The announcement that top videogame publisher Electronic Arts was buying leading US mobile publisher Jamdat sent shockwaves through the mobile games industry, and the dust from the deal will probably not settle for many months to come. Overnight, the landscape of the industry changed - and the consolidation race, which had come off the boil slightly in the preceding months, was back underway in earnest.
For EA, however, the deal was a logical continuation of its mobile strategy - or so claims EA Mobile's chief technical officer Lincoln Wallen, speaking to MobileIndustry.biz in this exclusive interview. In this first half of the interview, Wallen discusses the thinking behind the Jamdat deal and the ongoing process of integrating the two companies; check back tomorrow to read more about EA Mobile's outlook on the market as a whole, and what its strategy for the coming months andyears looks like.
It doesn't reflect any change. It's simply a way of implementing the strategy that we've been talking about all along. It's always been our goal to attain the same position that we have across other platforms on mobile - as the leading publisher - and to do that pretty quickly. The acquisition of Jamdat puts us in a very good position to realise that aspiration.
I wouldn't say faster; we wanted to get there fast, and acquisition was always one of the tools which we were in a position to use. We've always been continually assessing that. I think the particular fit that we discovered between Jamdat and EA was very strong, very complementary, so it made sense.
Integration always takes time, but I think we're off to an extremely good start. A lot of planning has gone into it, so from day one we were able to begin executing the integration. It's a lot of work right now, but it seems to be coming out fast enough and practically enough.
Certainly, there are only a couple of locations - usefully, Jamdat's headquarters for Europe is in the UK, and their headquarters for the USA is in Los Angeles, so actually it could have been a lot more painful than it actually was. It's been going extremely well.
No, not at all. In fact, that was one of the strong points about the fit - they were very complementary, everything from title mix, with Jamdat being extremely strong in the casual, puzzle area, which is a very significant offering in mobile today, and EA being relatively underrepresented in that category. EA was extremely strongly represented in the branded, mainstream games industry portfolio, and Jamdat had, perhaps not less of an emphasis, but certainly the availability of those brands is dependent on third-party relationships.
EA, having been building the business internally for less than a year, certainly much of its operational strength was still in its infancy. In that area, we had a strong partnership with I-Play simply as a recognition of that fact - that it's not possible to build out an operational side of this type of business instantly. We needed help. Jamdat have spent years in the market building up that sort of capability, so that's an immediate complement to our operations.
At the management team level, EA Mobile was building quite carefully, and therefore had quite a small management team. Jamdat comes with a very strong and proven set of senior execs in the different areas, which then complement what we have internally.
So in all areas - organisationally, operationally, title and IP, and to some extent market share as well - complementarity was the watch-word, and that was a significant factor in our enthusiasm for the deal.
No, we're still in business with I-Play and they're still a valued partner of ours. They still provide the sort of operational support that we need. Remember, I-Play's strength is very much in Europe, and Jamdat's strength has very much been in the US. So while of course it means that we're more self-sufficient than we were pre-acquisition, it's still the case that we have enormous operational needs.
Well, it does in principle, but both Jamdat and EA have placed Europe at the centre of their focus. Jamdat was already building a strong deployment centre within Europe, so we inherit that.
We're always evaluating options, but practicalities probably give you the answer to that. It's very important that the operation move forward, that the integration happens and that we come out of the blocks really strongly - so our focus is on the integration right now.
Organically is perhaps not the right word. When we talk about Jamdat being strong in the US, we're talking revenue terms, and obviously personnel terms - but the complement isn't quite the case. It's not that they have been weak in Europe; they haven't enjoyed as great a revenue success in Europe, but then their attention and focus and investment was turning to the US. They followed a deliberate strategy of contentrating on and dominating the North American market first, and then turning their attention to Europe.
That process was well underway - the investment in Europe has already been going in. Now we're hoping to realise the benefits of that in this coming year. A strong focus is definitely on Europe.
There's casual, and then there's Pogo - which is obviously a casual franchise, but is a very strong casual franchise, which has very strong franchise values and construction. The Pogo brand isn't very well known in Europe, although it is in the USA, whereas the strength of a title - like Tetris for example - is very significant from a consumer point of view.
The integration involves also finding the right mix of content and the right branding propositions to attract the consumer. There will be many of those - but the casual side is an area that we had identified as a significant component of revenues in mobile, and I think now we feel that we've got not just brands, but we've got studios, and people with the expertise of having built and delivered world-leading casual games to move forward with. I think we're well-set to exploit whatever IP and whatever branding the company owns in that strategy - so expect to see some innovative solutions to that sort of question.
All of these things are currently under review. Integration across platforms is something that we think the market will evolve to - so it's a very important thing to come about. It's not quite there yet, but certainly, looking into the future, we expect most mobile propositions to evolve multi-platform access.
So no, it's not right to say that we're not looking at the integration across multiple platforms. Obviously there are various barriers there based on licenses and just sheer practicality, but if you go out far enough we see those things as very highly integrated.
Obviously, being solely focused on mobile content, Jamdat's technological focus has been on the mass market products and their creation and deployment. They brought a number of development and deployment technologies which are completely complementary to the technology and tools which EA can easily build itself, such as 3D tools and so on.
I think there's no overlap there - it's just that now we have a set of solutions for the broad range of targets that we're addressing in mobile, from both companies coming together.
Yes, I think that's fair to say. Again, having been in the market for a number of years, Jamdat had evolved more control over development and more control over deployment. They had a range of toolsets that actually streamline that process and make it more efficient. That's something that EA itself didn't have; we hadn't been doing this for long enough to be able to evolve that sort of infrastructure.
That instantly became available, and helps with our broader deployment and more effective development on mass-market products.
I think that conversely, coming into the market as a long-term proposition has allowed EA to focus and invest on the next-generation experience, and that clearly sets the combined operation up very well for strong performance today, but also extremely good positioning for what we expect the market to evolve towards, almost immediately. I think we've now got all the bases covered, which is very good.
I think, as we've discussed before, EA's engagement with the mobile market has been measured, and characterised by stages. First of all, we licensed IP to Jamdat and to I-Play; secondly, we evolved and began to build our own internal division to address the market and to understand the nature of it and how to organise a company around the platform. Now, this step is to accelerate that, our ability to address the market.
I think that all of that simply shows an increasing understanding and commitment to the market, and obviously that comes from an assessment of its potential. I think the acquisition should be seen quite rightly as an indication that EA thinks mobile games are a big deal - a really big deal. The size of the deal is simply down to the fact that those are the market conditions today; that's the expectation of this market. Jamdat was the number one publisher in North America, and with the revenues they'd posted, they justified the step the company took.
The operational fit means that we expect to be able to accelerate that. It's sort of one plus one equals three; all of those things, I think, are reflected in the step that the company has taken.
First of all, we're always evaluating routes to improving our performance and improving the business - and being a company with no debt and a large cash reserve, acquisition is always on the agenda. That's a real statement - it's always on the agenda. The question is, is there the right target, is there good complementarity, will it be an accelerator - all these questions need to be asked continually of different possible acquisitions. Then, it's all got to come together with the willingness of the target to actually want to do a deal. All of those factors coming together at one time is unusual, but when it happens, being able to act decisively is something that characterises EA.
You're just seeing an example of that. I don't think it's fair to characterise it at all as reacting to factors other than our own strategy to achieve certain impact on our own business through the mobile platform in a certain timescale, the coming together of all these factors, and the particularly good fit that Jamdat represents to EA - both in culture, management, technology, IP... It's actually quite striking, the fit, and that's interesting and not often the case.