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PopCap acquisition accelerates EA's digital business to $1bn

Wed 13 Jul 2011 6:58am GMT / 2:58am EDT / 11:58pm PDT
BusinessPublishing

Publisher's $750 million swoop was a "full and fair price"; Other companies were looking to acquire Peggle creator

Electronic Arts' acquisition of Peggle and Plants Vs Zombies creator PopCap means the publisher now boasts a digital business worth $1 billion, according to CEO John Riccitiello.

In an email to staff following the announcement of the deal, Riccitiello said the company's $750 million swoop was a "full and fair price" for the casual games firm.

"Acquiring PopCap extends the leadership we have established since the investment in our flagship casual site, Pogo. It adds to our momentum on the mobile and social platforms and accelerates us toward our goal of achieving $1 billion in digital business in FY12," he wrote.

In recent months PopCap has received a lot of offers, including bids from other game companies

John Riccitiello, EA

"PopCap adds to our portfolio some of the best casual intellectual property in gaming hit games that are growing fast on mobile and social platforms. Where some companies are built on a single hit, PopCap has made lightning strike again and again. They have built a powerhouse of evergreen casual properties and proven their ability to create new hits again and again on the fastest growing platforms mobile, tablets, PC, online and Facebook."

He continued: "There is no denying that what we announced today was a business transaction a full and fair price for a company that has demonstrated they can sustain success and transform to meet and set the pace for high-growth gaming platforms. The deal is compelling."

He added that other companies had been looking to acquire PopCap, but the company chose EA from a number of potential suitors because of its working culture.

"In recent months PopCap has received a lot of offers, including bids from other game companies," said Riccitiello.

"Ultimately, PopCap chose EA. Their leadership team tells us that in the end, the decision swung on their recognition of our culture -- the respect that EA shows for games and the teams that create them."

While PopCap games are available on multiple formats, the deal makes Electronic Arts the number two publisher on Facebook behind Zynga, with PopCap games pulling in 17.5 million monthly active users.

11 Comments

Graham Simpson Tea boy, Collins Stewart

219 7 0.0
You are witnesses to massive EA shareholder value destruction.

Posted:3 years ago

#1

Mary Hilton Community Manager, Reclaim Your Game

38 20 0.5
EA seems to be spending money like drunken sailors on the premise that all gamers are going mobile and social gaming.
I'd be hedging my bets on that one, personally.

As for the quote:

"Ultimately, PopCap chose EA. Their leadership team tells us that in the end, the decision swung on their recognition of our culture -- the respect that EA shows for games and the teams that create them."

How long will it take EA to lay off scores of people and shut down entire areas of the new acquisition?
They're infamous for doing just that-buy a company out, and then shutting it down, absorbing whatever assets they want, and throwing out everything else. They'll destroy the value of the new acquisition faster than the speed of light.

Posted:3 years ago

#2

Gavin Matheson Creative Video & Marketing Director, Big Splash Creative

4 0 0.0
I believe this is a good deal. Combined with Tetris and Playfish, this deal near certainly put EA as the #1 company for delivering casual content on digital formats. However, the only thing that will hamper this acquisition is EA themselves. This is because EA have a particular habit of eclipsing their own great titles - which other publishers would scream to have in their catalogue - by focusing their sales & development teams too much on their sure money-makers such as FIFA, Need for Speed, Tetris and The Sims. This is obviously not a recent habit as it has plague them for over 20 years, hence the nick-name "EA-Borg". Sure, things has changed a bit now as the company has been taking more risks with their EA-P range (which are treated differently from their internal offerings), but we cannot forget that EA has an incredible catalogue of titles which appeals to all ages that has disappeared from the face of the earth, thanks to their habit.

It would be very interesting to see how they will promote and differentiate their entire casual catalogue with all of POPCAP's titles in the mix. Even better, it would be interesting to see how "long" they will promote their casual offering. Peggle, Plants Vs Zombies are great games but everyone knows that what makes POPCAP the company they are now is Bejeweled, a title that has been in EA's mobile camp but has been receiving sales decline year on year thanks to their habit.

None the less, this is still a great deal to which I think will really benefit EA, but let's see what they will do about it as history evidently proven about the company.

Edited 1 times. Last edit by Gavin Matheson on 13th July 2011 11:58am

Posted:3 years ago

#3

Raf Keustermans CEO, co-founder Plumbee

28 2 0.1
@Graham - can you explain in more detail?

Posted:3 years ago

#4

Matthew Gallagher Studying Multimedia Technology & Design, University of Kent

1 0 0.0
Ive already pre-ordered plants vs zombies 5 (turbo edition)

Posted:3 years ago

#5
Great, all the games will be exclusive to Origin and Pogo...glad I got them when they were just PopCap. I bet the studio gets disassembled and everyone gets laid off in a year or so when EA realizes it has over-extended its reach with all of its recent purchases (great quote up there by Mary: spending money like drunken sailors).
We've seen it happen to so many in the past. I guess big fat stacks of cash still trump common sense and learning from history. A sad day...

Posted:3 years ago

#6

Francis Cermak Website Administrator, HeavenGames LLC

17 3 0.2
Heh, Jeff Green works for EA... again!

Posted:3 years ago

#7

J. Goldmaker Community Management

26 0 0.0
Now they can afford to give away cars on Bejewelled Blitz again!

Posted:3 years ago

#8

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Its an interesting feeling to see people you worked with at the start of your career become many many million-aires.

Jason Kapalka worked very hard for this. I can't say I'm not a bit jealous... but I'm also VERY happy for him.

Posted:3 years ago

#9

Ashley Tarver Indie

41 1 0.0
Make a few really successful games. Sell up to EA for millions. Leave. Create studio. Make a few really successful games. Sell up to EA for millions. Leave. Create studio. Make a few really successful games. Sell up to EA for millions. Leave. Create studio ...

Money pit!

Posted:3 years ago

#10

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Uh huh... if you can consistently make successful games.

Anyone who can do that in the game industry *will* be rich.

Posted:3 years ago

#11

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