Elevation, BioWare, Pandemic joining forces

Just under a year ago, a rumor circulated that a venture-capital firm with U2 lead singer Bono on its board was buying British publisher Eidos. Turned out the rumor was true, and the VC firm was Elevation Partners, a then-new Silicon Valley outfit with big plans. According to a September 2004 Bloomberg News report, the venture capital firm has raised nearly $2 billion to invest in "media and entertainment projects."

Given that another member of Elevation Partners' board is John Riccitiello, former president of Electronic Arts, it was clear that the fund was looking to invest in games. Sure enough, in March 2004, Eidos's board announced it was recommending shareholders accept a bid from Elevation worth 71 million pounds ($126 million), or 50p ($0.88) per share. However, that deal was soon trumped by SCi Entertainment, which offered Eidos 103 million pounds ($182.8 million)--nearly 73p ($1.29) per share. A buying war ensued. When the dust cleared, SCi prevailed, leaving many wondering if Elevation would take another stab at games or write off the sector altogether.

Now is has become clear the Elevation isn't done with games--not by a long shot. On Thursday, the company announced it is backing the alliance of two major independent developers, Pandemic Studios and BioWare, into a new superdeveloper. Canada-based BioWare is a celebrated developer of role-playing games stretching from 1997's Baldur's Gate to the forthcoming Mass Effect for the Xbox 360. Pandemic is a much newer shop but has enjoyed success with a string of hit action games, including Full Spectrum Warrior, Mercenaries, and Destroy All Humans!

Carefully referred to as a "creative and management partnership," the new operation is a holding company called BioWare/Pandemic Studios. BioWare's two cofounders, Greg Zeschuk and Ray Muzyka, and Pandemic's two cofounders, Andrew Goldman and Josh Resnick, will become shareholders and senior executives. As one might expect, Riccitiello becomes the company's CEO. The 400 employees of both studios will also receive stakes in BioWare/Pandemic, and the studios in Los Angeles, Edmonton, Canada, and Brisbane, Australia, will continue to operate largely as before.

According to Elevation, the BioWare/Pandemic deal is even bigger than the Eidos acquisition, being a "combined investment" of more than $300 million, including future funding. It also could have major repercussions within the game industry. Its express design is to sidestep the traditional publisher-developer relationship, where the latter is dependent on the former for funding, via the injection of outside capital.

"Some developers have chosen the path of selling to publishers, and that's a viable path," Resnick told GameSpot. "We have specifically chosen not to go down that route because it was important for us to maintain our independence. You know we really look for inspiration in companies like Pixar, because they're able to remain independent from distribution partners and increase their focus on creating great products."

However, Muzyka told GameSpot that the deal does not mean BioWare/Pandemic will be abandoning its strong ties to its publishing partners. "They might feel threatened by something like this, but we absolutely see the reverse," he told GameSpot. "We really do look at this new venture as a means to improve our ability to deliver a great product. And that's always good for our publishing partners."