BMG Interactive

~ the goodbye ~

BMG Interactive ended in March 1998, when Take-Two Interactive bought substantially all of its assets from BMG Entertainment North America. It had been the video game label of Bertelsmann's music division, headquartered in New York, and its last significant act as a going concern was publishing a game about stealing cars in a top-down city.

The label grew out of deals rather than a plan. Bertelsmann Music Group entered the business in 1993 by signing with Ion and added Crystal Dynamics in 1994. BMG Interactive Entertainment was founded around the same time the label expanded into Japan, in late 1994. Sam Houser led it. Strauss Zelnick, who had been running Crystal Dynamics, joined in late 1994 to look after the North American side, and a San Francisco office was set up under Don Traeger, formerly of Electronic Arts. Wikipedia's infobox dates the founding to 1993 while its text describes the company being founded after the 1994 deals, so the year is soft.

What it actually published was a decent mid-nineties catalog. Gex reached the PlayStation on 8 March 1996 and the Saturn three weeks later. Pandemonium! followed that November. Blood Omen: Legacy of Kain arrived on 30 May 1997 and Courier Crisis that November. In 1995 BMG had signed a publishing agreement with a Dundee studio called DMA Design covering four titles, one of which was listed under the working name Race'n'Chase. That one shipped on MS-DOS on 28 November 1997 as Grand Theft Auto, with the Windows and PlayStation versions two weeks later.

By then the label was already being dismantled. In 1997 BMG Interactive announced it had shuttered its US operations, after commercial failures including a game called Spider, and across late 1997 and early 1998 it sold publishing rights off title by title. Grand Theft Auto and Mass Destruction went to ASC Games, and Spec Ops went to Ripcord. Five more publishers took the remainder between them, Electronic Arts and GT Interactive among them. The rights to Grand Theft Auto were sold in the same stretch of months the game came out in. That is not what restructuring looks like.

~ the chronicle ~

~ exhibit 1, item 2 ~

The dates cluster. The asset purchase agreement is dated 10 March 1998, Take-Two announced the acquisition on 12 March, the Form 8-K reports 18 March as the date of the earliest event, and Wikipedia says the deal closed on 25 March. The filing itself declines to help: it defines the closing date as "the date this Agreement is executed or such other date as the Purchaser and the Seller may mutually agree" and leaves the day blank in its own signature block. What Take-Two paid was 1,850,000 shares of a newly created Series A Convertible Preferred, convertible one for one into common stock, leaving BMG with approximately 15.8 percent of the company. The preferred paid no dividends and carried a liquidation preference of $6.875 a share. No dollar purchase price appears anywhere in the agreement.

Item 2 of the 8-K lists what changed hands: distribution, sales and marketing offices in France and Germany, a product publishing and distribution group in the United Kingdom, rights to twelve upcoming releases, and back catalog. Then it enumerates them, and the first entry reads "The worldwide publishing and distribution rights and copyright to Grand Theft Auto." Item two is Space Station: Silicon Valley for the Nintendo 64. The same entry shows Take-Two taking the copyright while keeping ASC Games on as its US distributor for the PC release. Both accounts of who held what are therefore true at once. Further down, the agreement fixes a Tangible Personal Property Value of $413,000 and sets its balance-sheet reference date at 31 January 1998. Wikipedia describes the company as dormant at the point of sale. That is hard to reconcile with a filing transferring live offices and the employees attached to them.

~ december 1998 ~

The assets were the smaller half of the deal. Three BMG Interactive executives, Dan Houser, Sam Houser and Jamie King, along with Gary Foreman of the same label and Terry Donovan from BMG's Arista Records, moved to New York to work for Take-Two. In a restructuring announced that April, Sam Houser was made Take-Two's vice president of worldwide product development. In December 1998 the Housers, Donovan and King set up Rockstar Games as Take-Two's high-end publishing label and as the successor to the thing they had just come from. The formation was announced publicly on 22 January 1999.

The first Grand Theft Auto shipped with a record company's logo on it. That is not how anybody remembers the series, me included. The name I associate with those games is Rockstar, and Rockstar was still a year away when the first one came out. BMG Interactive is the publisher that paid for it and then stopped existing before it could publish anything that followed.

Bertelsmann spent five years deciding that games were close enough to records to be worth a division. It got one genuine hit out of that, and concluded in 1997 that it was done. The agreement that ended the label puts a precise number on its tangible property, $413,000, and no number at all on Grand Theft Auto.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »