and in some part on the strength of GTA IV. But it may be that post-launch for the major title, while at the same time EA's offer appears to hang in compliance limbo, investors are becoming impatient and selling off.

Most likely, though, the lower share price is due to the overall market downturn and concern about oil prices, and has nothing to do with EA's offer, says Wedbush Morgan analyst Michael Pachter. EA, as well as many other companies in the industry, are seeing somewhat lower values as well.

"It's nothing in particular concerning video game stocks," Pachter said. "Take-Two is worth the same, it won't impact EA's offer."

Said a Take-Two spokesperson, "Our position with respect to EA’s tender offer remains unchanged. Take-Two’s Board is committed to and focused on a process of considering all strategic alternatives to maximize the value of Take-Two. We are considering any and all alternatives which will deliver greater value to stockholders than the current EA offer."

Sunday
8 p.m. Kotaku Party: Open to everyone (21 and over)

Monday
10:30 a.m. Microsoft Presser
1 p.m. Shane Kim Roundtable
3 p.m. EA Presser
8:30 p.m. Gears of War 2 Reception

Tuesday
9 a.m. Show Floor Opens
9 a.m. Nintendo Presser
11:30 a.m. Sony Presser
2: 30 p.m. Ubisoft Presser
4:30 p.m. Capcom Presser
7 p.m. Activision Presser (Not technically a part of E3)

Wednesday
9:15 a.m. E3 Keynote by Gov. Perry
10 a.m. Sony Roundtable
10:45 a.m. Take Two Presser
1 p.m. State of the Industry Keynote
2:30 p.m. Konami Presser

There are, of course, plenty of booth tours, one-on-one interviews, meetings and parties that I didn't include in this concise snapshot. What are you most eager to check out? Me? I'm psyched for the big three's keynote's because those are almost always chockful of news. I'm also interested to see what both Take-Two and EA have to say at their pressers, I expect some news from both, maybe even related, though I sort doubt it. More than any year before, though, I think this E3 will be the year of the third-parties. Lots of big games being shown off.

Hit the jump to vote on what you most want to hear about and see next week.

Following CVG's report that Take-Two might close the doors on Venom Studios, its Newcastle, UK-based developer of Don King's Prizefighter and Prey, Take-Two has said in a statement that it is indeed considering layoffs, though no final decisions have been made yet.

"We are assessing the role of Venom Games in Take-Two's overall global studio system and are in a consultation with the employees of Venom in relation to possible redundancies at the studio,” the company said. “No final decision will be made until after the consultation with employees," it added.

Venom was founded in 2003 and was acquired by Take-Two in 2004 for $1.3 million.

What’s kind of curious is these rumors floating around, and we read them on the Internet.. Oh, there’s some rumor that like, after BioShock, everybody hated Ken and everybody left. And everybody’s in the office like ‘where did this come from? I didn’t leave. Are you leaving? No.’ The answer is, after BioShock finished, nobody left... We would love to know [where the rumor came from]... It’s rough for us, because we’re like, it’s the same old team, we’re still there, still like working with Ken, we’re doing great stuff... If you ever meet Ken, he’s the most unassuming guy. He’s the biggest nerd. But what you have to do in a game is go out there and get people excited about your project... What I think people like about Ken, or what’s made him an ‘icon’ is that he tells the truth... He takes his case to the gamer, and that really gets people excited.

You heard it here! Ken Levine: Nerd, icon, exciter.

The Truth About Ken Levine [Next Generation]

The U.S. District Court of Washington D.C. had asked Take-Two to show why it wasn't complying with the FTC's broad-ranging information request as it investigates potential antitrust issues for the possible combination, probably regarding the companies' sports portfolios.

For its part, Take-Two had claimed that complying with the full scope of the FTC's requests would have been too expensive and labor-intensive, and asked for "reasonable limits."

It's now gotten those limits yesterday through an agreement with the FTC, and the investigation will now continue without the need for Take-Two to appear in court. EA had also previously reached an agreement with the FTC that would delay any acquisition attempt until the completion of the investigation - the fact that Take-Two won't have to appear in court should simplify the process quite a bit.

Said Take-Two in a statement, "The Company is pleased that a resolution has been reached that should substantially reduce the economic burden on the Company and focus the inquiry in a way that should minimize the distraction to the Company’s employees. The Company intends to continue to cooperate fully with the FTC."

EA's current offer deadlines July 16th, but any acquisition will have to wait until the FTC makes its final determination.

"For clarity’s sake, I think you’ve got a slight mis-remembering of what we said," Riccitiello told an audience member who asked about capitalizing on GTA IV's release value. "We were extremely explicit that there was no possibility whatsoever that we would be able to acquire the company or close the transaction prior to the release of GTA IV."

"What we said is we wanted to close the transaction in time to affect holiday sales for some of the games like Midnight Club, catalog for GTA and others. And so the reason we’re continuing to extend it, that was our plan all along and that was the way we described it at the time."

The questioner was probably prompted to the question by EA's recurring comments about the time sensitivity of their offer, but Riccitiello said that "the depreciating nature of the asset was not necessarily about GTA."

"It is that one more holiday period where we can sell more puts money onto the bottom line."

The publisher has not, however, raised its offer above $2 billion, or $25.74 per share, as the FTC's investigation process continues. Take-Two was recently asked to explain to the U.S. district court of Washington, D.C why it is refusing to fully comply with the commission's information request. Take-Two risks an injunction if it doesn't provide the full scope of info, which has been speculated to pertain to portions of its sports portfolio.

EA senior VP of corporate development Owen Mahoney congratulated Rockstar on Grand Theft Auto IV's successful launch, but maintained that despite the title's success, EA's offer "reflects a full and fair price based on the long-term value of Take-Two's entire operation."

When Kotaku spoke to Mahoney about the deal, he said that the longer the process goes on - both Take-Two's resistance and possible delays due to FTC investigations - the less valuable it is to EA. That was back in April, and it's now June.

Plus, EA's agreement with the FTC means the publisher will wait 45 days beyond the time that compliance by both parties is determined to be complete, which drags the process out even further. Is time still a factor?

"That's every bit as true today as when Owen said it a couple of months ago," said EA VP of corporate communications Jeff Brown. "Time erodes the value of this deal."

The FTC has asked to review a large volume of information across two separate requests; for EA's part, Brown says that it's taking them some time to put the information together. "It is our intention to [fully comply]," he said. "There's no dispute on our side."

Take-Two board chairman Strauss Zelnick recently made some bold comments at an investor event, claiming that its portfolio, particularly in the contentious sports arena, out-rates EA's in a head-to-head comparison, information that, if true, might suggest that EA needs a higher offer to seal the deal.

"It seems like Strauss has been playing football without a helmet; he needs to check his numbers," said Brown.

Kotaku has requested comment from Take-Two, and will update with any response we receive.

As of today, only an insignificant portion of Take-Two shares - 6,139,824, or 7.9 percent of the total - have been tendered to EA.

Said Zelnick, "The latest extension of EA's unsolicited, highly conditional tender offer does not alter the fact that their proposal still significantly undervalues Take-Two, a fact that is reflected in the overwhelming number of stockholders who still have not tendered their shares."

"Our Board of Directors remains in unanimous agreement that the proposal is contrary to the best interests of Take-Two stockholders, and the Board continues to recommend that stockholders not tender their shares to EA. The Board remains focused on the strategic process that began formally on April 30 to consider all alternatives to maximize value. We believe that these alternatives, which may include a business combination or remaining independent, will deliver greater value to stockholders than the current EA offer."

Ken Levine re-negotiating contract with Take-Two [Variety]

We know that, as we speak, the FTC is thoroughly investigating the possible takeover of Take-Two by Electronic Arts, to be sure that there are no antitrust issues. The FTC first made one request for information, and then a second one, indicating they're analyzing the deal very closely.

EA cut a deal with the FTC by which it consented to a 15-day extension on the investigation period, making it 45 days, and in return the publisher agreed it wouldn't move to acquire Take-Two until the investigation was closed or until the 45 days expired.

Newsweek's Level Up legal affairs columnist, former FTC lawyer Justin Blankenship, wrote a new piece trying to pin down exactly what issues the FTC might be looking at. Though the specifics are not public record and not likely to be sussed out easily, Blankenship learned a few details - like where the FTC's greatest area of concern likely is, and whether Take-Two is risking a legal injunction to stonewall EA:

For one thing, a second request from the FTC is a fairly rare occurrence and often demands a mountain of information from the companies involved - in fact, Take-Two has resisted answering the request on the grounds that it's just too much unnecessary stuff and would cost them too much time and money.

But Blankenship's details suggest there might be more to that story:

The gist of it appears to be that Take-Two had an agreement with the FTC to search for responsive documents in the files of certain individuals. But after hiring a new law firm, Take-Two has apparently reneged on that initial agreement, and has on several occasions narrowed the scope of the search that it is willing to perform even further.

Although the target of an FTC investigation has some grounds to object to a second request on the basis that it's unduly burdensome, the Horwitz affidavit tells the story of a corporation that's gone beyond making good faith objections based on scope. Take-Two appears to be simply stonewalling.

It's certainly a viable speculation that Take-Two is simply buying time in order to hold off EA after negotiations have fallen apart. The Federal Court has already demanded to know why Take-Two hasn't ponied up the info - and if they continue to withhold, the FTC could seek a preliminary injunction in Federal Court, which could delay the acquisition until the FTC gets what it wants - but not permanently.

It actually doesn't make a lot of sense for Take-Two to do that, as Blankenship's article explains:

You would think that as the unwilling target of EA, it would be in Take Two's best interests to hand everything over to the FTC as soon as possible with every incriminating quote already highlighted, complete with its own commissioned economic study about how EA would destroy competition in sports videogames, all wrapped up with a pretty red bow.

As all of the commenters here at Kotaku who've been following this story have speculated:

Not surprisingly, the FTC's investigation appears to be focused on "competing titles for simulated sports games, including basketball, football, hockey, and baseball."

Specifically, said Blankenship, with Take-Two holding the Major League Baseball exclusive while EA's got Madden, consolidating the basketball and hockey overlap just might choke the competition out of the sports game genre.

The Law and the Short of It: Level Up Legal Affairs Columnist Justin Blankenship Returns to the Scene of Electronic Arts' Bid For Take-Two [Level Up]

Electronic Arts wants to buy Take-Two, we all know that. And Take-Two is playing hard to get, slightly souring EA's advances. In fact, we've heard the only reason that Electronic Arts is still pushing deals at Take-Two left and right is because they want to get their Federal Trade Commission approval for the deal.

With that in hand, EA can walk from the table and return when it makes more since for everyone involved and, in theory, they wouldn't have to go through the FTC approval process again. Thing is, Take-Two now isn't playing nice with the FTC either.

In an early morning update today, Take-Two notified investors, hangers-on and attentive journalists, that the U.S. District Court of DC is ordering the company to explain why they won't comply with the FTC.

Take-Two says that they have been cooperating fully with the FTC in regards to their review of Electronic Arts' offer.

The Company has already provided enormous quantities of data and access to key executives, and has offered to provide the FTC staff with additional documents and information. Nevertheless, the Company believes the FTC’s subpoena and CID are unnecessarily broad and would entail unacceptable additional expense to the Company. To limit the inordinate expense and labor that the FTC’s demand would entail, the Company has sought to obtain reasonable limits on the scope of the information sought.

The court has ordered a hearing on June 24 to determine if Take-Two is required to comply. If Take-Two can't come to some sort of agreement with the FTC prior to the hearing they say they plan to fight the commission's request.

When we go head-to-head with 'Brand X' we out-rate them significantly...We outsell them when we go head-to-head. It's sort of an unheralded achievement. This is a tough business.

On one hand, he's right! 2K's basketball and hockey games are normally top-shelf, and they've got baseball to themselves. But the "head-to-head" bit...yeah, it's dancing around that elephant in the room. 2K don't have an NFL game in the US. They don't have a football game in Europe/Asia. That's like saying my 92 Corolla can take on a Ferrari head-to-head, so long as we're...both sticking to the speed limit. And the speed limit's 30.

2K Sports unheralded against EA Sports, says Zelnick [GI.biz]

Zelnick said the publisher is currently testing in-game ads for its sports titles "pretty aggressively," and is also experimenting with ways to add microtransactions into the mix across its franchises. The idea, said Zelnick, is to "turn packaged goods partially into a subscription business, and drive some of the volatility out." Plain language? Digitally-distributed business models like pay-for-content and subscriptions are less risky than the $60 retail box.

"If we can get a good model for episodic content for high quality titles, that should be a pretty profitable business because there are no hard goods associated with it," Zelnick said.

Microtransactions work, said Zelnick, when it's something of value to the consumer. "You can't pull content out of a console game and the sell it to people later; it's not a good experience," he said, perhaps subtly digging his competition's recent controversy.

A natural extension of a property might be a better idea, he said - like letting players "change the way characters look, [add] weapons, cars and the like."

Forbes magazine thinks it knows who the other contender could be - Ubisoft, after ruling out Activision, who's already rather busy with a very big impending merger with Vivendi.

There are a few reasons why Ubi might be a good bet:

Well, for one thing, Ubisoft's profits are on the rise, reaching a "record high" for fiscal 2008. In March, the publisher reported a doubling of its income to $172.45 million, along with $1.5 billion in sales. Despite its past troubles, Take-Two is pretty top-tier, and very few of its fellow publishers could reasonably afford it - but Ubi's new numbers make it look more feasible for them.

Forbes adds:

In recent interviews with Forbes.com, Ubisoft North America's president, Laurent Detoc, has indicated the company is moving away from a pure games-based business in favor of what it hopes will be long-lived brands, extended across all forms of media. For instance, Ubisoft is developing a TV series and building a computer-generated imagery studio. A Prince of Persia movie, based on the game franchise, is also in the works.

There's a lot at Take-Two that could dovetail with Ubisoft's interests.

And Ubisoft has been diversifying, expanding into several genres - but as Forbes points out, their sports presence is pretty weak, with only Shaun White Snowboarding in the pipeline. They could really use Take-Two, then.

Forbes also asked an analyst:

"Ubisoft has shown they do a good job of managing original intellectual property. Culturally, Take-Two developers would not have a problem at Ubisoft because they allow a decent degree of creative freedom," says Doug Creutz, analyst at San Francisco firm Cowen and Co.

Michael Pachter also told Forbes he thought Ubisoft and Take-Two might be a good match. But I've discussed the same matter with Pachter and other analysts myself, and it's likely that once EA gets FTC clearance for the merger, they'll be forced to raise their bid into the $30 per share range, territory that Ubi might be very hard-pressed to top.

Still, on that results call, Zelnick was careful to clarify that while Take-Two may be in other merger discussions, nothing has progressed to the negotiation phase.

Take-Two's EA Alternative [Forbes.com]

Zelnick's answer? "Possibly," but Zelnick said there's nothing currently in Take-Two's schedule that fits that bill. For his part, Zelnick is waiting to see how much staying power the trend has, and whether to define it as a "music genre" or a "rhythm genre."

Zelnick said such considerations are "terribly important when you invest in AAA properties that you expect people to play for over 20 hours."

Zelnick has good reason to demonstrate his restraint to his investors, of course - right now his mandate is to prove that they're better off sticking with his guiding hand than with EA's.

Today, Ernst upped his estimate to 15 million on word from Take-Two that the publisher had already sold through 8.5 million copies of GTA IV, with 11 million shipped to retailers. Ernst noted that "We expect GTA IV sales to re-accelerate in the latter part of year in conjunction with the seasonal holiday period."

As for Final Fantasy XIII shipping 7 million in 2008?

Ernst said that "Initially we had hoped it would make it in for the end of the year" but that FFXIII "definitely appears off the table" according to Square Enix guidance. Frankly, we'll be thrilled (and maybe even a bit flabbergasted) if it hits North America before 2010.

The Hudson Square Research analyst updated us on a handful of other key figures, noting that Gran Turismo 5 is also expected to be a "no show" this year and that next week's release of Metal Gear Solid 4 "won't be enough to materially accelerate the PS3 this year."

"For the PS3, that’s definitely a set back," Ernst told us about titles that the firm expects to hit next year, "And I think is why their 10M unit guidance for the [fiscal year] was lower than most had expected."

"It's more likely that it would be released coincident with BioShock 3 - that also remains to be seen," he added. Looks like we can expect a BioShock trilogy, at least.

An analyst also asked Zelnick whether Take-Two has any creative control over the film. Sticking strictly to financial terms, Zelnick said, "We definitely did structure this deal so that we have no economic exposure or risk... the economic exposure or risk is being borne by... Universal Pictures."

No financial risk would suggest little to no creative control, but he declined to disclose specifics of the agreement.

"At the time of EA's highly conditional, unsolicited tender offer, we emphasized our board's commitment to explore all strategic alternatives, including remaining independent, and pursuing business combinations with third parties... we're actively engaged in that process now."

"In fact, we have had and continue to have formal discussions with a number of interested parties," Zelnick said.

Zelnick's comments follow numerous earlier statements he'd made that Take-Two would entertain talks with Electronic Arts following April 30th, but he declined to specify in detail who the other interested parties might be or what stage the discussions were at. When questioned by an analyst, Zelnick clarified that they were "discussions, not negotiations."

The company more than doubled its net revenues for the quarter, reporting $539.8 million as compared with $205.4 million in the second quarter of 2007, even while the company spent $12.4 million on the stock-based compensation plan it recently approved for its Board.

Notably, results also reveal that Take-Two has spent a total of $5.3 million in legal fees over the last six months, the lion's share of which have been spent fending off Electronic Arts' acquisition bid.

As for BioShock, which now heads for both the PlayStation 3 and the movie theatres, Take-Two said it has shipped 2.2 million units to date.

Board chairman Strauss Zelnick emphasized the company's overall value:

“Take-Two’s performance has exceeded expectations through the first half of fiscal 2008, clearly demonstrating the creative, operational and financial strength of our business,” Zelnick said. “Our results reflected the extraordinary success of Grand Theft Auto IV, the value of our catalog of titles, and our ongoing initiatives to improve the efficiency of our operations.

"We look forward to continuing to enhance stockholder value by building on our broad portfolio of internally developed and owned interactive entertainment brands, leveraging the opportunities in the current industry cycle, and operating our business in an effective manner.”

Zelnick's statement on "continuing to enhance stockholder value" seems to indicate he has no immediate plans to yield to EA's bid.

Ben Feder, Chief Executive Officer of Take-Two, added, “Based on the Company’s stronger than expected results, we have increased our financial guidance for fiscal 2008 and are confident in our ability to continue to perform for the balance of the year. Furthermore, Take-Two is extremely well positioned in an industry that is experiencing explosive growth. We believe that our exceptional creative talent, diverse range of hit products, and the proven global demand for our titles will be the drivers of increasing value over time.”

In its first week, GTA IV sold 6 million units, to the tune of $500 million in net sales.

As for BioShock, Take-Two said it had shipped over 2.2 million units since its late August debut, though GTA IV sales were the primary driver to $98.2 million in profits on the quarter for the publisher.

Under the agreement, no transaction will be completed until the FTC has finished its probe, which can take up to 45 days instead of the customary 30.

"We've entered an agreement with the FTC to modify the scope," said an EA spokesperson. "This is a normal part of the review process, which allows us to move through the review as expeditiously as possible while giving the FTC additional time in which to complete its full review and work."

At the time EA last extended its tender offer until June 16th, corporate development VP Owen Mahoney said the extension would allow the FTC further time to complete its investigation. However, there are only 7 business days between now and the expiration of EA's current offer, not 45 - so it's reasonable to infer EA will extend its offer again to allow the FTC to fully complete its probe.

EA declined to comment on plans to extend the offer, but the spokesperson said, "You'll hear from us on or before the expiration."

The FTC also does not comment on the specific details of individual investigations.

BioShock PS3 [Strategy Informer]

A peek at recent SEC filings reveals another item of interest: When EA made its most recent deadline extension, its third, it stated that 6,210,261 shares of Take-Two stock had been tendered to EA as of May 16th. That's only a small percentage of what EA would need to acquire a majority - but its even less than they used to have.

At the time of the second extension, as of April 17th 6,432,787 shares had been tendered - which seems to suggest that 222,526 shares have gone back to Take-Two. Granted, those 222,526 shares are statistically tiny in the grand scheme of things, but even a small loss of stake seems an inauspicious sign for a company making a hostile bid.

On the other side of the coin:

The rise-and-fall pattern of Take-Two's stock seems nonetheless to follow the movements of EA. It traded at only about $17 per share at the time EA announced its bid, and only began to climb thereafter. The stock has seen highs just ahead of each bid deadline, and began its ascent to its current high just after EA announced it had borrowed $1 billion to give it "options" in financing the possible acquisition. Wedbush Morgan analyst Michael Pachter has suggested previously that such stockholder patterns might indicate anticipation for the completion of a successful transaction.

The record-setting launch of GTA IV failed to have a noticeable impact on the share price, either, lending credence to the perspective that, failing an acquisition by EA, Take-Two's stock would lose a great deal of the value it gained on the possibility.

EA has stated publicly on numerous occasions that this latest extension will allow the FTC to continue reviewing the potential business combination, and EA has also said that the longer this fight drags out, the less likely it is they'll pursue it, no matter what the reason for delay is.

"The thing for us is that further delays... could affect the value of our offer," corporate development VP Owen Mahoney told Kotaku in April. That statement appears to be proven accurate, as the degree to which Take-Two's share price outvalues EA's offer continues to increase, while Take-Two continues planning ways to raise the less-concrete but nonetheless essential value of its owned IP - the announcement of a BioShock film, for example, certainly supports potential for sustained future growth for Take-Two.

So does this mean things look bad for EA's bid? Not necessarily.

Wedbush Morgan analyst Michael Pachter said that there are still many conditions to satisfy before a conclusion can be expected. Chief among these is the "poison pill" that Take-Two's management implemented. The board adopted a measure that says that anybody who buys more than 20 percent of the company's shares after April 7th is limited in the number of votes they get in the company. In other words, if EA won the company, they wouldn't be able to control it.

"Nobody will tender until all conditions are satisfied," Pachter told Kotaku. "The biggest is defeating the poison pill, so you should not expect the shares tendered to remain tendered. Those that were tendered subject to the closing condition
(which has NOT been met) are free to withdraw their tender and sell at a higher price in the open market."

Calling the back-and-forth shareholder trading continuing at present "pretty irrelevant," Pachter said he expects plenty of people to tender to EA once all the conditions up in the air are satisfied.

"At the conclusion of this process, it will end up as a friendly deal at a higher price," Pachter said.

According to the latest SEC filing, EA has not raised its bid, as some analysts had speculated it would. The offer remains at $25.74 per share, and as of the time the filing was made, the company reported that only 6,210,261 shares had been tendered to EA - to acquire a majority stake, EA needs more than five times that many.

"Extending our offer will allow the FTC review process to continue," said EA VP of corporate development Owen Mahoney. "EA's offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval. As stated earlier, we retain the right to terminate the offer if the conditions are not satisfied."

Following EA's extension announcement, Take-Two executives also issued statements:

"This is the same highly conditional proposal that EA offered Take-Two stockholders on March 13, 2008, which our Board of Directors thoroughly reviewed and unanimously determined to be inadequate and contrary to the best interests of Take-Two's stockholders," said Take-Two Board chairman Strauss Zelnick, stating again that he recommends stockholders not tender shares to EA.

"We said we were willing to begin formal discussions with interested parties on April 30, following the launch of Grand Theft Auto IV, and we have in fact begun that process," Zelnick said.

Take-Two CEO Ben Feder said that GTA IV's record-breaking launch, along with recently-announced plans to develop a BioShock feature film , [demonstrate] how Take-Two is delivering value from our powerful and wholly-owned intellectual property. The small number of shares tendered into EA's offer to date demonstrates that our stockholders agree with what our Board has maintained from the beginning: EA's proposal undervalues our Company."

EA May Extend Deadline for Take-Two Offer [Wall Street Journal]

So ... now what? Analysts quoted in a Friday San Francisco Chronicle story still think the deal will get done. Michael Pachter cited the Wall Street Journal story that places Rockstar's Dan Houser in the pivot, as his contract with Take-Two is up next year and he's open to EA ownership. Pachter's reasoning: Houser would broker the deal in hopes of being rewarded by his new employer. EA talks about how GTA IV's success was already built into its offer to Take-Two, so surely GTA IV's success is already built into Take-Two's relationship with Houser. A grateful EA might be willing to throw in a premium Houser couldn't negotiate otherwise.

Even though the deadline was not extended, as some suspected, that by itself doesn't preclude another offer. Weekend deadline negotiations are usually for labor unions and management. They certainly aren't covered by amateurs like yours truly, or the Agence France Presse writer who called the game "Grand Theft Auto IV: Liberty City Stories." We're not that well sourced. Once the regular writers and analysts get back in the office this week, someone will say something.

Deadline Passes in EA Bid to Buy Take-Two [AFP/Yahoo News, via Joystiq]

First off, there's no shame in being the type whose eyes glaze over every time you hear something to do with "the market" or "analysts" or "diluted shares," and since this ongoing saga contains these phrases at several junctions, you may want to start with the easy, albeit detailed, summary of the whole works we recently wrote for you.

Still with me? Hit the jump for your handy roundup of our recent coverage:

To summarize, EA believes it's made a "full and fair" offer for Take-Two at $26 per share; Take-Two says it's not enough, and that's where the two have stood ever since the offer was made in February. EA's initial deadline to seal the deal expired on April 18th; EA then modded its offer with an extension that will hold them until Friday.

A couple of things have changed since the saga began. First, many expected the record-breaking release of GTA IV to be a game-changer; it wasn't, despite what Take-Two board chairman Strauss Zelnick said, save for a handful of change gained on Take-Two's per share price, which has been vacillating around the $26 price point since EA's offer. Before EA made its bid, Take-Two seemed stuck at $17 a share.

Second, EA's $2 billion dollar offer is now worth less per share than it was at first, thanks to some extra shares handed out as part of Take-Two's management compensation package. The new $25.74 per share price is due to dilution, not a reduction on EA's part - but it still presents an additional obstacle, considering that Take-Two's stock has remained higher than that for a few weeks now.

Both companies are taking a hard line, and all tricky issues of monetary valuations aside, each has a valid viewpoint. Zelnick believes Take-Two's current lineup and stable of talent gives it much more value than the EA bid gives it credit for, and he made an uncharacteristically impassioned plea to this effect during Take-Two's annual shareholder meeting.

EA, on the other hand, is playing it cool, noting during its own annual meeting yesterday that its sports portfolio is robust, its "city-state" label structure is diverse, and that it has no need to break its back to gain Take-Two. EA has also said repeatedly that the longer this battle goes on, the less it's all worth to them, despite feeling that Take-Two's are "some of the best studios in the world."

Most recently, EA borrowed $1 billion in extra capital from several lenders to afford them "maximum flexibility." Following that announcement, Take-Two's stock made a climb to $27 per share, indicating investors feel EA's bid looks likely.

Cowen and Co. analyst Doug Creutz recently put the odds of the deal going through at 80/20, for example, provided EA raises the offering price one more time. Wedbush Morgan's Michael Pachter doesn't think EA needs to offer more money without negotiating first, but both analysts agree that the deal has too much upside for both parties to walk away.

Will the delay-despising EA extend its offer once again at the end of this week, or will it extend and raise it, as some analysts have told us they must - and can afford to? We'll see.

Holographic... interface?

Riccitiello also promised that the next NBA Live would take "a huge step up," with new features set to be unveiled at E3.

EA seems enthusiastic about its sports franchises, and Riccitiello says he expects EA Sports will help drive the company to an additional $1 billion in revenue and an 100 percent increase in operating income. Riccitiello was optimistic about the company's studio structure in general, also listing big things ahead for the Sims Studio: Two sequels for MySims, a new SimAnimals title, and the launch of The Sims 3.

"Our fiscal 09 operating plan keeps us on track to achieve our fiscal year target - even without Take Two," Riccitiello said.

During the same call, EA Games label president Frank Gibeau also expressed positive sentiments about EA's "city-state" label structure. "We have restructured... from a top-down and centralized model to a federation of highly creative teams, each with our own culture and vision," he said, noting a broad range of studios and properties from EA Mythic's Warhammer to Battlefield and Mirror's Edge at DICE.

Riccitiello was largely unable to comment on the specific state of the Take-Two acquisition, however. "We're obviously contained pretty clearly in what we're allowed to talk about," he said. "Our offer currently stands at $25.74 a share, or $2 billion dollars, and our valuation took fully into account the success of GTA... we'd anticipated a result much like what happened in the market."

"It's a spectacular game - I'm enjoying playing it - and offer enormous congratulations to the Rockstar team."

Re: Phone SOny and R* Give them Your info!!! [ intimidtr3 @ PlayStation.com, thanks everyone!]

Now, though, Houser tells the WSJ that in the event of an acquisition by EA, Houser wouldn't mind being "a much smaller fish in a much bigger pond."

The "talent" at Rockstar, as they're called internally, make star-caliber money and might find EA's more traditional pay structure jarring. In 2005, a particularly strong year, Take-Two paid royalties of $84 million, according to company filings. The bulk of funds, say people familiar with the matter, went to Mr. Houser and other Rockstar executives. If EA succeeds in acquiring Take-Two, some analysts believe EA's star developers might demand a bigger share of game proceeds.

Another possible kink: Rockstar's history of autonomy. If EA ends up with Take-Two, Mr. Houser says it's unlikely that he would go so far as to seek EA's approval for game content. Still, he calls Mr. Riccitiello "the real deal" and sees some appeal in an EA alliance, which he says would make Rockstar a "much smaller fish in much bigger pond."

"I'm not someone who has any kind of problem with that," says Mr. Houser, who says EA turned him down for a job in the late 1990s.

"There's no news here," said EA VP of communications Jeff Brown. "This is just a process point on something we announced in February."

With $2.3 billion on hand in cash, cash equivalents and short-term investments, EA already has the funds available to do the deal as it currently stands. With the deal not contingent on financing, why borrow more money?

"It helps us maintain maximum flexibility for any opportunities," said Brown.

Take-Two had no comment as of press time.

BioShock has been hailed as one of the most highly cinematic and richly plotted titles in interactive entertainment, making it extremely well-suited to film... Our ability to attract a major studio and unparalleled creative team speaks volumes about the strength of our BioShock franchise.

Full release after the jump:

BioShock Heads to Hollywood
Universal Pictures to develop movie based on hit video game from 2K Games

Gore Verbinski, Director of Pirates of the Caribbean, to Direct/Produce

BioShock Heads to Hollywood
Universal Pictures to develop movie based on hit video game from 2K Games

Gore Verbinski, Director of Pirates of the Caribbean, to Direct/Produce

New York, NY - May 9, 2008 - 2K Games announced today that it has reached an agreement for BioShock®, the universally acclaimed smash-hit video game, to be developed as a feature film by Universal Pictures. 2K Games, whose 2K Boston and 2K Australia studios developed BioShock, is a video game publishing label of Take-Two Interactive Software, Inc. (NASDAQ: TTWO).

The prospect of bringing this blockbuster game to life has attracted not only a major studio, but top Hollywood talent. Gore Verbinski, director of the Pirates of the Caribbean trilogy, is slated to direct and produce the BioShock movie. John Logan, Academy Award-nominated writer of Gladiator, The Aviator and Sweeney Todd, is in talks to do the screenplay.

The expected release date and terms of the agreement were not disclosed.

An original property developed by 2K Games, BioShock is one of the most successful new interactive entertainment franchises to launch in recent years. A critical and consumer hit, BioShock has sold more than 2 million units worldwide since its release in August 2007. A sequel to the game, BioShock 2, is planned for a release in 2009.

"We are excited that 2K Games' vision for BioShock will be carried forward in a new medium," said Strauss Zelnick, Chairman of Take-Two. "BioShock has been hailed as one of the most highly cinematic and richly plotted titles in interactive entertainment, making it extremely well-suited to film. In partnering with Universal and Gore Verbinski, we have assembled a team that respects the uniqueness of BioShock and will translate it into a powerful movie experience."

Mr. Zelnick added, "Our ability to attract a major studio and unparalleled creative team speaks volumes about the strength of our BioShock franchise. It also demonstrates how Take-Two is delivering value based on our strategy of creating and owning our industry's most powerful intellectual property."

Christoph Hartmann, President of 2K Games, noted, "BioShock fans appreciate the depth and complexity of the game, and our partnership with Gore Verbinski will introduce the world of Rapture to an even wider audience. In addition to his impressive body of work, Gore is an avid video gamer and true fan of BioShock. That was extremely important to us in deciding to move forward with this project."

BioShock: Triumph of the Imagination

Considered to be one the finest games in the history of interactive entertainment, BioShock unfolds as a deep and exciting adventure. Barely surviving a plane crash, the player lands in icy uncharted waters and discovers an undersea city called Rapture, a failed utopia whose citizens had embraced genetic engineering before the city descended into pure anarchy. Power and greed have run amok and the city has succumbed to civil war. It is a gripping game that forces the player to make complex moral choices. Fans have embraced BioShock's mysterious world filled with powerful technology and fascinating characters. BioShock is also renowned for its rich visual detail depicting a gorgeous Art Deco world set deep beneath the sea.

BioShock has earned some of the highest ratings and strongest accolades in video game history. It is one of the best-rated titles for Xbox 360™ video game and entertainment system from Microsoft, with a MetaCritic rating of 96. Numerous organizations bestowed "Game of the Year" status on BioShock in 2007, including The Associated Press, the British Academy of Film and Television Arts (BAFTA), Game Informer, Spike TV's Video Game Awards, G4's X-Play, Amazon.com, The Houston Chronicle and Paste Magazine. Additionally, BioShock ranked among the top 10 titles on many other "Best of 2007" award lists, including The New York Times, Time Magazine and Maxim. BioShock was internally developed by 2K Boston and 2K Australia and is owned by the 2K Games label of Take-Two Interactive Software.

What does this mean for EA's ongoing bid for Take-Two? Cowen and Co. analyst Doug Creutz said this morning that even the GTA IV launch couldn't have elevated the share price from January's 17 dollars per share to its current 26-dollar range, and that right now the elevated price is due to investor eagerness for the sale.

"Take-Two's self-imposed moratorium [on negotiations] is over," said Creutz. "We haven't heard anything out of either company in the last week. They could be talking... I still think the odds that the deal happens that are very high... I don't think GTA changes that at all."

Just how high are those odds? EA continues to point to the ticking clock, and just recently told GamesIndustry.biz that the chances of a deal happening are "now 50/50 at best."

"I think it's more like 80/20," said Creutz.

To understand the likelihood, Creutz cites an example from elsewhere in the market. Adjacent to this ongoing battle, we've seen Microsoft launch a similarly aggressive bid to acquire Yahoo! — and fail. But according to Creutz, the EA-Take-Two bid is an opposite scenario in every way. "EA's shareholders want this deal to happen; they understand how potentially accretive this deal is," he said.

"If you compare this to Microsoft and Yahoo!... Microsoft shareholders didn't really want the deal, and Yahoo!'s management wanted to stay in charge. EA shareholders do want this, and Take-Two management have a lot of incentive to cash out so they can move onto the next project."

A Take-Two spokesperson said today that the Board will do "the right thing" for its stockholders: "Toward that end, we are committed to a process of considering all strategic alternatives to maximize stockholder value, including remaining independent. We have said that we were willing to begin formal discussions with interested parties on April 30th, after the launch of GTA IV, and we have continued to observe that timetable."

The spokesperson also reiterated it had received interest from "various parties" since the EA bid went public, but analysts have repeatedly noted a so-called "white knight" has yet to appear.

Creutz is of the opinion that EA will have to bid a little higher to make the deal happen. "EA can cut a lot of costs [in the event of an acquisition]," he said. "They don't have to have Strauss [Zelnick] and Ben [Feder] around; they can get rid of the corporate overhead. There's a lot of cost synergy with sales and marketing reorganizations and probably on the R & D side. A deal has the potential to add a lot to EA's earnings power; because of that, they can afford to pay more."

So why hasn't EA raised its bid? "You don't go public with your best offer; it's negotiating 101," said Creutz. "I think EA's willing to raise the bid once to get it done, but they have to take a hard line, otherwise Zelnick is going to walk all over them. Zelnick has to play it the same way."

"It's a game of chicken. Neither of them really wants to lose here, and neither of them wants this to blow up."

Are the parties talking? What does Take-Two consider an adequate offer? "We are not going to comment on specific conversations with third parties, nor will we speculate about the 'right' stock price," said the spokesperson.

Creutz also suspects bravado has a big role to play in this "game of chicken" — "If this deal doesn't happen, it's because egos got in the way, and both sides are going to walk away feeling a little stupid that they let this slip through their fingers," he said.

EA's Jeff Brown was unavailable for comment.

Last night the New York Times let slip that Grand Theft Auto IV pulled in more than $500 million in its first week, selling an astounding 6 million copies globally, 3.6 million of them on the first day alone. This morning Take-Two confirmed the report, adding some well-deserved back-patting to the numbers.

To put it in perspective Halo 3, the previous record-holder, earned $300 million in the first week.

"We knew Grand Theft Auto IV would break new ground in terms of the player's experience, with its compelling story line, extraordinary gameplay and action that ranges over a broad urban canvas. Now, it has broken sales and rating records as well. Grand Theft Auto IV's first week performance represents the largest launch in the history of interactive entertainment, and we believe these retail sales levels surpass any movie or music launch to date. We congratulate the entire Rockstar team on creating a must-have experience that takes the legendary Grand Theft Auto franchise to a new level," said Strauss Zelnick, Chairman of Take-Two.

"Rockstar's goal is to make each new title in the Grand Theft Auto franchise even better than those that preceded it, and Grand Theft Auto IV is a smashing success on that score. Grand Theft Auto IV makes full use of the power of next generation technology, and offers players an experience unique in the interactive entertainment medium. This game sets a new standard in the industry, with critics hailing it as both an artistic and technological masterpiece," said Ben Feder, Take-Two's Chief Executive Officer.

The real question now is what this record breaking, Halo 3-smashing game will do to the EA/Take-Two talks.

As reported last night, Take-Two's suing the Chicago Transit Authority and its ad agent, Titan Outdoor, for $300,000, in addition to insisting they run the ads. The ads were pulled just prior to GTA IV's release date after a Fox News report suggested a link between the game ads and violence in Chicago.

Why was GTA IV's advertising handled differently, as Take-Two claims, from the ads for other mature entertainment, like R-rated films and adult TV? And what role did the Fox News broadcast play in the decision?

A spokesperson for the CTA said it would need more time before it's able to answer these questions. "As of last night we had not received a copy of the suit you're asking about," said communications VP Noelle Gaffney. "Until our lawyers receive it and have an opportunity to review it, we won't have any comment."

Rockstar did not address requests for comment.