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Should Microsoft be looking to buy?

by Chad
1/23/2003
Recently, there has been an abundance of acquisition rumors focused on Microsoft and various software developers in the industry. With so many different scenarios being tossed around, I have been wondering if it will help Microsoft in the long run to acquire any of these properties.

The first problem with acquiring an established developer or publisher is the instant conflict of interest if they are a multi-platform company. Software developers are most successful when they can reach a wide fan base. Using a company like the hated Electronic Arts and Activision as examples, they have become the number one and number two software developers, respectively, by reaching the widest possible audiences. They develop for all three consoles, with an emphasis on the PS2 platform. This philosophy has made these companies wildly successful and has helped push the gaming industry past filmmaking in gross revenues. A longstanding rumor has been that Microsoft would purchase a large, established company in Japan, specifically Sega. If you were to purchase a profitable company such as Sega and make them exclusive to a single console, they would instantly lose a significant revenue stream. As with any acquisition, many expenses would be eliminated, but with 8-10 million units shipped, Microsoft does not have the user-base to expect to recoup the cost of such a massive acquisition that would make their shareholder happy. Sony, with a newly reported 50 million units shipped, would have trouble justifying acquiring a large software development house for the sole purpose of publishing exclusive titles.

Software development companies are also expanding beyond traditional game development, which makes acquisition a more daunting and expensive task. As a software company, EA is firmly in the number one position in the world. They are more profitable than they could have ever dreamed of becoming. In a recent interview with Business 2.0, Electronic Arts CEO Larry Probst stated that in the future he envisions EA to rival Disney as a media conglomerate. We've looked at Disney as a model," Probst says. "It is the gold standard for us." (Please readers, so I don't have to try to be creative at this late hour, insert your own jokes in the comment section. Remember, Walt Disney was accused of being a communist.) EA has $920 million in cash that Probst hinted may be used to expand into other entertainment realms, such as movies or music. They did not become larger than everyone else by making the highest quality games; they did it appealing to the group that offered the highest dollar amount. That is why they are largely ignoring the Xbox crowd, but we are not alone. EA does not develop specifically for the Gamecube, either. They develop for the 50 million PS2 users, and port everything else. And why do they continue to do this? Because they cleared $1 billion in revenue this quarter using this strategy.

What the hell is my point? I believe it would be a mistake for Microsoft (or Nintendo, or Sony) to try and purchase one of the major software developers. There are too many revenue obstacles to overcome, and Microsoft has just begun paying dividends to its stockholders, meaning their cash reserves are going to be a little less than they had planned on. Of course, it is all relative, and a few hundred million is not a lot to Microsoft, but it is cash they will no longer have on hand.

Instead, I believe Microsoft should continue to acquire talent. Money can be spent on assembling a team of the most skilled developers in the world. They can offer compensation packages to employees of other companies and bring them into the Xbox team. They recently did this in a high level position by hiring former Sega vice president and chief operating officer Peter Moore. I believe this was also the thought process behind the acquisition of Rare. Microsoft hardly retained any franchise titles, but they now have the creative minds that spawned Donky Kong Country, Diddy Kong Racing and GoldenEye. As a company, Microsoft has never been shy about compensating its employees. Just drive through Redmond, WA and take a look at the Microsoft funded real estate empire. Their money would be well spent raiding talent from other companies; and not just the high level people who set direction and discuss vision. We all know that those guys do jack s$!t when it comes to the creativity and innovation that is necessary in building a successful gaming endeavor. The designers and programmers who actually create the products are who Microsoft should target. They are the people who have a passion for gaming, like the developers whose concept became the Xbox.



  ChadX365 Says  
Microsoft has recently solidified the Xbox as the number two console. If people continue to buy the Xbox, developers will begin to focus on making it number one when 2005 rolls around Until then, Microsoft Studios can begin to build a game development team that is unmatched by anyone in the world.

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Coola
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Posted 1/23/2003
Greatly Said, however i think the whole point in acquiring such software developers is to keep them out of the hands of its competitors and make their competition lose money by with-holding exclusive content. When we think longterm we think 5-10 years. When Microsoft thinks longterm they think 20-30 years down the road where profit will eventually kick in. But I couldn´t have said it better my friend... unless I had some background music...
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Coola
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Posted 1/23/2003
Also I would like to add that Microsoft has $40 Billion in cash with a Market Cap of $300+ Billion. With approximately $2-3 Billion coming in each quarter. Pure profit. So it wouldn´t make that big of a dent.. if at all.
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mar636363
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Posted 1/24/2003
one of the main issues microsoft is currently going through is market recognition. another one is acceptance at the broadest possible level. shad´s article addresses these issues and tries to present us with the best solution in helping us resolve those two issues. though i agree with shad´s premise of strengthening microsoft´s position by attaining outside talent, i would have to disagree with shad when he claims that attaining outside talent to acheive market acceptance/recognition is THE BEST posible solution.
why? simply because the product, in this case, is quality software. it´s not the filet di´mignon at an ambitious startup restaurant or some other product that takes a relatively short period of time to produce. starfox: dinosaur planet took over 3 years to make, so did morrowind or any other aaa title. simply put, producing quality software can not be rushed. it´s a time consuming process that takes devotion and know-how.

will attaining talent today (regardless of quality) help microsoft today? i don´t think so buddy. all this acquried talent is not going to pay off in the near future. its going to pay off longterm (this is what microsoft wants us to understand when it claims that a company purchase demonstrates its "long term commitment" to the industry). microsoft is seeking recognition today, not tomorrow. its better of buying off companies that have brand titles that the mass market recognises, titles that every one wants.
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mar636363
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Posted 1/24/2003
good article though. it was a great read.
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Ammon
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Posted 1/24/2003
Microsoft is scaring the living crap out of everyone in the gaming world. Nintendo fans are losing faith in the gamecube due to their beloved company Rare being sold Microsoft. The one company that kept N64 alive is gone. Talk of Microsoft buying Blizzard and what not is of equal concern if not greater to all gamers in general. Microsoft is out to destroy the competition my friends, and frankly he is doing a good job. In case none of you already know, Microsoft already has reserved the exclusive rights for Metal Gear Solid 3 for 6 months before it can release on any other system. I work for a market research company and a month or so ago Sony was doing surveys to get an idea of how fast popularity of the competition was increasing. XBOX is getting up there. People are finally starting to see that the XBOX is going to be on top and isnt just some crap thrown together to make Microsoft to look good. People who complained at first that microsoft didnt have any good games or exclusive titles will soon realize that they will soon have all the titles. Microsoft is in this for the long run, and they arent going to lose. I couldnt be happier. Buying out other companies is the smartest thing Microsoft can do. They dont have time to look for individual programers. Why get one guy when they can just get the whole company, take away the competition, and get them started imediately making games just for them all at the same time. Microsoft is pulling an Alamo on this one, but with the purchase of Rare, Blizzard, and possibly Sega, Sam Houstons on his way. Santa Anna along with the rest of the Sony gang our goin down.
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auzdafluff
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Posted 1/24/2003
actually MS made $8.65 billion in the last quarter, enough to buy Vivendi, Sega and Activison in one go...
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boredguy
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Posted 1/24/2003
Leaving market logistics behind it would be a small feat for microsoft to buy any developer on the market. If they bought something big it could get them the short term recognition they want. That may just come close to lasting long enough for their previous business endevures to become noteworthy and profitable. But I know little about the market so all that I say is speculative.
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User X
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Posted 1/24/2003
I heard that they might have bought Vivendi (Half-Life, Warcraft, Counter-Strike, Spyro, and Lord of the Rings). You all make great points, but lets remember something. While its true that EA is on top because of Sony, Sony may not allways be on top. I know most of us hardcore gamers will remember EA for what they are and continue to shun them when MS is king of the hill, but I hope that the rest of the gaming community will do the same.
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fu chad
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Posted 1/24/2003
What purpose does an article like this serve? Number one, the executives at Microsoft do not give a damn about some snotty nose prick giving them advice on how to run their business. Number two, no matter how many gamers you get to believe in your half cocked ideas - it all boils down to supply and demand. If you got the games people want, then you got their business. Not some grass roots theory the brainiac Chad might have you believe.
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SuP
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Posted 1/24/2003
Microsoft brought up the issue of dividends but they dicided agianst it. So they have 40 billion in extra cash that is not being used. Check cnn
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M Burns
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Posted 1/24/2003
Exxxxxxxxxxcelent!
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UKMatt
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Posted 1/24/2003
Do not buy Sega microsoft. Bad idea. If sega get bought by M$ a shedload of sega staff will leave and the company just wont function the same and the quality of the games will deteriorate. Sega show alot of support for xbox anyway, so it would be a pointless move by M$.
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Orochi
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Posted 1/24/2003
I dont think MS realy needs to wory about profitability, they need to wory about image. Right now, MS is viewd as a paraiah by the japanese, and many of their developers. A good deal of it is due to the fact that they are very loyal to japanese products, but more than that they are extremely loyal to japanese franchises. They dont see microsoft representing themselves as the company that will bring them, FF12, devil may cry 3, xeno saga 2, biohazzard 5, ect. Microsoft can take a pretty big hit to the wallet, what they cant take is this assualt on their image. If microsoft could purchase, capcom, and square-enix, I think thats exactly what they should do, if for no other reson than to show people that the xbox2 will be your source for capcom and square games. Its not just about talent.

-Orochi
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Dahlsim
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Posted 1/24/2003
People don´t buy based on quality only. It´s NOT just talent, exclusives is about NAMES. Names that people recognize. Names that drive console sales.

Names like GTA and FF and GT and Tekken and VF etc. all exclusive to Sony. Names like Rockstar and EA and Namco favoring the PS2.

Your argument assumes the Xbox base remains a significantly smaller market percentage than Sony.

The whole point of acquiring exclusives to make sure that the software is selling to larger installed base, because of the exclusives. What comes first, the chicken or the egg.

MS must buy some chickens (or some eggs) to get it started.

Name like Halo & Bungie, Perfect Dark & Rare, DOA etc. MS needs more names.
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all-in-all
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Posted 1/24/2003
Nintendo has name, but their still #2 or #3
In 2003, Microsoft needs 2 more games like Halo, 3 GTA´s, and at least 3 FFX and Splinter Cell´s
then they can add the 70 shovelware games
and an exclusive ´spider man the movie 2´ game
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Dorky
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Posted 1/24/2003
Sure Microsoft should do some more shopping.
It´s a buyer´s market since so many software companies aren´t doing so well. You can get top-talent at bargain prices. While the economy´s in the tank, Microsoft can assure themselves of a great future if they can scout the proper talent.
Even with Rare and Bungie, you need more top titles. Microsoft should acquire Visual Concepts rather than Sony. I mean Inside Drive sucks and Fever isn´t as good as Sega´s stuff. Why not buy Visual Concepts and integrate the Fever and Inside Drive with them? Or have the Microsoft guys focus on other sports.
Just a thought ...
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kurnlx
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Posted 1/24/2003
I agree, Microsoft does need to focus on obtaining talent. But if you recall, Sony used aqusition tactics to gain ground on Sega and Nintendo in the mid-90´s. If they weren´t buying developers whole, they were aquiring exclusivity deals to proven titles such as Tonb Raider and Resident Evil. So microsoft would be justified in wanting some leg-up in this early war of consoles.
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caddysittinon20s
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Posted 1/25/2003
wow, finally some intellegient posts, and also, i enjoyed the article as well. (everyone except fu chad).
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SuP
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Posted 1/25/2003
Yes sega would loose money if it focases on the xbox. But more people would buy the xbox ending up with more games being sold which is exactly what microsoft wants. meaning the userbase would increase
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Evil1
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Posted 1/25/2003
Back in the day it might of been about buying talent. But unfortunately the mass-market has pushed companies like MS into buying franchises and names, that´s it. People flock to crap as long as it has the name on it, as is being shown for the last five years now and it´s not going to change anytime soon. So I belive this is MS´s only way to survive and not let Sony run away with a monopoly on the console market. Which will happen if they are not at least caught up to this generation. But on the other hand, let´s not see MS go up and beyond and become this future one-player giant. Well, nah, I don´t care as long as their hardware kicks ass. I wouldn´t of cared about Sony so big if their hardware kicked ass either. But...
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LoSt-SoUL
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Posted 1/26/2003
Ubi Soft would be a good one, although they vavour the Xbox anywho, they should def. buy Splinter Cell (Although I thought they already had it), and stop it from coming out on PS1.3 and GC. Apart from it being the highest selling game, MS are becoming more of a laughing stock, after they pushed as "Only On Xbox". Although it will not play anywhere as good!

Sega is also a company that favours the Xbox....when it comes to there more adult games, which is good....GC can have Monkey Ball *laughs
A decent Sonic game would be though (hasn´t really been one for a while)

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Ammon
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Posted 1/26/2003
I think Microsoft buying Sega would be a great idea. For all you people talking about names and stuff, what bigger of a name could there be than Sega. Everyone knows sega. In case some of you dont know, up until probobly recently Sonic Adventure 2 was Gamecubes number one selling game, and with Panzer Dragoon sega is starting to look like it might begin to make a better name for itself. Sure Sega is in the business to make money too, but if they were smart they would sell out to XBOX now to confirm themselves $$$ for the future. Not just for the present. Plus, with the advantage of programing just on XBOX hardware they will be able to make better games easier and faster.
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TFC’s:Men Hunter
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Posted 1/26/2003
phock all that, Microsoft needs to do what they have to do.Buy what is most convenient for them.They ether should buy a company that sells, or a company that deliver great games.A combination of both would put even more affect to the blow.

->OnlyOn[x]365<- .
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Wriggler
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Posted 1/29/2003
Yes Sega would be a nice buy for Microsoft and everything. It would gain them recognition, it would get a few good games under their belt etc.

BUT if Microsoft bought Sega and guaranteed there to be no more Sega consoles, accessories, multiplatform games, or creativity... would you still think as much of the XBox? Mr Joe Public would start to see Microsoft as the evil conglomerate again if they devour too many nice development houses. I think Rare was pretty much the line, and they were lucky not to cross it. It paid off in publicity as well as exclusive games and dev teams.

MS buying Vivendi? That´s another matter... Two nasty conglomerate´s going at it? Bring it on! Just leave Sega out of it...

Wriggler
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SuP
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Posted 1/31/2003
whats wrong with buying another company like sega or rare. Microsoft has the best public relations. They´re seen as quality over quanity which is what they want. And it won´t be seen as devouring the company if the games keep their high quality
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UpInYou
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Posted 2/1/2003
MS should just come out with something more original.
Like buying all the companys and making the most universal game ever;


UpInYou!
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Magicdog
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Posted 2/2/2003
Chad whats a matter you a fraid the Xbox will get all of the good games,and not your beloved P/S2? Oh well lifes a bitch,and if M/S is inclined to buy more developers,and keep more games exclusive to the Xbox I say go for it!! Oh Chad I dont think you have to worry about M/S cutting them selfves short on money anytime soon!! The only thing you may have to worry about is not seeing a game you want on the P/S2 one of these days!!!!!!!!!! But not to worry Chad I dont see M/S going on any buying craze anytime soon!! They´ll pick,and chews the companys,and talent that will give them the most bang for the buck,and thats why M/S makes money,and keeps makeing money!!!











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UpInYa
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Posted 2/3/2003
Yeah thats right "Chad",Microsoft should just buy them all.So shut your face and act like you know about business.MS is doing what any other company would do if they had their kinda power foo


UpInYou!
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caddysittinon20s
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Posted 2/3/2003
haha, that post i had earlier about seeing some good posts just went out the window,lol. j/k j/k
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UpInYou
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Posted 2/4/2003
we understand caddysittinon20s, that last post of yours really did mess it up -


UpInYOU!!!
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david hearn
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Posted 2/8/2003
IF i where working for a software developer and microsoft came to me asking me that i would come and work for them. all they really had to do is say we will set you up for life. and then ofcourse i would say as long as if i get a brand new car of any kind when ever i wanted it i wouldn´t care what the hell you did . SHOW ME THE MONEY !

But seriously to have as much power and money as microsoft has is just plain evil. Me personnaly i love the monopoly microsoft has i love the evilness if you will.

For everyone that reads these reviews keep on eye for me in the next ten years my name is going to be bigger then bill gates ever could imagine.

speaking of bill gates i have his only match thus far and he´s not even a real person. if you have ever watched the movie antitrust we all know that Gary Wiston is Bill Gates rival. he the character even states in the movie "Bill Gates , Bill who?"

but the real threat to him is me, so watch out bill i´m comming for you.

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d"argo
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Posted 2/9/2003
nothing to do with games,but a little note to those that havent seen the great series that is FARSCAPE.catch it on sci-fi channel,because its the last season so we need to boost ratings to get more.its brilliant television.or visit www.savefarscape.com
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RaistlinN16
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Posted 2/11/2003
I think MIcrosoft should buy Ubi-soft, whatever the price. Just to make sure PS2 doesn´t get Splinter Cell would be worth it. That is MIcrosoft´s biggest game right now. Ubi-Soft makes other great games too Ghost Recon ruled, but now Nintendo is getting.So basically all of Microsoft´s games other than Halo is non-exclusive.
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bighair
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Posted 2/15/2003
Right now i have to say that sony owns the nation wide gamers poll. Xbox is completely better but who is incharge of there avertising? There key problem is video game customers need for game hype. Xbox team needs to take some lessons on hypeing up there products if they want to be #1. they need to look into buying a great media & sales man. Sega is no great promotter they make kick @ss games but all there systems failed because of lack of avertising. xbox needs to take some lessons on there mistakes and not follow them. So to the article i would have to dissagree microsoft has the money use it. Buy any of the top programmers and or developers. snach up any good company it can its going to take a hole lot more to dethrown sony than they expected.
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Magicdog
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Posted 2/19/2003
Hey Chad whats the matter you to lazy to put something new up here? Or maybe we got lucky,and you went to a P/S2 site where you´d be much better suited then on XBOX365!!!!
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jedi blackbox
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Posted 2/20/2003
i think sega would be cool to come on board.just imagine panzer dragoon orta 2,3,4,5...and we do have some pretty good sega games comin our way.virtua cop 3,outrun 2,spikers etc.id like to see a new 2-d sonic game done to mutts in xbox graphics.how bout it sonic team.
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ryo hazukis fan
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Posted 11/4/2004
why dony microsoft buy sega nintendo and sony or atleast nintendo or sega if they would buy sega for instance and get shenmue 3 for xbox 2 give some american style songs plus the sega songs giving the consumers more plus marketing this one game which should be marketed well and also make the game bigger than it was planing to already be by getting segas overworks team and wow and hitmaker team and sonic team to develop extra stuff and levels for it like cool lighting effects which sonic team is good at and wow to make licenced cars in shenmue 3 which can be bought and then driven anywhere in and cool sonic theme parks to enter and much more quests and cool things like market many companies things like companies like pizza hut subway timex pepsi and get plenty more companies wanting marketing microsoft could make this possible plus this then would make more stuff in the game and make it so much longer and also ryo hazuki actually eating these meals subway and others im not saying turn the game into an add but to get so much longvivety in it and great marketing sales and man would it sell think of the opennings car chases chasing lan di in a cool bumper car and porche and a massive truck and then lan di chasing him in a plane helicopter and cool adds for existing sega games like in blimps imagine a sonic blimp with sonic in it then ryo seing it then going into wallmart then going hey cool today is the release day lets buy it and then buys xbox 2 and buys a game then he plays it as you see him playing and also they can get adds of there own games through the shenmue 3 game like even play little demos while at the same time making revenue of wallmart and then entering a mall think of the people wanting marketing and then if microsoft got appaloosa interactive the creator of ecco the dolphin to make lots of malls to enter miami beach type juice stands and environments such as babes to talk to and take home for some more advertised juice and coffee the posibilities are limitless come on shenmue 3 come to xbox 2 please
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CHARMED
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Posted 11/11/2004
СОСИТЕ ХУИ!
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