Electronic Arts Acquires Social Gaming Company Playfish For $400m

by amyellensoden | November 9, 2009 at 03:42 pm
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Electronic Arts (EA) has acquired the rights to Playfish, a social gaming company in a deal that could be worth up to $400 million. This should prove to be lucrative for EA as Playfish has already gained great popularity on MySpace and Facebook with online games like Restaurant City and Pet Society.

EA's interest in expanding its focus to social and digital gaming lead to Playfish: a widely successful provider for online and wireless games. The popularity of social gaming has grown recently, a trend that has not gone unnoticed by EA. They're looking to become a frontrunner in terms of social entertainment.

EA will pay $275 million in cash and $25 million in equity for the company. In addition, if Playfish achieves certain “performance milestones” (aka continues to grow), the price tag could go up to a full $400 million.

With over 150 million downloaded games from platforms such as MySpace and Facebook, and approximately 60 million active monthly users, Playfish's current popularity will be invaluable to EA as they expand their range to social and online entertainment.

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Mritunjay

I am now a bit confused about the type of "game" they are playing.

Reports indicate the co. is in loss and is going to shed 1500 jobs! Seems the co. is cutting cost on employees and new products while piling up products that already have a standing in the market.

Electronic Arts Inc.'s (ERTS) fiscal second-quarter loss widened as the market for videogames remained weak, prompting a weak fiscal-year outlook and another round of cost cutting.

The company said it will cut 1,500 jobs, or 17% of its workforce, mostly by March 31, in a restructuring aimed at trimming at least $100 million in costs. Most of the cuts, about 900, will come from development, with 500 from publishing and label support and 100 from corporate. The plan will result in charges of $130 million to $150 million. The company currently has about 9,000 employees.

EA also has cut out "the bottom third" of its games in development in order to focus on titles with a much better chance of being blockbusters, executives said.

"Retailers remain cautious and report that foot traffic remains slow," EA Chief Executive John Riccitiello said on a conference call to discuss the results and guidance. "Various digital sectors are performing well, but the packaged sector is under pressure."

He added he remains "cautious" about the rest of the year and that October was another down month for the videogame business.

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