A new wave of consolidation has hit the game industry since the economic downturn began last year, with Square Enix picking up Eidos, Tecmo merging with Koei, Warner Bros. snagging Midway out of bankruptcy, Namco Bandai buying D3Publisher, and most recently, ZeniMax purchasing id Software.
"Get me Riccitello and Farrell on the phone!"
The wave may not have broken just yet, as rumors of takeovers of THQ and Electronic Arts are pushing the publishers' share prices higher this week, Reuters reports. According to the wire service, rumors are circulating that Microsoft is pondering an acquisition of Electronic Arts, and a major media company is preparing a takeover bid for THQ. Last year, EA was in the suitor's seat, as it spent months pursuing an ultimately unsuccessful hostile takeover of Take-Two Interactive.
As an acquisition, EA could instantly bolster Microsoft's Xbox 360 effort by making franchises like Need for Speed, Medal of Honor, and Skate exclusive to the system. EA also has a number of big-name licenses including Harry Potter and the exclusive gaming rights to the National Football League, although change-of-ownership clauses could prevent those titles from becoming Xbox 360 exclusives. In addition to its original and licensed titles, EA also runs the EA Partners program, which offers various publishing and distribution services to developers, and covers titles like Rock Band, Brutal Legend, and Crysis 2.
The Reuters report doesn't single out candidates to make the THQ bid, but a Dow Jones Newswire article specifies MTV Games owner Viacom and Warner Bros. parent Time Warner as potential suitors. THQ recently enjoyed a significant hit with the chart-topping UFC 2009 Undisputed on Xbox 360 and PlayStation 3. THQ's stable of franchises also includes wholly owned properties like Saints Row, Red Faction, and the soon-to-debut Darksiders, as well as series based on licenses like WWE wrestling and Nickelodeon TV shows.
In both cases, the rumors have driven the supposed targets' stock prices higher. THQ opened the week with shares at $6.51, and by press time had jumped roughly 15 percent to $7.47. EA shares are up nearly 8 percent from $18.55 to $19.95 in the same span of time.
SAN FRANCISCO, Sept 22 (Reuters) - Shares of THQ Inc surged 13 percent on Tuesday as rumors swirled that the video game publisher might be the target of a takeover.
THQ ( THQI - news - people ), the smallest of the major U.S. video game companies with a market capitalization of roughly $500 million, is no stranger to buyout chatter.
Yahoo! BuzzThe publisher of 'UFC 2009 Undisputed' -- based on the popular Ultimate Fighting Championship bouts -- as well as the 'Saints Row' and 'Red Faction' franchises, THQ has been slashing costs and has focused on trying to develop a smaller number of big hits, rather than spending to develop a larger slate of games that might generate middling sales.
MKM Partners analyst Eric Handler said rumors about a THQ buyout seem to crop up about once a quarter. He said the speculation is that a major media company is coming in with a bid.
However, Handler said he does not see a bid as likely in the near term.
'(The) company still has a very high percentage of licensed titles and is just beginning to rebuild its wholly owned IP (intellectual property) portfolio,' Handler said in an email.
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Comment On This StoryIn addition to UFC, THQ also licenses titles from companies such as World Wrestling Entertainment ( WWE - news - people ) Inc and Viacom Inc ( VIA - news - people )'s Nickelodeon.
In July, THQ posted a stronger-than-expected quarterly profit on a 77 percent rise in sales.
Shares of THQ are up around 75 percent this year and trade at about 46 times forward earnings.
The Agoura Hills, California-based company's stock rose 13 percent to $7.50 in afternoon trading.
