Former Take-Two CEO Paul Eibeler has joined the board of directors at SouthPeak Games and that, as we will get around to explaining, could be bad news for current Take-Two Chairman Strauss Zelnick.
SouthPeak is a middle-power publisher whose stable includes games like Legendary, Velvet Assassin and the upcoming Section 8, but chairman Terry Phillips said the company is looking to move up the food chain and he wants Eibeler to help make it happen. “As one of the most respected executives in the interactive games industry, we welcome Paul to the board of directors,” he said. “His depth of experience will certainly be an asset to SouthPeak’s growth as a major publisher.” Eibeler himself issued a statement noting that SouthPeak “has set a course for rapid growth” leading into the 2009 holiday season.
Eibeler’s appointment is a bit of a curious one in the eyes of some observers, however, since it was just over two years ago that shareholders of Take-Two Interactive, the publisher of Grand Theft Auto, BioShock and numerous others, cut him loose after a string of five money-losing quarters. Replacing him atop the Take-Two Mountain were Chairman Strauss Zelnick and CEO Ben Feder, who hold those positions to this very day.
So why might Eibeler’s “re-emergence” be bad news for Zelnick? When he was ousted over Take-Two’s under-performance, the publisher was trading at around $21 per share; those same shares are worth about $9.60 today. It’s unfair to lay all of Take-Two’s travails at Zelnick’s feet but there’s no getting around the fact that the highlight of his tenure thus far, Jack Thompson madness aside, was his strident and aggressive battle against an attempted buyout by Electronic Arts, which had offered $26 per share for the company – nearly triple its current price.
There’s also a certain irony in Bloomberg’s remark that one of Eibeler’s chief failings at Take-Two was an inability to come up with hits that could fill the holes between Grand Theft Auto releases; while 2010 could be the year the company finally breaks out as a major player, right now Take-Two remains very much a one-trick pony.
SouthPeak clearly has confidence in Eibeler and given the way Take-Two’s value has continued to spiral downward despite his removal, it’s difficult to argue the point. But as his light brightens, it may cast shadows on Zelnick, who, regardless of the reason, is clearly a guy who’s just held onto the reins while the horses ran over the cliff. It’s not necessarily a zero-sum game but renewed confidence in Eibeler, even just witnessed from across a crowded board room, could very easily lead to questions about the man currently at the top. Given the way things have been going for Take-Two, that could get ugly in a hurry.