Seth Gilbert, 10-2-2008
Crossing T’s and dotting I’s, this week there were a couple news briefs from the M&A front:
Sony BMG: After months of rumors, Sony announced August 5th that they’d reached an agreement to buy partner, Bertelsmann’s, fifty percent stake in their joint Sony BMG music label. Regulators in Europe approved the deal a few weeks ago and it’s now officially complete. The world’s second largest record label, which includes famed imprints Columbia, Arista, Epic and RCA records, will now be called Sony Music Entertainment, Inc. and be a subsidiary of Sony Corporation of America. Bertelsmann received $1.2b, including $300m in cash that was carried on Sony BMG’s books.
Take Two: EA walked from its hostile takeover attempt in August, and two weeks ago, walked from the prospect of a friendly deal too. Now Take Two Interactive, will walk away from sales discussions Click to Read More
Seth Gilbert, 10-1-2008
Gamestop is billed as the world’s largest video game retailer but until today, they had no footprint in France, Europe’s second largest market. For $700 million, including debt, that will now change.
Gamestop announced Wednesday they will buy France’s Micromania retail chain from L Capital, a private equity firm affiliated with LVMH.
The all cash deal will be funded through a combination of cash on hand (the company had $539.9m in Cash and Equivalents as of August 2nd), a $150m term loan from Bank of America and existing lines of credit.
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Seth Gilbert, 09-30-2008
Tuesday, the Motion Picture Association of America and Real Networks went at it head on, taking each other to court in separate lawsuits. There may have been an effort at behind the scenes diplomacy but there was no shot across the bow, no public warning. The fight came quick and fast with preemptive and counter strikes.
The battleground is Real Networks newly released realDVD software, a software program designed to copy DVDs. The question is whether it’s legal and how copyright law should be applied to its use.
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Seth Gilbert, 09-26-2008
Research in Motion (RIM) is expected to launch three new phones in the coming months: the Blackberry Bold (new to the US, already available internationally), a clamshell phone called the Pearl Flip, and a touch screen device expected to be called “The Storm (pics).” Unfortunately, new product launches – between component parts, subsidized pricing and promotional costs – can be expensive. As a result, the company warned late Thursday that gross margins and profit will suffer in the third quarter.
Co-CEO Jim Balsillie characterized the situation as a “land grab” and justified the increase in near term expense as, essentially, an opportunity. It’s similar to the story pitched in June when the company showed sales and marketing expense up heavily. But the market didn’t treat that first glimpse as foreshadowing, and they weren’t convinced with the re-itteration. The market also wasn’t completely satisfied with the rest of RIM’s earnings news.
By midday Friday, the stock was trading near $70 a share, well below its fifty week low of $80.20. From Thursday’s market close of $97.53, it was down more than 25%.
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Seth Gilbert, 09-24-2008
Digital Rights Management (“DRM”), and the assorted encryption techniques that fall under its moniker, has become industries’ primary preventative weapon for thwarting rampant content piracy. It’s been their canon, their go-to machine. Unfortunately, like any weapon if improperly used it has the ability to blow up in its user’s face. Sony learned that lesson the hard way in 2005. Now, the use of a different Sony developed technology called SecuROM, along with a questionable disclosure policy, has put video game publisher Electronic Arts (EA) in the crosshairs. A lawsuit’s already been filed.
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Seth Gilbert, 09-23-2008
Be it a bubble or a breakthrough, investors are sure loving games. Not two weeks ago, Seattle based Big Fish Games, a maker of downloadable games, drew down an $83m round; a number likely big enough to put them on the podium for the largest gaming venture financing of all time. Today, Redwood City, CA based Trion World Network, a “server based” game developer and publishing platform company, turned in a medal worthy performance of their own.
In a series C round, Trion raised $70m.
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Seth Gilbert, 09-17-2008
From the venture wires, two startups closed new financings this week: Austin, Texas based game company, Challenge Games, and Bethesda, Maryland based online book publishing community WEbook.
Challenge Games
Based in Austin, Challenge Games was founded in 2006 with the aim of building short-form (playable in short term increments) multiplayer games. To date, the company has launched two free browser based games: Duels (released Aug. 07) and Baseball Boss (released July ’08).
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