PopCap Games To Be Acquired For $1 Billion+
Update: We've heard from multiple sources that the buyer is Electronic Arts. — Huge news in the gaming world: PopCap Games, the company behind such hits as Plants vs Zombies and Bejeweled, is in the process of being acquired …
Context & Ripple Effects
Electronic Arts has been rebuilding through acquisition rather than organic development: it paid $860 million for BioWare and Pandemic Studios in 2007, launched a hostile tender offer for Take-Two in 2008, and signed a five-year Facebook Credits deal in 2010 that gave it direct billing rails inside the largest social-gaming platform.
PopCap is the kind of asset that deal history points toward: Bejeweled and Plants vs. Zombies are evergreen casual hits with audiences EA does not reach through its core console business. As of June 22, 2011, multiple sources point to EA as the buyer of a deal worth over $1 billion — a figure that would exceed the BioWare/Pandemic outlay — but the companies have not confirmed anything publicly.
First-order effects
- Electronic Arts would take ownership of Plants vs. Zombies and Bejeweled, adding two proven casual franchises whose players sit largely outside the console audience EA built its business on.
- At a reported $1 billion-plus, the purchase would be larger than the $860 million EA paid for BioWare and Pandemic in 2007, marking a step up in how much EA will spend per studio.
Second-order effects
- Zynga and other social-game specialists would face an incumbent holding both evergreen casual IP and a confirmed Facebook Credits agreement — owned content combined with platform-level billing.
- Independent casual studios become re-priced acquisition targets overnight, as publishers demonstrate they will pay nine figures rather than attempt to grow comparable hit factories internally.
Third-order effects
- If the pattern holds, the major publishers consolidate the casual and mobile segments by buying established studios instead of competing against them, shifting industry value from retail distribution control toward ownership of franchises delivered directly over platforms like Facebook.
The trend: Traditional console publishers are acquiring casual and mobile game studios outright to own hit franchises and their direct-to-player distribution, rather than building competing pipelines themselves.