Activision: Take-Two didn't fulfill our acquisition requirements

Speaking at the Goldman Sachs Technology Investment Symposium 2008 Conference, Activision chairman and CEO Bobby Kotick said that Take-Two did not meet the company's criteria.

"I think we've had - as weâve said for a very long time, now - well-stated criteria for what we're interested in in an acquisition," he said.

"We've said that we need a history of profitability, good management, the proprietary technology for a franchise, history of multimillion unit sellers. They would have to be non-dilutive and operating margin accretive.

"And, for us, Take-Two didnât fulfill those requirements. Maybe it does over the long-term for EA, but it doesn't for us."

Kotick told a Mark Wienkes, a media analyst from Goldman Sachs, that some of Activision's competitors are reacting to what they've done - creating a company that is going to be the market leader, with the highest operating margins and with a successful track record of realising franchises in every geography in the world.

"You're going to start thinking about what you need to do to maintain your lead," Kotick noted.

"But again, our focus is on our lead as profitable participants in the space - and not share-for-share space. Without getting into too many of the details of Take-Two, we really like businesses where if we take the risk, we get the reward.

"Where you see businesses where you're taking all of the financial risk in the product-development investment or in the franchise fees, and then the reward is going to the developer or the licensor. That doesn't really make for a great margin expansion strategy, in our view."

Even so, Kotick admitted that EA has some unique insight into that business and has been looking at it for a long time.

"I'm sure they have a good sense of what its prospects are for the future."