Take-Two Gains Ground on Electronic Arts

When it comes to sports video games, Electronic Arts (ERTS Quote) rules. But some analysts see Take-Two Interactive (TTWO Quote) becoming a serious challenger to the throne.

That's because Take-Two is using cut-rate prices to take on EA -- a plan that has boosted sales of its ESPN NFL 2K5 game, which Take-Two co-publishes with Sega. Analysts fret that EA will have to resort to discounting prices on its own sports games -- or risk losing sales to Take-Two.

"I don't think [EA is] accustomed to competing on price. I think they're really confused as to what to do," said Michael Pachter, who covers the video-game industry for Wedbush Morgan. But "if EA doesn't cut their prices, they're going to have real trouble," Pachter added, projecting that the video-game giant could lose up to $40 million in sales to Take-Two this holiday season -- about 2.5% of EA's expected December quarter revenue. ...