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EA buys PopCap for $750 million

Tue 12 Jul 2011 9:22pm GMT / 5:22pm EDT / 2:22pm PDT
BusinessPublishing

Madden publisher make huge casual games move buying Plants Vs Zombies and Bejewelled creator

Publisher Electronic Arts is to buy social and casual games giant PopCap Games for $650 million plus $100 million in stock.

The deal is expected to close in August 2011 and could include additional payments of $550 million over two years.

"EA and PopCap are a compelling combination," said EA CEO John Riccitiello. "PopCap's great studio talent and powerful IP add to EA's momentum and accelerate our drive towards a $1 billion digital business. EA's global studio and publishing network will help PopCap rapidly expand their business to more digital devices, more countries, and more channels."

"We picked EA because they have recast their culture around making great digital games," added David Roberts, CEO of PopCap. "By working with EA, we'll scale our games and services to deliver more social, mobile, casual fun to an even bigger, global audience."

The publisher said that PopCap properties such as Plants Vs Zombies, Zuma and Bejewelled will be heading to new platforms and markets as a result of the deal.

"PopCap has a proven financial trajectory with sustained revenue growth and double-digit operating margins," offered EA CFO Eric Brown. "On a non-GAAP basis, this deal is expected to be at least ten-cents accretive in fiscal year 2013."

11 Comments

Eddie In Project Manager, Ndoors

15 0 0.0
There goes the neighbourhood

Posted:3 years ago

#1

Alan Pliskin

2 0 0.0
"Yeah... That's how we do it in my neighborhood b!tch"

Posted:3 years ago

#2

robert troughton UK General Manager, Epic Games

222 96 0.4
So with one hand the publishers invest in currently successful social games studios and with the other they close previously successful AAA games studios. This is madness... and very typically short sighted. They will need those AAA game studios again when social jumps to the next level. I just don't understand this...

Posted:3 years ago

#3

Martyn Brown Managing Director, Insight For Hire

140 51 0.4
I figure the move is largely figured around stimulating the stock price and general investment, such is the super-high-level consideration of the market. Hence so very many reactive cuts and then reversals further down the line. IMHO EA probably need to lose more people from the boxed publishing side since that largely appears to be losing $ hand over fist despite a long string of successful and highly polished AAA titles.

Am aware Popcap are extremely profitable, but still it's an eye-opening figure for casual titles and maybe of their 5-6 IP's unless there's a bunch of hot things under cover. I also think Facebook is vulnerable to google+, so as ever it'll be an interesting couple of years or so. EA don't (as far as I can see) have an incredibly positive track record of making acquisitions work (or so it seems) for them, although obviously as a Popcap shareholder, it's happy days I guess. :) Well done them.

Posted:3 years ago

#4
I said this before in another comment when this was rumoured but I think it is worth repeating:

"We're looking at massive disruptive influences (iPhone & Facebook are just 2) which is causing re-valuation of companies like PopCap who have a longer track record than most, have consistently made hit games, have an existing loyal customer base and have historically high ARPUs. These companies are very SCARCE. If EA could splash $800m on a hardcore games studio like Bioware/Pandemic a few years back, it makes perfect sense in the current market for PopCap to command an equally fantastic price."

Posted:3 years ago

#5
I think it is a good current acquisition. EA cannot afford not to be in the digital social gaming biz. Pop cap makes perfect partnership

Posted:3 years ago

#6

Peter Ohlmann Technical Director

22 6 0.3
EA doesn't make profits since 2007, but they still acquire whatever company they want. I don't really understand where all the money come from.

Posted:3 years ago

#7

Shane Sweeney Academic

398 413 1.0
Well EA started going "good" around 2007, so lets hope this venture breaks the "nice guys finish last" curse.

Posted:3 years ago

#8

Julien Donguy Social Gaming Integrations Manager, Scoreloop

1 0 0.0
$650M in cash is 41% of the cash and equivalents item on EA's 2011 balance sheet if I'm not mistaken, I guess they really won't be making many more "big" acquisitions.

Posted:3 years ago

#9

Alan Wilson Vice President, Tripwire Interactive

29 30 1.0
Julien - nice spot. If I was an investor in EA, I'd be screaming right about now... EA have been bleeding cash for about the last 3-4 years, from memory.

Posted:3 years ago

#10

Wayne Gibson UK Marketing Manager for GameKrib.com

69 8 0.1
This no doubt will also be part of EA's strategy to bring more digital content to Origin.

Posted:3 years ago

#11

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