EA buying BioWare/Pandemic for $860M

[UPDATE] Superdeveloper scooped up by megapublisher for a staggering sum, deal to close in January; deal covers 10 IPs, including Mass Effect, Mercenaries, and unnamed Wii and DS games.

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A week jam-packed with Nintendo news was overshadowed today by an announcement that sent shockwaves through the North American game industry. Thursday afternoon, top publisher Electronic Arts announced that it will acquire VG Holding Corp., owner of BioWare/Pandemic.

VG Holding Corp. was formed in late 2005 when esteemed Canadian role-playing game studio BioWare formed the aforementioned "superdeveloper" with Californian shop Pandemic Studios. The union was funded by Elevation Partners, a venture capital firm with rock star Bono on its board, and brokered by then-Elevation board member John Riccitiello, who became BioWare/Pandemic's CEO.

At the time, the deal was seen as a break from the traditional developer-publisher relationship, which sees the former beholden to the latter for funding. However, when Riccitiello returned to his old job as EA CEO, many wondered if the move might presage a takeover bid of BioWare/Pandemic. These suspicions were further raised when EA agreed to distribute the Pandemic shooter Mercenaries 2: World in Flames under its EA Partners program.

When the BioWare/Pandemic deal was announced, Elevation made much of the fact the union represented a "combined investment" of more than $300 million, including future funding. Today, the company got a massive return on said investment, with EA paying $620 million in cash to the stockholders of VG Holding Corp. In addition, the publisher will issue an additional $155 million in equity to unidentified VG Holding employees, as well as assume $50 million in outstanding VG stock options, and will lend VG $35 million to fund the transition.

In return for paying a princely sum, EA becomes the owner of both BioWare's and Pandemic's original properties. Jade Empire, Mass Effect, and Dragon Age are among BioWare's original IP, which does not include such licensed hits as the Dungeons and Dragons-based Neverwinter Nights, Star Wars: Knights of the Old Republic, or the DS Sonic RPG. BioWare is also working on an unnamed massively multiplayer online role-playing game. Pandemic is best known for the Full Spectrum Warrior and Mercenaries series, as well as the THQ-owned Destroy All Humans! and LucasArts-owned Star Wars: Battlefront franchises.

However, EA was relatively cagey about which BioWare/Pandemic games will become EA properties. The announcement only mentioned one BioWare (Mass Effect) and two Pandemic games (Saboteur, Mercenaries) by name. However, it did say the two studios have "10 franchises under development, including six wholly owned games."

Pending regulatory approval, EA's takeover of BioWare/Pandemic will be final on January 2008. Both studios will become part of the EA Games division, run by Frank Gibeau, with Greg Zeschuk and Ray Muzyka continuing to run BioWare, and Andrew Goldman, Josh Resnick, and Greg Borrud staying in charge of Pandemic. The two studios employ 800 people in Los Angeles; Austin; Edmonton; and Brisbane, Australia.

[UPDATE] In a conference call with analysts after the announcement, EA executives shed some light on the motivation behind the deal. Besides the impeccable pedigree of both studios, Riccitiello said that the "acquisition fills out a gap in [EA's] genre lineup," specifically the role-playing and action adventure markets. The executive also cited BioWare's forthcoming MMORPG as a huge opportunity for "further expansion into the MMO space."

Although the implication is that the BioWare MMORPG is an original IP, Riccitiello and his associates steered clear of saying so specifically. He did say that the deal will make EA the owner of the Mass Effect, Jade Empire, Mercenaries, Full Spectrum Warrior, and Saboteur properties. The executive also said that EA "expect[s] to bring 10 franchises to market in the next few years; six of which are wholly owned." [UPDATE 2] No mention was made of Dragon Age but BioWare reps confirmed with GameSpot that the little-seen title is moving forward in development, and is already in playable form.

Later, Gibeau said that number includes "many titles that have not yet been announced that we will be announcing in the near future." These include "several unannounced titles that are targeted both at the Wii and DS." The two studios' combined operations are expected to yield around four or five games each year for the next three fiscal years.

On the financial side, EA CFO Warren Jenson said that that he expects games from the two studios to generate over $300 million in annual income during EA's 2009 and 2010 fiscal years. (EA's 2009 fiscal year begins on April 1, 2008.) He later said that number would increase once the BioWare MMORPG launches "in the back half" of that period.

For more on the EA-BioWare/Pandemic deal, read GameSpot's interview with BioWare co-CEOs Greg Zeschuk and Ray Muzyka.

Discussion

1412 comments
Granpire
Granpire

@Adversary16 I was serious. :P But Dragon Age 2 aside, I still stand by my statement for the most part. I still like Mass Effect 1 marginally more than 2, but it's still decent. The Old Republic seems to be coming along nicely, and nothing about Mass Effect 3 is raising any red flags for me. I think EA's hindering them just a little, but they aren't destroying Bioware. There was a huge overreaction at the time, and there still is, for many.

Adversary16
Adversary16

@Granpire That's a very good joke! For a moment, I thought you were serious! :lol:

Granpire
Granpire

It's interesting to look back now, at all the negative comments about EA, and we can see that they really didn't bring down Bioware at all... At least not from what I can tell.

joesguy
joesguy

Well that's business for you. And sadly, the video game industry is run on business ethics, not customer service ethics. The only silver lining here is that EA will continue to screw up until the gamers decide to boycott their crap. Then they'll have to pull their act together or lose money and shareholders. Even that's a thin chance though.

Mr_Versipellis
Mr_Versipellis

This makes me want to be sick every time I think about it... --Ex-BioWare Fanboy

hell4444
hell4444

man oh man Ea's gonna buy pandemic dats one juicy chunk of news

Doctor_Wario
Doctor_Wario

I'm also extremely concerned about this deal. Not that I don't like EA, they have some good stuff. It's just that Bioware is hands-down the best RPG developer I've seen in ages, and I worry that EA will try to Buy and Fix the company like they have a few others. Usually this results in complete obliteration of the company altogether. Advertisements are also a big thing with EA, such the T-Mobile phone you use in Need for Speed Carbon. (T-Mobile. Seriously, they could have at least concealed the ads just a little...) If I see a Cingular reference in Mass Effect 2, that'll be a sign EA's been there. And honestly, I wouldn't be surprised. I just hope that EA won't try to fix a company that, without a doubt, is not broken.

xxLordDavidxx
xxLordDavidxx

... bugger. This is not good news. EA suck, I haven't seen a single good game from them in absolutely ages. And BioWare is one of the best companies around, EA is just going to pull BioWare down until they are also crap - which will be a terrible thing to witness. I hope to god EA don't mess this up.

Bluestreamz
Bluestreamz

The hell with EA. The simple fact that they exist is already lowering the bar on game quality. See the FIFA example: Since EA can't make a decent soccer (football) game to compete with the PES franchise, Konami itself is lowering the quality on its soccer game (PES 2008 is a disappointment). I might as well dust off my snes or genesis (megadrive) and play some good ol' EA titles, like Desert Strike or FIFA 97... If I could turn back time...

ascalon94
ascalon94

i wish bioware wasnt being bought out they have made great rpgs for a long time. I hope EA can keep the good rpgs going maybe a online KOTOR3 or MASS EFFECT 2. If they screw up someones going to open up a can of wup ass. Does anyone agree?

jonstratton
jonstratton

To be fair, EA games have improved recently. However I feel that's due to them buying out other Companies and getting the talent with it. Atleast Mass Effect is finished and we will see a great game without any EA influence, lets just hope ME 2+3 aren't buggy and rushed... Just hope the same thing that happened to Kotor 2 doesn't happen to ME 2. Another thing i'm worried about is how much experience do EA have in making RPGs?

batosaims
batosaims

bungie is only a second party developer like naughty dog is ms still has a majority share in them so i doubt e a can buy them out and since ms has the exclusive rights to mass effect it will never be on the ps3 the mosy anyone can hope for is a pc version down the line

Orthrand
Orthrand

This is how EA has managed some turnaround, its swallowed creative talent whole. But where will we all be 4 years down the line when a Bioware RPG, shock horror is a slow burner or too niche. Considering what happens to RPG studios if anything bad happens in a company, Black Isle, you'd think Bioware'd have some brains. But maybe theyll show some balls unlike the Black isle boys and stick together if it all goes south say when mass effect 2 has in game advertising for Anne Summers.

philby00
philby00

i guess on the one hand this means we can look forward to mass effect '08 and '09 with updated rosters. but maybe it also means it will come out on pc a lot sooner.

Beamish1990
Beamish1990

Any new Bioware RPG releases will now be awful, thanks to EA buying them out. They'll multi-platform everything, ruining any exclusive RPGs.

SapenNamen
SapenNamen

To Mercenary19, who said: "Uhh. Whatever, that's buisness. Not much you can do about it. There are always other companies that make good games. Lets just hope that bigger and more important companies like Bungie and Rockstar don't get bought out" Bungie and Rockstar. Bigger than Bioware. I guess they're older, too?

batosaims
batosaims

im just glad mass effect is remaining exclusive im sure microsoft saw this coming and has exclusive rights tothe game and maybe the trilogy

tsiper
tsiper

EA SUCKS!!!!!!!!!!!!!!!!!!!!!!!!

tbolt_88
tbolt_88

Nice time for EA to buy BioWare...right before Mass Effect comes out. This way they can slap an EA sticker on the cover and act as if they had something to do with the game.

raza3
raza3

ea game is good but i like in this game only need for speed

batosaims
batosaims

no jason ms still owns the license and has an exclusive deal signed in ink and beside ray mayzku has already confirmed its stayin on the 360 exclusivly

jaysonball
jaysonball

wow this is big news. mass effect to ps3 now?

Hadoki
Hadoki

I like the games from Bioware, but i don't no see this a good or a bad thing now...

PerfectDark0Fan
PerfectDark0Fan

So what are the chances of Mass Effect 2 if the originals great with Microsoft pulishing the original. I guess EA dosent get a good repitiation for RPGs the Bioware gets.

Devvy01
Devvy01

Is there anything they don't own now?

Mercenary19
Mercenary19

Uhh. Whatever, that's buisness. Not much you can do about it. There are always other companies that make good games. Lets just hope that bigger and more important companies like Bungie and Rockstar don't get bought out.

Ocram_Zepol
Ocram_Zepol

Meh. I just hope EA learns that porting = bad.

Dill_Doe
Dill_Doe

EA's gunna take over the world

rogue81
rogue81

That's EAs way of thinking: Can't make decent games on our own, we'll buy the people that can make them for us!

easy33
easy33

This is amazing..........I wonder how this will affect the way Bioware and Pandemic make their games.....if there is an effect.

musicaz70
musicaz70

Well... this is an awkard kick in the face to all gamers...

yugimasa9999
yugimasa9999

I hope EA won't buy ubisoft Montreal in the future....

Chickensoup911
Chickensoup911

Nooooo, this can't be happening. I hope I wake up soon.

SnuffDaddyNZ
SnuffDaddyNZ

NEWSFLASH! For people that thing this is a bad thing.... EA has been the official distributor of LUCASARTS products down under for a LOOOONNG time. Also, these two companies CHOSE to sell themselves to EA - that is NOT EA's fault.

-Laharl-
-Laharl-

**** you, EA. Why must you try to kill gaming?

death455
death455

I love the free market sometimes. Companies like EA use there money to buy creativity and then ruin it. They cancel out the effects of work work for there own greed.

DarthAsheron
DarthAsheron

THIS IS BULL SH**!, these guys are like soe, EA takes over all the companies, soe takes over all the mmos. I hope EA gets a crash and burn. Once they see how players react.... hopefully..... AND REMEMBER KIDDOS, EA'S MOTTO FOR ONLINE GAMES! "EA games!, patch everything"

RogueRazgriz1
RogueRazgriz1

will EA ever stop its "conquest" of every known developer? next thing we know, EA buys out Rockstar and Bungie

hazelnutman
hazelnutman

EA is slowly taking everything I love... No more BattleFront 2 I guess. As long as they don't take Naughty Dog or Insomniac Games, I'll manage.

PSdual_wielder
PSdual_wielder

I feel bad for the whole industry. Now whatever the stated of mass effect is in, the instant it comes out it'll become reduced to half finished according to the EA game rule. And a whole bunch of potetntially good games in the future will all be glitched with a bug that freezes the game on the unskippable EA games logo at the startup.

buljas_si_ti
buljas_si_ti

this is the end of good Star Wars based games... bye bye KOTOR 3...

bildo2020
bildo2020

This is why Valve and Steam rock. Forget the huge pricey publishers....develop something with a medium size publisher (if you even have too) and put it on steam! Long live digital distribution!

GoFeR24
GoFeR24

EA + BioWare = Apocalypse :(

Moloch121
Moloch121

 @Granpire  @Adversary16 Wow just 10 months ago you were hopeful and now TOR is going F2P they couldn't even hold onto subs for a year.