"I can confirm we had layoffs yesterday they were in the studio," said LucasArts spokeswoman Margaret Grohne. "They had to do with where we are in our product life cycles."

Yesterday a number of former LucasArts staffers contacted us to say that 75 to 100 employees were laid off from the company, including VP of Product Development Peter Hirschmann and the producer of LEGO Indiana Jones and LEGO Star Wars: The Complete Saga, Shawn Storc.

The layoffs come months after former president Jim Ward stepped down from heading the company and was replaced by Darrell Rodriguez, a former Electronic Arts COO.

According to our sources up to 80 percent of staff has been laid off in departments such as Production Services, which includes QA and Compliance, with jobs planned to be outsourced overseas. Cuts were also said to be made in development, with art and programming staffers being laid off.

While Grohne declined to talk specifics, she did say that Hirschmann was no longer with the company and that his departure was a "mutual decision."

While our sources told us that the layoffs cut deeply into the developer's internal studio, leaving the company short-staffed, Grohne maintained that the company is healthy and remains committed to internal development.

"We are healthy," she said. "LEGO Indie was launched on seven platforms to positive reviews, The Force Unleashed and Fracture are on track for this fall. We have a good slate of games and we have some good stuff going on in production.

"We are definitely committed to the internal studio."

When Ward resigned, the company cited "personal reasons," but an alleged and anonymous LucasArts employee later suggested in a post on Gamasutra that Ward may have been pressured to leave, pointing to differing philosophies within the company.

That anonymous poster wrote "There are some that believe that more money can be made by licensing the SW and Indiana Jones IP to third party developers than through in-house development," hinting that the change in leadership "could spell trouble for the LucasArts division."

Ward was replaced by interim president Howard Roffman until former EA COO Darrell Rodriguez was named president in April. Whether the rumored layoffs are part of a plan to reorganize LucasArts development is unknown.

We've contacted LucasArts for clarification and comment, but did not hear back as of press time.

Update: While LucasArts public relations did not get back to us today, several former LucasArts staffers did, with one telling us that 75-100 employees were laid off from the company, including the producer of LEGO Indiana Jones and LEGO Star Wars: The Complete Saga, Shawn Storc.

According to another source, up to 80% of staff has been laid off in departments such as Production Services, which includes QA and Compliance, with jobs planned to be outsourced overseas. Cuts were also said to be made in development, with art and programming staffers being laid off.

Mike Fahey and Leigh Alexander contributed to this story.

By: Brian Crecente and Leigh Alexander

Rumored developer displeasure with Entertainment Software Association president Mike Gallagher may be partially to blame for nearly half a dozen member publishers dropping out of this year's E3 conference, Kotaku has learned.

This morning we broke the news that not only are Vivendi and Activision not attending this year's E3 they've both decided to drop out of the association all together. We've since learned that NCSoft, Her Interactive and id Software have all decided not to attend this year's show, though they are all remaining members of the association.

Only NCSoft had returned calls about the decision as of press time, saying that their decision to not attend E3 this year, the first time they won't in the company's history, was due to the development cycle of their games and in no way reflects on the ESA or it's leadership.

But several industry sources who wish to remain anonymous say Gallagher is in part to blame for issues surrounding this year's E3.

Wedbush Morgan analyst Michael Pachter also believes that the drop-outs are spurred by decisions made by Gallagher, who he says is less knowledgeable and sophisticated than his predecessor, Doug Lowenstein.

"Lowenstein was a very savvy industry veteran who paid attention to the goings-on in the industry and cared what the community had to say," Pachter said. "The new person.. whose name completely escapes me because I've never met him or heard from him, is far less knowledgeable and sophisticated about this industry than Doug was and is going to make some rookie mistakes."

"Doug used to be a very visible spokesperson in congress... when you'd get these [things like] Barack Obama saying videogames are corrupting our youth or MADD saying that Take-Two should pull GTA off t he shelves, you would hear Lowenstein immediately shoot back. I would guess that Activision doesn't perceive the same value from the ESA as they did under Doug's leadership. I criticize [Gallagher's] lack of drive to learn about the industry."

While the ESA and Gallagher declined to comment for this story, several sources tell us that Gallagher has come under fire for what is perceived as his poor handling of the association.

In March, GamePolitics reported that the ESA shuttered its New York office, and in so doing fired that office's head, senior VP and general counsel Gail Markels. Markels, who reportedly earned $317,000 in 2005, successfully led all the ESA's litigation efforts against unconstitutional video game laws.

The ESA apparently trimmed its lobbying initiatives throughout 2007 while budgets rose, according to a report made by GameSpot on public filings. Last year, the Association spent a record $2.86 million on lobbying — even though it chose to confront fewer issues, removing lobbying on online gambling, taxation of virtual property, and Internet privacy in favor of focusing solely on constitutional, copyright and relevant trade issues.

Pachter points to the timing of this year's E3 as another mistep. He believes that the new July date just doesn't work out for Activision and Vivendi for financial reasons. Most game companies have a financial quarter that ends in June. Those companies usually have to observe a two-week "quiet period" following the end of the quarter, during which they may not speak to investors — and Pachter says that Activision is especially strict about observing theirs to the minute.

With that in mind, the July E3 is just financially inopportune for both Activision and Vivendi based on the schedules of their fiscal quarters.

"And a Vivendi that feels snubbed could be a big detriment to the ESA, Pachter said. "Vivendi's revenues are so heavily from online subscriptions, which technically don't fall under the ESA... but if ESA ever cares to represent the MMO companies, they really have to have Blizzard as part of their consortium. And there's no question that the market in 20 years is going to shift to a more heavily-utilized download model."

Activision and Vivendi, for their part, say the decision to not renew their membership in the ESA this year was purely a business one.

"After careful consideration, Activision has decided not to renew its ESA membership for business reasons and will not be participating in any official E3 activities. We appreciate the work that the ESA has done over the years in promoting the interactive entertainment industry with state and federal governments and wish the ESA best of luck with the show."

Vivendi sent a similar statement to us today. Both declined to comment about Gallagher's leadership of the ESA.

Activision did confirm with us that while they will not be attending the show, they will be holding an event on the first day of E3, though not at the convention center. Vivendi has not yet commented on whether they will be showing outside of the convention center during the show's week.

The ESA contacted us after the story went live to clarify that Codemasters will be attending E3 afterall.

Newsweek's N'Gai Croal conducted an extensive interview about Gordon's decision to leave EA for the position of partner at Kleiner, beginning in June. In addition to being on comfortable terms with the partners at Kleiner, Gordon explained to Croal that the gaming youth and emerging trends helped inspire his decision:

"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, an all-new round of invention that's coming," he says. "Kind of as part hobby, part work, I started diving into it. I realized that I really, really, really wanted to be in the middle of that.

It's worth noting that Gordon was one of EA's earliest employees, and that Kleiner was one of the first investors in the company during Trip Hawkins' startup days back in 1982. Full announcement from Kleiner follows the jump.

Just the FAQs: Departing EA Chief Creative Officer Tells Level Up 'After Twenty-Five Years at EA, I'm Ready to be a Forty-Year Old' [Level Up]

William "Bing" Gordon Joins Kleiner Perkins Caufield & Byers as Partner

Electronics Arts Co-Founder and Chief Creative Officer Brings Consumer and Virtual Gaming Expertise to KPCB Technology Entrepreneurs

MENLO PARK, California, April 28, 2008—Kleiner Perkins Caufield & Byers today announced that William "Bing" Gordon will join the firm as Partner in June 2008. Gordon will provide his unique insight and expertise to entrepreneurs in consumer technologies.

"Bing possesses a rare combination of tremendous creative insight and keen business judgment," said KPCB Partner John Doerr. "His success with dynamic and engaging digital entertainment and consumer media is invaluable for innovators in mobility, social networks, gaming and entertainment - indeed, in any area that interacts directly with consumers."

For the last 10 years, Gordon served as Chief Creative Officer at Electronic Arts, with responsibility for the company's creative products and oversight of multiple studios. He will maintain his relationship with Electronic Arts as Chief Creative Officer Emeritus, and return to the company to lead periodic workshops on innovation with EA Studio leaders.

Well-known for driving creativity and reality in the digital world, Gordon co-founded Electronic Arts in 1982. It is now the world's leading independent developer and publisher of interactive entertainment software for advanced console systems. Gordon was integral to the creation of more than 20 different award-winning game franchises, including Madden NFL, The Sims and Need for Speed.

During his tenure, he led business, entertainment and marketing groups, helping the company innovate and evolve the interactive entertainment medium across console, PC and mobile platforms. Prior to his role as Chief Creative Officer, Gordon served as Executive Vice President of Marketing, Executive Vice President of EA Studios and as Senior Vice President of Entertainment Production.

"There is a new generation who have grown up 'always on, always digital,'" said Gordon. "Driven by their creativity and new usage habits, entertainment and communications are on the verge of previously unimaginable changes. Ever since KPCB funded Electronic Arts' initial business plan in 1982, I have watched the KPCB team find and support brilliant company-makers to harness disruptive digital technologies that benefit people. I cannot wait to join the firm, and work directly with an all-new generation of entrepreneurs."

Ted Schlein, KPCB Partner, commented, "Adding Bing to our team enhances our investment perspective and will benefit our ventures across the consumer technology landscape. As applications and services evolve more and more rapidly, Bing's depth of experience and industry-wide respect will help our entrepreneurs realize the full potential of their innovations."

Gordon is a member of the board of directors of Amazon.com. In 2005, he accepted a faculty chair position at the University of Southern California's Interactive Media Division after Electronic Arts invested in the fledgling program. Additionally, he co-taught Videogame Prototype Design at Stanford University, and serves at Yale University on the "Digital Yale" presidential advisory council and as advisor to Yale's computer science faculty on its "Computing and the Arts" initiative. He is a trustee at the Urban School of San Francisco.

Gordon holds a B.A. degree from Yale University and an M.B.A. degree from Stanford University.

About Kleiner Perkins Caufield & Byers

Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in over 500 ventures, including AOL, Amazon.com, Citrix, Compaq Computer, Electronic Arts, Genentech, Genomic Health, Google, Intuit, Juniper Networks, Netscape, Lotus, Sun Microsystems, Symantec, VeriSign and Xilinx. In February 2008, KPCB announced its $100 million iFund initiative targeted at innovation in the Apple iPhone and iTouch platform. KPCB portfolio companies employ more than 250,000 people. More than 150 of the firm's portfolio companies have gone public. Many other ventures have achieved success through mergers and acquisitions.

The "Change in Control Employee Severance Plan" will give "minimum levels of compensation" to all employees in the event that they are fired as a result of a change in control of the company. While Take-Two goes to some lengths to point out that this has nothing to do with the possibility of a buy-out, they also note that the plan was created to address the "understandable concerns" that some employees have about the possibility of an EA buy-out.

We hope that this benefit will alleviate some of the concerns you may have, and allow you to remain fully focused on your responsibilities. You are critical to the success of Take-Two. The most important contribution each of us can make during this period is doing our jobs with the same focus, skill and creativity we always have.

We remain committed to open communication with all of you, and will continue to update you when and as we can.

Creativity is at an all-time high at Take-Two — this is an incredibly exciting time for all of us and also for our customers who depend on us for cutting-edge innovation and the industry's most exciting games. We know we won't disappoint.

Sincerely,
Strauss and Ben

Was that the sound of stockholders announcing their intentions? Hit the jump for the full email.

EMAIL TO EMPLOYEES REGARDING ADOPTION OF THE TAKE-TWO INTERACTIVE SOFTWARE, INC. CHANGE IN CONTROL SEVERANCE PLAN

Dear Team:

Last week we informed you of EA's unsolicited proposal to acquire Take-Two, which our Board rejected. Although there is no update on the proposal, we have been working to substantively address the understandable concerns that some of you may have as a result of the proposal. Therefore, we have established a formal severance plan for the benefit of our employees, and are publicly announcing that plan today.

Please note: we are not assuming that any change in control will occur or, if there were a change, that any positions would be affected.

Our "Change in Control Employee Severance Plan" provides for minimum levels of compensation for all employees in the event that an employee's position is terminated as a result of a change in control of the Company. These types of plans are fairly common for publicly traded companies. In fact, both Electronic Arts and THQ have change in control severance plans. If you have any questions about our plan, please speak with your manager, local HR director or Courtney Kelley.

We hope that this benefit will alleviate some of the concerns you may have, and allow you to remain fully focused on your responsibilities. You are critical to the success of Take-Two. The most important contribution each of us can make during this period is doing our jobs with the same focus, skill and creativity we always have.

We remain committed to open communication with all of you, and will continue to update you when and as we can.

Creativity is at an all-time high at Take-Two — this is an incredibly exciting time for all of us and also for our customers who depend on us for cutting-edge innovation and the industry's most exciting games. We know we won't disappoint.

Sincerely,

Strauss and Ben

TAKE-TWO INTERACTIVE SOFTWARE'S BOARD REJECTS ELECTRONIC ARTS' UNSOLICITED PROPOSAL AS INADEQUATE

New York, NY - February 24, 2008 —The Board of Directors of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today confirmed that it has received an unsolicited proposal from Electronic Arts Inc. (NASDAQ:ERTS) to acquire Take-Two for $26.00 per share in cash. Take-Two's Board of Directors has thoroughly reviewed EA's unsolicited proposal with the assistance of its independent financial and legal advisors and concluded that the proposal is inadequate in multiple respects and not in the best interests of Take-Two's stockholders.

After careful evaluation, the Board has determined that EA's proposal substantially undervalues Take-Two's robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty. We believe EA's unsolicited offer is highly opportunistic and is attempting to take advantage of our upcoming release of Grand Theft Auto IV, one of the most valuable and durable franchises in the industry. Furthermore, the offer values the Company at a significant discount to its public peers and does not compensate Take-Two for its intrinsic value and the substantial synergies that the proposed combination would create.

Strauss Zelnick, Executive Chairman of the Board of Take-Two commented, "Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company. Thanks to the extraordinary efforts of our creative and business teams, Take-Two has made enormous strides in the past 10 months toward our common goal of being the most creative, innovative and efficient company in our industry. We're extremely proud of our unique portfolio of game franchises, exceptional creative talent and loyal consumer following. Our Board believes that we will build greater value for our stakeholders by remaining relentlessly focused on our strategy and delivering on our mission of making the highest quality interactive entertainment."

Mr. Zelnick continued, "In addition to undervaluing key elements of our business, EA's proposal fails to recognize the value we are building through our ongoing turnaround efforts, which will further revitalize Take-Two. While we have made substantial progress already, the turnaround of our business which we initiated in June is not yet complete, and we believe its benefits have not been recognized in either our current stock price or in the value of EA's proposal."

Mr. Zelnick added, "While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realizing a mutually beneficially transaction. However, given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released. Therefore, we offered to initiate discussions with EA on April 30th, 2008 (the day after Grand Theft Auto IV is scheduled to release). We believe this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA's refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders."

Take-Two has a proven track record of creating and acquiring ownership of valuable new intellectual property. Grand Theft Auto is one of the industry's top franchises, having sold more than 65 million units to date. Over the past year, Take-Two has continued to expand its owned intellectual property portfolio, with two new franchises established - BioShock, one of the highest rated games of all time and winner of numerous "Game of the Year" awards, which has sold over 2 million units to date - and Carnival Games, a casual game for the Wii™, which has sold over 1 million units to date. Take-Two's other proven million-unit selling video game franchises include Midnight Club, Sid Meier's Civilization, Bully, Red Dead Revolver, Max Payne, Rockstar Games presents Table Tennis, Manhunt, Red Dead Revolver, Mafia, The Darkness, Spec Ops, Sid Meier's Railroads! and Sid Meier's Pirates! Take-Two also has powerful and growing sports franchises, with licenses for leading brands, including Major League Baseball® 2K, NBA® 2K and NHL® 2K, and proprietary sports brands, such as Top Spin, All Pro Football and Don King Presents: Prizefighter. Additionally, Take-Two has a partnership with Nickelodeon to publish video games based on top rated Nick Jr. titles such as Dora the Explorer and Go, Diego, Go!

Ben Feder, Chief Executive Officer of Take-Two, commented, "The revitalization of Take-Two is well underway. In the last year, we have accomplished a great deal in terms of restructuring our cost base to improve margins, addressing the legacy issues that have weighed on our business, and enhancing our creative output through organic and external initiatives. We believe stockholders will reap the benefits of these actions both in the near and long term and that our efforts will create greater value for stockholders than what is being offered by EA at this time."

As part of its turnaround plan, Take-Two has implemented a more streamlined and efficient operating structure, put in place a $25 million cost cutting initiative, instituted a disciplined Product Investment Review Process, restructured international operations to create a more efficient and responsive international organization, consolidated the majority of 2K Games and 2K Sports operations on the West Coast to increase efficiency and better support the growth of these labels, and sold its non-core Joytech business.

To continue to position itself for the future, the Company has begun to more aggressively leverage potential growth opportunities, with the acquisition of Illusion Softworks development studio and the formation of the 2K Play label to focus on the family and casual games market.

In addition, current management has secured a $140 million line of credit, announced a preliminary settlement of the "Hot Coffee" class action and made significant progress in resolving the New York District Attorney and SEC actions that have been pending against Take-Two since June 2006 and July 2006, respectively.

Mr. Feder concluded, "We remain committed to executing our existing business strategy and turnaround plans and to building value for all of our stockholders. We intend to vigorously resist any attempt by EA to acquire Take-Two at a price that does not adequately value our Company and its growth opportunities."

Bear Stearns and Lehman Brothers are acting as financial advisors to Take-Two and Proskauer Rose LLP is acting as a legal advisor.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

For more information, please visit http://www.transactioninfo.com/taketwo/

Take-Two's and EA's letters regarding the proposal are included below.

***
February 6, 2008

Mr. Strauss Zelnick
Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Congratulations on your recent announcement about the release date for Grand Theft Auto IV. I am sure it must feel great to have this important title locked and ready.

Further to our recent discussions, this letter is to formally express Electronic Arts Inc's. ("EA") interest in acquiring Take-Two Interactive Software, Inc. ("Take-Two") and to propose a transaction in which EA would acquire all of the outstanding shares of Take-Two common stock for $25 per share payable in cash. We are confident we can consummate a transaction quickly, confidentially and on the terms proposed.

The proposed combination will create significant value for your stockholders. Our offer price provides a substantial premium of 58% over Take-Two's most recent closing price and a 51% premium over Take-Two's 30-day trailing average price. The cash purchase price provides certainty of value to Take-Two's stockholders in today's uncertain economic environment.

We believe that moving quickly to negotiate and conclude our proposed merger is in the best interest of Take-Two and EA. Waiting for a later date leaves open significant uncertainty regarding the timing, the probability and the value of a potential transaction and is not in the best interests of either company or Take-Two's stockholders.

We also believe the proposed merger provides an attractive outcome for Take-Two's employees and business partners. We have a powerful product slate for 2008 and beyond with exciting releases planned for many of EA's well-established franchises as well as important new franchises we are launching such as SPORE, Dead Space, Dragon Age and Mirror's Edge. We feel that Take-Two's IP portfolio is well aligned against EA's product footprint and its studios fit well with our decentralized divisional model. Take-Two's creative teams are an essential part of the Take-Two business, and we believe EA would offer a stable and supportive environment for your studios to focus on developing great new games with the backing of a global games industry leader. We believe EA can and will represent the best home for these teams anywhere in the entertainment world.

We have completed a thorough review of Take-Two's public information and are prepared to move forward immediately to consummate a transaction with minimum disruption to Take-Two. We believe that with adequate access to the necessary information we can complete all required due diligence in approximately 2 weeks. We believe that our due diligence review would require limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. Importantly, no interaction with any of the studio leaders will be required until our other due diligence is completed and the material terms of a transaction are agreed to.

Considerable time and resources have been put forth in developing this offer, and our Board of Directors has approved its delivery to Take-Two. Our offer is not conditioned on any financing requirement. However, our offer is subject to the satisfactory completion of our due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements and the satisfaction of customary conditions to be set forth in such agreements.

We do not intend to make this letter public and our offer will automatically terminate and be withdrawn in its entirety if any portion of this letter, or the existence of discussions between EA and Take-Two relating to a possible business combination, are disclosed to any person other than the directors and officers of Take-Two and its legal and financial advisors.

We look forward to hearing back from you by the close of business on Friday, February 15, 2008, with a response to our proposal.

I am available to meet and discuss all aspects of this proposal with you and your Board. If you have any questions, please do not hesitate to contact me. I very much look forward to hearing from you and working with you and the Take-Two team to consummate a successful transaction.

Sincerely,

John Riccitiello
Chief Executive Officer

JSR/dal

***
February 15, 2008

Mr. John S. Riccitiello
Chief Executive Officer
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065

Dear John:

Thank you for your letter of February 6, 2008. The position of the Board of Directors (the "Board") of Take-Two Interactive Software, Inc. (the "Company") with respect to an acquisition of the Company by Electronic Arts Inc. ("EA") has not changed from that which you and I have previously discussed.

As part of the Board's stated objective of maximizing shareholder value, we have been and remain open to considering a business combination with interested parties at the right time and the right price. However, the Board has concluded that EA's proposal has not been delivered at a time nor does it contemplate a price which is consistent with this objective.

On a personal note, I want to thank you for the courtesy reflected in our prior discussions and also your letter. I look forward to getting to know you better in the future.

Sincerely,

Strauss Zelnick
Executive Chairman of the Board

***
February 19, 2008

Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.'s ("EA's") $25 per share cash offer to acquire Take-Two Interactive Software, Inc. ("Take-Two") and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA's offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two's most recent closing price and a 63% premium over Take-Two's 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.
We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two's creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two's talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two's studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two's shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two's shareholders, because:

There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA's strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year's holiday selling season.
We believe Take-Two's current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.
With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.
We also believe the transaction we are proposing will create value for EA's shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two's and EA's corporate and publishing infrastructures and by optimally supporting Take-Two's creative teams and intellectual properties in EA's decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two's shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two's shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

Sincerely,

John Riccitiello
Chief Executive Officer

***
February 22, 2008

Mr. John S. Riccitiello
Chief Executive Officer
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065

Dear John:

Thank you for your letter of February 19, 2008. As you know, the Board of Directors (the "Board") of Take-Two Interactive Software, Inc. ("Take-Two" or the "Company") carefully considered Electronic Arts Inc.'s ("EA's") previous offer of $25 per share and concluded that neither the timing of the proposed acquisition nor the price was consistent with the Board's objective of maximizing stockholder value. The Board's rationale for rejecting EA's prior offer is not altered by your decision to increase that offer by four percent.

I would like to reiterate, in the clearest possible terms, the Board's conviction that this is not the right time for Take-Two to enter into a negotiation to sell the Company. Our organization is keenly focused on the scheduled April 29th launch of Grand Theft Auto IV, and on maximizing the value of the game to the Company and, in turn, our stockholders. It is the Board's strongly held view that beginning strategic discussions now would distract our Company and thereby threaten the value of this key franchise.

While I understand that you may disagree with the Board's reluctance to commence discussions immediately, the Board and I want to assure you that our concerns about timing are genuine. Potential negative financial consequences to Take-Two are significant and we believe outweigh the benefits of commencing discussions at this time. As you know, there is no certainty that EA will actually close on the proposed transaction on mutually agreeable terms, especially since you have proposed a price that we would not accept and have qualified your offer by a diligence request. Moreover, as we have all seen time and again, the process surrounding acquiring a public company from start to finish is complex, uncertain, intrusive and distracting, and we believe it would be especially so to the creative artists at the core of our business and to all those who may be displaced by a transaction.

While the Board is convinced that discussions at this time would be imprudent, we also appreciate the potential benefit of a frank and private dialogue with EA. To that end, the Board would be willing to commit to entering into a good-faith discussion with EA on April 30, 2008 to determine if we can reach common ground on the proper value of the Company and therefore an appropriate, mutually beneficial transaction. This would, of course, be subject to both parties reaching a mutually acceptable confidentiality agreement on customary terms. We are prepared to begin negotiating this confidentiality agreement immediately.

In order to alleviate any concerns you may have about the proposed starting date for these discussions, I would be pleased to meet with you privately as soon as possible to talk on a general basis. In addition our Board would confirm, subject to its fiduciary duties, that from now until April 30, 2008 (the "Quiet Period"), the Company will not pursue negotiations with any other potential strategic partner for a business combination unless we have first contacted you. Further, if the Company receives any bona fide offer to acquire the Company during the Quiet Period that the Board decides to explore, the Company will immediately inform EA and we understand that EA may then act as it sees fit.

I would like to note that if EA chooses to announce publicly the Board's proposal or announce any offer by EA to acquire the Company during this Quiet Period or if the contents of this letter become publicly available in sum and substance, the Company will consider all of its alternatives, including discussions with other parties, and further we will reserve the right to refuse to provide EA access to information or diligence.

John, I believe I know you well enough to rely on your considering this proposal in the same good faith we have in making it. I look forward to your favorable response.

Sincerely,

Strauss Zelnick
Executive Chairman of the Board

I also, coincidentally, received Take-Two's comments on the whole, now-public, affair while on the phone with Riccitello. While the two seem to match up on the basic facts, their final analysis don't.

"Basically, (Take-Two) said to us that they thought the offer was inadequate and the price wasn't right," Riccitiello said. "Pretty much the standard response you get from just about anyone in a case like this."

Take-Two's official line pretty much says the same thing, though with a bit more detail on why the $2 billion offer doesn't work for them.

"Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company," said Strauss Zelnick, Executive Chairman of the Board of Take-Two. "Thanks to the extraordinary efforts of our creative and business teams, Take-Two has made enormous strides in the past 10 months toward our common goal of being the most creative, innovative and efficient company in our industry. We're extremely proud of our unique portfolio of game franchises, exceptional creative talent and loyal consumer following. Our Board believes that we will build greater value for our stakeholders by remaining relentlessly focused on our strategy and delivering on our mission of making the highest quality interactive entertainment.

"In addition to undervaluing key elements of our business, EA's proposal fails to recognize the value we are building through our ongoing turnaround efforts, which will further revitalize Take-Two. While we have made substantial progress already, the turnaround of our business which we initiated in June is not yet complete, and we believe its benefits have not been recognized in either our current stock price or in the value of EA's proposal.

"While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realizing a mutually beneficially transaction. However, given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released. Therefore, we offered to initiate discussions with EA on April 30th, 2008 (the day after Grand Theft Auto IV is scheduled to release). We believe this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA's refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders."

When I told Riccitiello about Take-Two's desire to forestall talks until after the GTA launch, perhaps because they want to see how one of their top titles will do before selling, he said that they did their best to hold off on their offer. In fact EA first approached the board in December, but decided to wait on starting serious talks to make sure the rumblings wouldn't create problems for the Rockstar team working to get the game wrapped up. But now, Riccitiello believes, the company is pretty much done and the time to talk is almost past.

"I initially brought the offer in December, but we waited until GTA development was complete," he said, pointing out that most analysts have already built forecasts for GTA sales into the company's stock value. "That's already baked into their estimates. The truth is the longer they wait the less valuable the (GTA) asset becomes we have less time to influence the holiday sales.

"We felt we got the timing right."

I asked Riccitiello about the perception some have, right or wrong, that Electronic Arts is a company that buys up successful franchises and then runs them into the ground but pumping out endless iterations of the same game. He was quick to point out the reorganization the company went through last year to try and place a greater emphasis on developers over the larger EA brand. The move, from what I heard from people at Bioware, Maxis and Pandemic, was definitely in the right direction.

Riccitiello, in fact, points to their new label model, one inspired by conversations he had with Rockstar's as proof that Take-Two and it's developers would find a happy home at EA.

"As a company, Take-Two is a company that has been faced with operations, financial and legal challenges," he said.

"We think that (the recent reorganization at EA) creates a super environment for the studio labels... We can give them access to the world's best distribution model."

News of this offer brings to mind, for me, rumors I heard earlier this week that a large company (I heard Microsoft, but it could just as easily be EA) was in fact courting some of Take-Two's largest shareholders in an effort to line-up a hostile take-over if an equitable purchase couldn't be arranged, a question that riled the folks at EA.

"We haven't taken anything off the table in terms of options," Riccitello said. "But we see ourselves, in many ways, as a White Knight. There is nothing friendlier than a 60 percent increase in their stock."

"Frankly you can write anything, but look at what we've done (with the labels model). People are flocking to that. I think we can be a good home for these developers."

Riccitello, incidentally, said he was in New York, where Take-Two is based, rather than EA's headquarters in Los Angles, this weekend. I asked if it was because he expected to be sitting down with Take-Two in the coming days and he declined to say. But did say it was a good place to handle the press attention in the coming week.

EA Makes Offer to Buy Take-Two [Kotaku]

Electronic Arts just called me to let me know that they are making a bid to acquire Take-Two Interactive in an all-cash merger of about $2 billion.

The offer set Take-Two's stock at $26 per a share, about 64 percent over the company's closing stock price prior to the company's Feb. 15 offer.

Take-Two's board rejected the offer, leading Electronic Arts to make their offer public to the company's shareholders.

In the letter, attached in the jump, EA CEO John Riccitiello tells Take-Two's Stauss Zelnick that the buy-out would help both the company and its stock holders:

Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two's game designers would also benefit from EA's financial resources, stable, game-focused management team, and strong global publishing capabilities. ... There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today.

Specifically, the letter mentions that EA could really help out with the launch of GTA IV. Hit the jump for the full letter and check back later to read our interview with Riccitiello.

Updates:
EA CEO/ Take-Two Chairman Talk Take Over Bid
The Take-Two Letters: EA Rejected
EA or Not EA: The Take Two Question

February 19, 2008

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.'s ("EA's") $25 per share cash offer to acquire Take-Two Interactive Software, Inc. ("Take-Two") and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA's offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two's most recent closing price and a 63% premium over Take-Two's 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two's creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two's talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two's studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two's shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two's shareholders, because:

— There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA's strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year's holiday selling season.

— We believe Take-Two's current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

— With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EA's shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two's and EA's corporate and publishing infrastructures and by optimally supporting Take-Two's creative teams and intellectual properties in EA's decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two's shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two's shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

There's been some changes to these results since the original article was released on Monday, due to the availability of new information. While this does change some of the numbers, it also indicates how fluid many of these predictions are, and the challenge of pin-pointing exact answers for many of them, both for journalists, traders who rely on the analysts for smart business choices, and gamers who want to know how well the industry is doing.

Here's the proof that being correct the most often doesn't always mean you're the best analyst.

Michael Pachter - Wedbush Morgan

June 4, 2007
Prediction: Take-Two will push back the release of Grand Theft Auto IV to the next financial year.
Outcome: TRUE
The release date of GTA IV was pushed back all the way to April 2008.

June 12, 2007
Prediction: In May 2007, the Wii will outsell the PS3 4 to 1, with the Wii selling 400,000, the PS3 selling 100,000, and the Xbox 360 selling 225,000.
Outcome: FALSE
The Wii did indeed outsell the PS3 4 to 1, but Pachter's sales predictions were a little high. The real numbers were Wii: 338,000; PS3: 82,000; and Xbox 360: 155,000 in the US.

July 10, 2007
Prediction: Microsoft will announce a price cut of $50-$70 at E3 2007.
Outcome: FALSE
No price cut happened at E3. Microsoft said they were comfortable with their price point, and didn't see a need to follow the way of the PS3.

September 5, 2007
Prediction: As the supply of 60GB PS3s dries up, the 80GB model may well be reduced to $499.
Outcome: TRUE
Right again. Consumers saw a drop in the price of the 80GB PS3 to $500 in October 2007.

September 14, 2007
Prediction: Halo 3 will drive the sales of the Xbox 360, which could exceed selling 400,000 units in September 2007.
Outcome: TRUE
Microsoft sold 527,800 Xbox 360s in the US during September, doubling the number of consoles sold in a month. Pachter also predicted in the same article that 3 million copies of Halo 3 would be sold in the first twelve days. Between September 25 (its release date) and October 5, Halo 3 was estimated to sell just over 5 million copies.

December 10, 2007
Prediction: There will be a 24% jump in November software sales from 2006 ($804 billion) to 2007 (estimated $1 billion).
Outcome: TRUE
Software sales from November 2007 in fact exceeded market expectations, reaching $1.3 billion.

December 14, 2007
Prediction: The previous December sales record is $1.7 billion, which will be shattered December 2007, likely in excess of $2 billion.
Outcome: TRUE
Mr. Pachter got it right on with this one. December 2007 saw sales revenue of $2.37 billion.

December 14, 2007
Prediction: Unreal Tournament III, MX vs ATV Untamed, and the PS2 version of Rockband will top December sales.
Outcome: FALSE TRUE
Pachter was right about one thing: Guitar Hero III for the PS2 took #3 in December sales, selling 1.25 million units. But how wrong he was about UT3 and Untamed, which saw disappointing sales. The winners for December were instead Call of Duty 4: Modern Warfare for Xbox 360 with 1.47 million units sold, and Super Mario Galaxy for Wii, selling 1.4 million units.

EDIT: Pachter has contacted me to make a correction to this prediction. He said that his prediction were those would be the top three games released in December, not top three sellers for the month. So it looks like Pachter gets another point, after all!

December 19, 2007
Prediction: Mass Effect will be coming to the PS3.
Outcome: FALSE
Sony has come out and made a statement that there is currently no Mass Effect in the works for PS3. They said it's possible... but don't hold your breath.

December 25, 2007
Prediction: John Woo will want to make more video games, as that's what action movie directors want to do now.
Outcome: TRUE
As out to left field as this prediction sounds at first, Pachter may be on to something. I'm not sure about all action film directors, but the success of Stranglehold has certainly put John Woo in the mood for video games. Woo founded Tiger Hill Entertainment in 2003, and has said he intends to continue bridging the gap between video games and films, particularly with his upcoming video game and film releases for Ninja Gold, a project he is working on with video game creator Warren Spector.

Accuracy: 6/10 7/10

Colin Sebastian - Lazard Capital Markets

May 17, 2007
Prediction: A new PSP will be unveiled by Sony in 2007.
Outcome: TRUE
September 2007, consumers were introduced to the redesigned PSP slim, just like Sebastian said (although his prediction came out after months of speculation that Sony had something in the works).

May 25, 2007
Prediction: Wii shortages could last through the 2007 holiday season and into 2008.
Outcome: TRUE
Despite meeting Sebastian's monthly target of 1.5 million units made and sold, Nintendo still suffered shortages for the second holiday season in a row.

August 21, 2007
Prediction: The PS3 will outsell the Xbox 360 in July 2007.
Outcome: FALSE Not Sebastian's Prediction
Sorry Mr. Sebastian, no dice. While sales of the PS3 jumped from 98,500 units in June 2007 to 159,000 units in July 2007, it wasn't enough to conquer the Xbox 360, which sold 170,000 units that month.

EDIT: Sebastian contacted me to clarify that while he said the PS3 would sell more and the Xbox 360 would go down, he never said that the PS3 would outsell the 360.

September 13, 2007
Prediction: Halo 3 will generate $200 million in revenue "very quickly".
Outcome: FALSE
While Halo 3 didn't make $200 million in 24 hours like many were expecting (only $170 million, how sad), Sebastian only says "very quickly." I could walk to the corner store "very quickly," but that could mean 5 minutes or half an hour, it's all relative. By the end of its first week, Halo 3 had made $300 million in revenue, which I'd still call "very quickly," but not the 24 hour blitz that most interpreted Sebastian's words to be.

October 2, 2007
Prediction: GameStop will be the real beneficiary of holiday video game sales, with total holiday revenue reaching $1.42 billion.
Outcome: FALSE TRUE
Sebastian's estimate was nearly $1 billion off the mark, as GameStop raked in $2.3 billion during the nine-week holiday period.

EDIT: The prediction made by Sebastian was referring to the Q3 earnings, not the holidays - despite the fact the prediction article doesn't distinguish this. Sebastian was much closer to the actual Q3 earnings, at $1.6 billion.

October 11, 2007
Prediction: September 2007 will see a 30 percent increase in software sales from September 2006.
Outcome: FALSE
It was certainly close. Thanks to sales from Halo 3, software sales rose from $446 million in September 2006 to $550.5 million September 2007. A significant $104 million increase, for sure, but that's only a 23.4% increase from the year before - not quite the 30% that Sebastian said it would be.

October 31, 2007
Prediction: In addition to Wii shortages, PS3 and Xbox 360 consoles will also be in short supply.
Outcome: FALSE Not Sebastian's Prediction
Sony and Microsoft both saw improved sales of their consoles during the holiday season, neither would be considered hard to come by or in any sort of shortage. The Xbox 360 didn't see the strain on supply until after the holidays.

EDIT: Sebastian clarified that the article containing this prediction was misleading, and he never predicted a shortage in PS3s.

December 13, 2007
Prediction: Wii will top hardware sales, although PS3 and Xbox sales will improve going into the holidays due to price reductions.
Outcome: TRUE
Despite supply setbacks, the Wii came out on top in hardware sales, moving 1.35 million units over Holiday 2007. Xbox 360 had a record month of sales, too, selling 1.26 million units, up 11.5% from the previous holiday season. The August price reduction certainly helped, as weekly sales improved from that month onward. The PS3 also saw a much-improved holiday, as it was up 62% from its sales at the same time last year, selling 797,000 units. This was also due in part to price drops in July and October, as well as the introduction of the 40GB model.

December 13, 2007
Prediction:Activisions November sales will double.
Outcome: FALSE
While there is no specific data for the month-on-month increases from Activision, we can compare Activision's Q307 improvement from Q306. They almost doubled revenue, from $142.8 million in 2006 to $272.2 million. Very close, but close only matters in horseshoes and hand grenades.

December 13, 2007
Prediction: Electronic Arts will see a 15-20% increase in sales in November, thanks to sales of Rockband, The Orange Box, and The Simpsons Game.
Outcome: TRUE
In the Q3 report, EA boasts that Orange Box and Rockband drove its 'strongest ever quarterly performance', and The Simpsons Game sold 4 million copies, and is what EA claims to be the 'highest rated entertainment-based game of 2007'. While the company did see a net loss of $33 million, they did see an increase in net revenue over Q307, jumping from $1.281 billion last year to $1.503 billion this year, a 17% increase.

Accuracy - 4/10 5/8

Jesse Divnich - The simExchange

August 17, 2007
Prediction: The PS3 will sell 165,000 units in July.
Outcome: FALSE
The PS3 only sold 159,000 units in July.

September 4, 2007
Prediction: The 80GB PS3 will drop in price by $100 to $499 in order to stay competitive in the North American environment.
Outcome: FALSE TRUE
While at first it looked like it would be Japan only, the 80 GB PS3 saw a price drop in North America late October.

EDIT: As Divnich has clarified to me, the prediction was actually true, since there wasn't a timeline placed on the prediction.

October 17, 2007
Prediction: The Wii will sell 485,000 units in September, despite the competition from Halo 3 and the Xbox 360.
Outcome: TRUE
The Wii sold better than estimated, moving 501,000 units.

October 19, 2007
Prediction: The PS3 will sell 153,000 units in October.
Outcome: FALSE
The PS3 only sold 121,000 units in October.

October 20, 2007
Prediction: The price cut of the PS3 will not affect its overall market share (i.e. it will remain in last place of all the consoles).
Outcome: TRUE
The price cut helped move more PS3s, going from 121,000 units in October to 466,000 units in November, but it still lagged behind all other available consoles - heck, the PS2 still sold 496,000 units in that same month.

November 9, 2007
Prediction: Activision will be the top third party publisher over Holiday 2007.
Outcome: TRUE
Activision's title Call of Duty 4: Modern Warfare topped sales charts in November and December.

November 9, 2007
Prediction: Super Mario Galaxy will sell 2 million units in November, and 1.99 million units in December (both in the U.S.).
Outcome: FALSE
Super Mario Galaxy sold 1.12 million copies in November, and 1.4 million copies in December.

November 9, 2007
Prediction: The Wii will sell 466,000 units in October, 806,000 units in November, and 2.2 million units in December (US sales).
Outcome: FALSE
The Wii sold 519,000 units in October, 981,000 units in November, but only 1.35 million units in December, likely due to the limited availability.

November 9, 2007
Prediction: US December software sales will surpass $2.2 billion.
Outcome: TRUE
Software sales totaled $2.37 billion in December.

January 15, 2008
Prediction: Hardware sales for the US in December will be as follows: Wii - 1.73 million units; Xbox 360 - 1.45 million units; PS3 - 854,000 units.
Outcome: FALSE
The Wii sold 1.35 million, the Xbox 360 sold 1.26 million, and the PS3 sold 797,600.

Accuracy: 4/10 5/10

Evan Wilson - Pacific Crest Secuities

January 24, 2006
Prediction: Europe won't get the PS3 until March 2007.
Outcome: TRUE
This shouldn't be terrible impressive, since he predicted this the day before the official announcement was made, but that hasn't stopped analysts from being wrong in the past. Wilson was correct (for once) about the European release date, as the PS3 went on sale in Europe on March 23, 2007.

August 21, 2006
Prediction: The high price point of the PS3 will not dissuade consumers, and it will sell out during the holiday season (2006).
Outcome: FALSE
Oh, how wrong he was. While the Wii sold out both Holiday 2006 and 2007, PS3s were still readily available both years, especially pre-price cut.

March 12, 2007
Prediction: Availability of the Wii will not improve until April 2007.
Outcome: TRUE
The Wii shortage finally saw hope in April, with the announcement of a Wii shipment the week of April 24.

April 3, 2007
Prediction: The PSP was not selling well due to the higher price point, and the price reduction should help fix that problem.
Outcome: TRUE
Following the price drop, Sony claims they have seen a 90% increase in PSP sales since the price drop came into effect.

June 11, 2007
Prediction: May 2007 will see sales figures increase to $320 million, up 12% from the year before.
Outcome: FALSE
Wilson's predictions were a little short. Software sales were up 33.2% from the previous year to $380.8 million.

July 5, 2007
Prediction: Microsoft is likely to lower console prices closer to the holidays, while Sony might not be inclined to cut console prices any time soon.
Outcome: FALSE
Ouch. Just four days after saying that the PS3 wouldn't be seeing a price cut in the near future, Sony announce they're dropping the price of their 60GB model by $100. Bad call, Wilson. And I'd hardly call the August 8 price cut of the Xbox 360 close to the holidays, so I'm thinking that Wilson was pretty wrong on both counts.

November 5, 2007
Prediction: The Guitar Hero franchise alone could provide $200 million in growth for Activision.
Outcome: FALSE - AT LEAST ACCORDING TO HIMSELF
Just over a month after Wilson predicts Activision's growth based on Guitar Hero, he shows concern that Activision will have troubled growth, despite first week earnings by Guitar Hero III: Legends of Rock of $115 million, which kind of negates his earlier prediction, doesn't it?

November 15, 2007
Prediction: A new Nintendo DS is waiting for release when the sales of the DS Lite trail off.
Outcome: FALSE
Nintendo has openly discredited this claim, and called the rumours "utter speculation". I'd check my sources next time, Mr. Wilson.

November 15, 2007
Prediction: EA will cut prices on 14 of its most popular sports franchises in time for the Holiday 2007 shopping season.
Outcome: FALSE
Despite the sluggish sales of a number of EA Sports titles, including Madden 08, no price cut actually occurred. It was a good suggestion, but not one that EA was prepared to take.

January 14, 2008
Prediction: December 2007 will have sales 26% higher than December 2006.
Outcome: FALSE
Ooh, so close! Normally I'd give Wilson the point, because he was only off the percentage growth by a teensy 2%, but Michael Pachter was able to call it exactly right at 28%, and I feel I should give credit where credit is due. December 2007 saw a total revenue of $4.82 billion dollars.

Accuracy: 3/10

Mike Hickey - Janco Partners

May 17, 2006
Prediction: The cost of making games for the PS3 could alienate some third party publishers.
Outcome: TRUE
Third party publishers were alienated because of the cost (and the fact that the PS3 was floundering throughout 2007), so Sony did something about it and cut the cost of developer's kits.

July 24, 2007
Prediction: In Q208, EA will execute a "quantifiable cost reduction plan."
Outcome: TRUE
EA decided to do this in the form of restructuring the company (i.e. layoffs) eluded to in their Q2 earnings report and announced late October/early November.

October 16, 2007
Prediction: The drop in box office sales can be blamed on the launch of Halo 3, and could last for several weeks.
Outcome: FALSE
Turns out people just didn't like the movies that were out there. In a look at the weekend box office returns of the top 10 movies for each weekend, movies were struggling even before Halo 3's launch: in the four weeks of September (Halo 3 being launched before the last weekend), the revenues were approximately $63 million, $61 million, $76 million, and $73 million. As for the four weekends of the October box office: $61 million, $81 million, $72 million, and $82 million. Of course, once the holiday movies hit in November, box office returns jumped: $124 million, $95 million, $92 million, $142 million, and $69 million. Even Halo 3 couldn't stop the onslaught of holiday movies and their subsequent box office returns.

October 16, 2007
Prediction: Holiday 2007 will see a shift away from the casual Wii games market to the hardcore gamer 360 market.
Outcome: FALSE
The top ten titles sold during the holidays did not contain what most would consider games for the hardcore gamer. Call of Duty 4: Modern Warfare snuck in down the bottom at number ten, but the rest of the list is the standard fare of Mario, brain training, and Wiimote-waggling.

October 29, 2007
Prediction: Activision's key fiscal game sales for Q208 and 2H08 will come from Spiderman 3, Shrek 3, Transformers, Guitar Hero, Tony Hawk, Call of Duty 4 and Enemy Territory: Quake Wars.
Outcome: FALSE
Activision's top titles for Q208 were Guitar Hero II (Xbox 360), Guitar Hero: Rock the 80's (PS2), Spider-Man 3, TRANSFORMERS: The Game, and Shrek the Third. Call of Duty 4: Modern Warfare was the top-selling title of December, so it's fairly safe to say that it will be a moneymaker for Activision, too. But due to the release of Skate around the same time as Tony Hawk, the sales of Tony Hawk will likely not be as high as Activision would hope.

October 29, 2007
Prediction: There will be significant sales of Call of Duty 4: Modern Warfare during the holiday period.
Outcome: TRUE
Call of Duty 4: Modern Warfare topped sales charts in December, selling 1.47 million copies. I'd call that significant.

November 26, 2007
Prediction: Video game sales will help motivate overall holiday sales.
Outcome: TRUE
If online sales are any indication, video games were a big driving force during the holiday retail season. Online purchase of video games, consoles, and accessories saw a 129% growth in sales from the previous year.

January 4, 2008
Prediction: Holiday sales are expected to be around $2.027 billion for GameStop.
Outcome: FALSE
Gamestop sales were even higher than anticipated, reaching over $2.3 billion.

January 4, 2008
Prediction: There's no reason to think video game sales would be weak over the holidays.
Outcome: TRUE
From Gamestop racking up over $2.3 billion to online video game sales increasing by 129%, it's safe to say that video game sales were strong.

January 4, 2008
Prediction: Price target for GameStop (around the holidays) is $68.
Outcome: FALSE
At no point between Nov.1 and Dec. 31 did Gamestop's stock reach $68. The highest point it hit was $63.77 on December 7.

Accuracy: 5/10

Jeetil Patel - Deutsche Bank

November 12, 2006
Prediction: Nintendo will sell approximately 1.5 million Wiis in the US by the end of 2006.
Outcome: FALSE
The Wii had only managed 1.1 million life-to-date sales by the end of 2006.

November 16, 2006
Prediction: The Xbox 360 will do better than the PS3 in Holiday 2006 sales.
Outcome: TRUE
The Xbox 360 sold 1.1 million units in December, while the PS3 only sold 490,000 units.

November 16, 2006
Prediction: Activision and UbiSoft will benefit the most from holiday sales.
Outcome: FALSE
UbiSoft didn't see any of their titles in the top 10 list for December,

November 16, 2006
Prediction: Nintendo will have the biggest retail presence this holiday.
Outcome: TRUE
The DS was the top selling hardware with 1.6 million units, the Wii was the second-highest selling home console with 604,200 units, and four games in the top 10 software titles list (Legend of Zelda: Twilight Princess - GameCube, Legend of Zelda: Twilight Princess - Nintendo Wii, New Super Mario Bros, and Yoshi's Island 2) in December. Take into account the difficulty of finding a Wii in time for Christmas, Nintendo definitely seems to have the biggest retail presence of Holiday 2006.

November 16, 2006
Prediction: The PSP appears to be losing its luster this holiday.
Outcome: TRUE
PSP sales dropped dramatically from the sales numbers two years prior. The PSP-2000 (Slim) came out shortly after, however, which boosted sales.

March 16, 2007
Prediction: Overall sales of next-gen consoles are weaker than this point in the previous cycle, and their sales could further disappoint.
Outcome: FALSE
While it is difficult to compare this generation to compare to the previous one, recent data from the UK showing that the PS3 is selling faster than the PS2 did, indicating that this cycle is plenty strong, at least for one console.

March 16, 2007
Prediction: A price cut for the PS3 is critical, but likely won't happen until at least April 2007.
Outcome: TRUE
The words "at least" are what save Patel here. The price cut didn't happen until July.

October 12, 2007
Prediction: VG Holdings should provide Electronic Arts with solid long-term content.
Outcome: TRUE
As the parent company of Bioware and Pandemic studios, it is likely that EA will benefit from having the two developers under its umbrella, with four as yet unspecified projects from Pandemic and an assortment of projects in the works from Bioware, including an upcoming partnership with Lucasarts.

October 12, 2007
Prediction: The poor quality of EA products could translate into ongoing market share losses.
Outcome: TRUE
EA stayed fairly consistent in the markets around the $55 mark up to the end of the year, but has since dropped to below $45, closing last week at $44.57.

October 19, 2007
Prediction: The PS2 may finally be on its way out of the industry for good.
Outcome: FALSE
The PS2 continues to outsell the PS3 - at least for now - and showed strong sales, moving 496,000 units in November, 1.1 million units in December (that's more than the PSP, as well). Combine that with the rumor of a $99 PS2 sometime this year, and it looks like the 7-year-old system still has some life in it yet.

Accuracy: 6/10

Mitsuhiro Osawa - Mizuho Investors Securities Co.

May 18, 2005
Prediction: The rush for digital cameras in Japan had its peak last year, and the US is about a year behind that.
Outcome: FALSE
Digital camera sales have picked up again in Japan.

May 7, 2006
Prediction: Sony's business model of producing cell chips in volume will fail if they cannot sell PS3s in volume as well.
Outcome: TRUE
Apparently Sony's plan is faltering, as they have to keep changing what their strategy is. The term "business model" is kind of loose, since Sony seems to be changing it as often as some people change their socks, but I'm certainly not seeing any great payout to having the PS3 Cell chips produced in volume.

August 31, 2006
Prediction: Canon stands to be the leading manufacturer of multifunction copiers for the next little while, following the release of their new models.
Outcome: TRUE
At the end of 2007, Canon was still the top copier manufacturer.

November 10, 2006
Prediction: Sony won't be able to ship 6 million PS3s by the end of March 2007, because there won't be enough machines to go around.
Outcome: FALSE
Sony only managed to sell 4.28 million units by the end of March 2007, but it wasn't because there weren't enough machines. There were plenty to go around! People just didn't buy them.

May 16, 2007
Prediction: Sony will make an operating profit (overall) of ¥380-400 billion this year.
Outcome: FALSE
At the end of Q3, Sony has already made a profit of ¥379.2 billion for FY2008 in operating income. It's very likely Sony will far exceed Osawa's expectations, as the lowest operating profit Sony pulled in a fiscal quarter was ¥90 billion, and January to March 2008 shouldn't be radically lower.

May 16, 2007
Prediction: It remains to be seen whether Sony can turn around its losses in the game division.
Outcome: TRUE
Four months after this prediction, Sony is looking for help from its other divisions to help recoup their losses. Sony did see improved sales of the PS3 over the holiday season, but like Osawa said, whether it'll be too little too late to recoup its loses remains to be seen.

May 16, 2007
Prediction: The key to success with the PS3 is launching a more cost-effective version with a 65-nanometer process technology, instead of the current 90-nanometer.
Outcome: TRUE
Following the sale of the Cell chip technology to Toshiba, the processor has become more cost effective with a 65-nanometer processor, but shrunk further to a 45-nanometer processor.

September 4, 2007
Prediction: A price cut for the PS3 is one option to recover the faltering system.
Outcome: TRUE
The price cut this time around was Japan only, but since that's where Osawa is based, I think we can give him this one.

October 26, 2007
Prediction: A lack of strong software titles will make it almost impossible for Sony to meet its target by the end of March 2008 of 11 million units globally.
Outcome: TRUE
While March 2008 hasn't arrived yet, it is looking unlikely. Sony still remains overly optimistic, but the Bloomberg report only pegs Sony at selling 8 million units worldwide.

December 24, 2007
Prediction: Toshiba is losing its strong investment in the flat TV business.
Outcome: FALSE
With the release of this ultra-thin framed television, Toshiba appears to be continuing its innovation in the television industry.

Accuracy: 6/10, but some were pretty wishy-washy, and some weren't about video games.

Richard Doherty - Envisioneering Group

August 8, 2005
Prediction: The PS3 release date will be on track with Sony's estimate of Q206.
Outcome: TRUE
The PS3 was released in North America November 17, 2006, which is in Sony's second fiscal quarter.

September 14, 2005
Prediction: Whether the Xbox 360 launches Nov. 20 or Dec. 5, Microsoft will sell through every unit they can deliver before New Year's.
Outcome: TRUE
Xbox 360's were tough to come by around the holidays in 2005.

November 4, 2005
Prediction: iTunes may no longer be compatible with the Xbox 360 following its launch, because the Xbox 360's interoperability with the iPod is not Apple-endorsed.
Outcome: FALSE
While none of Apple's FairPlay protected tracks work on the Xbox 360, they never would have in the first place. In terms of Doherty's suggestion that Apple would change iPod connectivity, that never happened.

May 10, 2006
Prediction: The console war will be a challenge for Nintendo, because the PS3 may now have greater appeal to the same older people and non-gamers Nintendo is going after.
Outcome: FALSE
Nintendo has sold many, many more Wiis than Sony has sold PS3s, so other than not having enough to units to go around, Nintendo is doing fine.

July 26, 2006
Prediction:Sony will take first place in the console war, with Nintendo possibly being able to take a few percentage points of the market share from Microsoft.
Outcome: FALSE
So, SO wrong. By the end of 2007, it was pretty clear that the PS3 was getting trounced in global lifetime sales. Midway through December 2007, global lifetime sales were as follows: Wii - 16.97 million units, Xbox 360 - 15.06 million units, PS3 - 7.75 million units. No matter how you slice it, the PS3 is not number one in any way. (In another interview in November, Doherty changes his prediction, instead saying that the PS3 will win at the end of the decade, or the halfway point of this console cycle.)

November 14, 2006
Prediction: The PS3's glitches will be ironed out by Thanksgiving.
Outcome: TRUE
Sony offered a firmware update before the November 23 deadline that Doherty suggested.

July 9, 2007
Prediction: Many of the sales that would have gone to the Xbox 360 will go to the PS3 following the PS3 price drop.
Outcome: FALSE
While this is kind of a "we'll never know for sure" sort of scenario, it doesn't look like the price drop of the PS3 crippled Xbox 360 sales. The PS3 went up 135% in units sold over the previous month, going from 81,600 units in May to 98,500 units in June. The Xbox 360 also went up in number of units sold, though, from 155,000 units in May to 198,400 in June.

July 9, 2007
Prediction: BD+, the DRM in Blu-ray discs, won't be hacked for ten years.
Outcome: FALSE
Give hackers some more credit, Doherty! By November 2007, hackers had just about made it through the code, only six months after the release.

July 9, 2007
Prediction: The $100 price cut of the PS3 will make it a lot more appealing to third party developers, and the discount will give Sony the advantage over the next six months.
Outcome: FALSE
The console price cut wasn't enough, as by November, Sony had to cut the price of their developer's kit in half in order to try and win back third party developers.

July 10, 2007
Prediction: Nintendo and Sony will benefit in the coming months from the announcement of Microsoft extending the Xbox 360's warranty (due to unacceptable failure rates).
Outcome: FALSE
Microsoft craftily got around this by dropping the price of their system shortly after the announcements of the extended warranty and Sony dropping their price, so while Sony sold more PS3s than the previous month, the Xbox 360 didn't lose any ground.

Accuracy: 3/10

Piers Harding-Rolls - Screen Digest

December 14, 2006
Prediction: Sony will see a net income of around ¥80 billion by fiscal year end, March 2007.
Outcome: FALSE NOT HIS PREDICTION
Sony's net income for FY2006 was ¥126.3 billion, leaving Harding-Rolls' prediction short by nearly ¥40 billion.

EDIT: Mr. Harding-Rolls contacted me, and clarified that he did not make this prediction, it was Sony's estimate.

October 4, 2007
Prediction: Halo 3 will be a system seller over the next few months.
Outcome: FALSE TOO OPEN TO INTERPRETATION
Halo 3 sold systems, but nothing record breaking. In fact, Holiday 2007 saw sales of the Xbox 360 fall below pre-Halo 3 levels. It might have sold more systems, but not as many as during the same period the previous year.

EDIT: While I interpreted the prediction as Halo 3 improving the sales of the Xbox 360, Mr. Harding-Rolls, has clarified that his prediction does not suggest that, and that it is too difficult to prove whether Halo 3 sold systems over the next few months or not.

December 18, 2007
Prediction: The Wii will win the console battle of Holiday 2007.
Outcome: TRUE
Gee, what a surprise, the Wii outsold the PS3 and the Xbox 360. Over the month of December, the Wii sold a total of 1.35 million units, with the Xbox 360 selling 1.26 million, and Sony claiming they sold 1.2 million.

Piers Harding-Rolls' Future Predictions

December 17, 2007
Prediction: Sony's exclusive content will result in better results for the PS3 in 2008.
Outcome: PROBABLY TRUE
The biggest struggle for the PS3 so far has been a lack of titles, and with upcoming PS3 exclusives announced, including big name series titles likeFinal Fantasy XIII, Gran Turismo 5, and Metal Gear Solid 4, it would be surprising if PS3 sales didn't pick up once these games are released.

December 17, 2007
Prediction: Being "multimedia hubs" is key to Sony and Microsoft's strategies.
Outcome: UNKNOWN
It's likely that this would be part of their marketing strategy, as being a multimedia hub is one thing the best-selling Wii doesn't have. As for whether this is concrete enough to be provable, though, remains uncertain.

December 28, 2007
Prediction: By 2011, sales for the PS3 will have caught up with the Wii, due in part to better games being available in 2008.
Outcome: UNKNOWN
This prediction is so far in the future, it will not only be unprovable for a while, but there is a solid likelihood people will forget about this prediction by the time it comes to fruition (or not).

January 11, 2008
Prediction: 2008 will be a "golden year for games retail."
Outcome: PROBABLY TRUE
There's a decent offering of 2008 games from Nintendo, Sony, and Microsoft, so it's likely that the gaming industry will likely have another strong year. One question, though - what exactly constitutes a "golden year"?

January 11, 2008
Prediction: The reality of PS3 and Xbox 360 as multimedia hubs will happen in the next 12 months.
Outcome: UNKNOWN
At least this multimedia hub thing now has a date, something many of Harding-Rolls' predictions are lacking. It's still too early in the year to say if it will be true, and it really depends on what peripherals and support for the PS3 and Xbox 360 become available, too.

January 11, 2008
Prediction: Good trading conditions for video game stocks will continue in 2008.
Outcome: UNKNOWN
This is a very broad, sweeping statement. With so many video game stocks out there, there will be fluctuations and changes in trading conditions throughout the year, as some publishers, developers, and retailers will have better years than others.

EDIT: The quote refers to retail trading conditions, not stocks.

January 11, 2008
Prediction: 2008 game sales will eclipse 2007 by "a vast some margin."
Outcome: UNKNOWN
Who knows what "a vast margin" is. Millions? Billions? Even if this were provable now, there would be no way to give this a concrete true or false.

Edit to the quote highlighted by Mr. Harding-Rolls.

Accuracy: 1/2, 7 not provable at this time

Billy Pidgeon - IDC

July 27, 2004
Prediction: The N-Gage QD will be a viable SKU in Nokia's line-up six months from now, but not in a year.
Outcome: FALSE
The N-Gage QD was "so popular", that they released the N-Gage QD Silver Edition in August 2005 for Europe, Africa, and the Middle East.

September 29, 2004
Prediction: There is a huge unrealized potential in wireless games, and Jamdat is poised to continue to lead in the sector.
Outcome: TRUE
Jamdat was so impressive to EA, in fact, that EA bought Jamdat to lead its mobile game division.

August 15, 2006
Prediction: World of Warcraft will inspire copycat games, but these will ultimately fail.
Outcome: FALSE
That may have been true, if it weren't for Lord of the Rings Online. While it doesn't have near the same number of subscribers as WoW, LOTRO became the #1 selling PC game in North America and Europe last May, only five months after the release of World of Warcraft: The Burning Crusade.

September 27, 2006
Prediction: Halo 2 will boast an array of capabilities (like the customizable maps and more) that will turn Xbox Live into a YouTube of self-made games.
Outcome: FALSE TRUE (see update below)
At the midway point of December 2007, Microsoft was still pushing for more user created content opportunities, leaving the impression that it's hardly the self-made utopia Pidgeon makes it out to be.

UPDATE: It wasn't widely popularized in news articles, but according to Microsoft's press event at GDC, it was announced that 100,000 Halo 3 films are uploaded every day, 30% more than are uploaded to YouTube. The outcome of this one has definitely changed.

October 19, 2007
Prediction: By the end of 2007, 14 million online console gamers will be active online in North America.
Outcome: FALSE
There are 10 million registered Xbox Live users, and two million registered PSN users, which