EA reels in Playfish for $275 million-plus

Publisher acquires social gaming specialist in deal potentially worth $400 million, adds Facebook games like Pet Society, Restaurant City to portfolio.

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[UPDATE] Shortly after the Playfish announcement, EA revealed it was laying off 1,500 employees--17 percent of its workforce--in order to save $100 million per year. The company also announced it was reducing its development pipeline by 50 percent and had canceled more than one dozen games to focus more on high-profit titles.

[ORIGINAL STORY] Electronic Arts has landed another big acquisition. Today the publisher announced its acquisition of social gaming specialist Playfish in a deal worth up to $400 million, as had been rumored last month.

Playfish and EA are now BFF.

The baseline acquisition price is roughly $275 million in cash, with an additional $25 million in equity retention arrangements. On top of that, Playfish's owners can earn up to an additional $100 million if unspecified performance milestones are met by the end of 2011.

Founded in October 2007 and based in London, Playfish games boast an active monthly user base of 50 million players around the world. Most of its titles are built on social networks like Facebook or MySpace, but the platform-agnostic developer also develops for the iPhone and Android, among other platforms. Among Playfish's biggest hits to date are microtransaction-driven games like Pet Society, Restaurant City, and Country Story.

Playfish will join Pogo as casual-focused EA brands. Beyond Pogo.com, EA's casual gaming portal has a presence on Facebook with a Hasbro-licensed Scrabble game. Its Facebook predecessor, the popular but unlicensed knock-off Scrabulous, was the subject of a legal battle.

One of EA's last attempt ventures into social-network gaming ended in failure. In 2007, the company picked up online karaoke community SingShot and turned it into its Sims On Stage site. That effort failed to take off and was shuttered earlier this year.

EA has a lengthy history of acquiring hit developers, though its post-purchase track record has been spotty. The publisher picked up Command & Conquer developer Westwood Studios in 1998, only to shutter it in 2003 after the disappointing debut of its sci-fi role-playing game Earth & Beyond. The previous year's acquisition of Maxis fared better, going on to create 2000's megahit The Sims and its similarly successful sequels.

The publisher also acquired Pandemic and BioWare in 2008 for a staggering $860 million. While Pandemic's Mercenaries 2: World in Flames failed to live up to its high profile, the publisher's investment may start paying off soon. Last week, EA launched BioWare's Dragon Age: Origins to critical acclaim and has the developer also working on the much-anticipated Mass Effect 2 for a January 26 release. Meanwhile, Pandemic's Saboteur is set to arrive December 8.

For more on Playfish, check out GameSpot's coverage of COO and cofounder Sebastian de Halleux's keynote address at the Game Developers Conference Austin in September.

Discussion

32 comments
xatman911
xatman911

I hope it pays well. It would be nicer if EA saved the workers and its now cancelled IP's instead of acquiring.

peewizzle
peewizzle

instead of acquiring a million bajillion companies...EA should focus more on improving whats in its lineup one of these days EA will hopefully stop producing CRAP, im getting fed up with sifting through the garbage to find 1 or 2 diamonds in the rough

Skogsmulle
Skogsmulle

Does this mean that I can play Pet Society and Country Story on my Xbox? (I didn't read the article)

pimperjones
pimperjones

social gaming specialist = free games that don't make money Yet another IT bubble swindle. Half these companies don't make any money, and have no real business motto. They are just in it for the hype and the quick turnaround. Open a company for 2 years and put social networking on the cover, rinse, sell for 300 million, repeat.

PublicNuisance
PublicNuisance

I guess EA was jonesing for a acquisition. I't like a junkie.

Makhdoom82
Makhdoom82

I am on level 27 on facebook yayyyy

SicklySunStorm
SicklySunStorm

Hmmm pretty dirty to be spending cash like that on a new acquisition when you can't even keep your current employee base. But that's business for ya.

pajamas
pajamas

Seriously, I played Restautant City but it does not seem profitable in any way. Ads are from Facebook itself, nobody will pay $10 for some items so that you have a nice eyeball as decor, or food items that you can easily trade with other players... And please don't charge facebook players to play Restaurant City, players will leave at such news...

Roque_00
Roque_00

This is wrong... Just wrong...

OtterX09
OtterX09

Okay, so EA cuts thousands of jobs company-wide, but acquires this garbage? God, how I hate big corporations. Dirty. Just plain dirty.

Koi-Neon-X
Koi-Neon-X ranger

I'm liking Playfish and I am really enjoying Farm Town and Restaurant City:) I'd say it's a good move acquiring Playfish.

lilmp89
lilmp89

EA gets hungry again, nomnomnom. Activision watches EA gobble up Playfish and gets hungry too. Activision nomnom too?

atwaxin
atwaxin

>EA is an idiot. >the games that the companies make there are decent and good (dead space, burnout..am i missing anything else?) >playfish f*****g sucks. why buy such a s****ing company and continue to ruin your own? IDIOTS

firehawk998
firehawk998

EA took a loss of $391 million then they fired 1,500 jobs. Meanwhile they bought a social gaming specialist( god knows what that is ) for $275 million nice work EA. Maybe you could have kept that $275 million in the company and have save those jobs.

Ivory-Dynamite
Ivory-Dynamite

Didn't they just fire a lot of people and what for this,come on.

binarypants
binarypants

I'm annoyed with this as I despise EA. I just bought $10 worth of playfish cash for restaurant city for a few slot machines and a brain in a jar and this news has me planning to abandon Restaurant City and anything Playfish entirely.

maverick_76
maverick_76

Well that is how business goes, you minimize your losses and maximize your profits. Overall I think EA has been successful and has put out some really good games but also they have certainly put out some stinkers as well. The last couple of Madden games and Need For Speed games come to mind.

MERGATROYDER
MERGATROYDER

So I guess this is the reason EA had so many losses. LOL

Inconnux
Inconnux

how long before EA destroys Bioware in a desperate attempt to pump out product to maximize profits? They have done so with many other great developer studios that they have purchased. But playfish??? talk about a stupid move

SLjimbolian
SLjimbolian

And yet EA is making huge cuts at their company. Wonder why they're losing money?

svaubel
svaubel

Eww. Makes me want to not touch Playfish games anymore now that EA owns them. Not that I really had time to do much on Resturant City anyways.

tremor33
tremor33

Boo. Even though I'm not much of a social network gamer/ user, this does nothing to entice me to start.

AngelCage-2
AngelCage-2

EA????? :-/ I love Restaurant city, i'm not ashamed about that, but If PF apply EA Policy on Restaurant City, we will have our lovely restos filled with unwanted AXE bodyspray Adson TVs and Arcades screens, Music ads on the minis, and ads in the street signs... *Sigh* they will even charge 5 bucks for ingredient in the PF store... I don't like this, don't like it at all.

ScreamDream
ScreamDream

That's a lot of money and a big risk especially when EA is laying off hundreds of staff. Facebook is great now but who knows where it will be 5 years from now. If EA concentrated on their current gaming division, perhaps they would not have to lay off hundreds.

k0r3aN_pR1d3
k0r3aN_pR1d3

I'll sadly admit that I've played Restaurant City on Facebook. And still do.