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.

Got a news tip or want to contact us directly? Email news@gamespot.com

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Avatar image for alucarDtnuoC
alucarDtnuoC

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WHY!?!? IN GOD'S NAME WHY?!?!?! WHY MUST EA CONTINUES TO DESTROY EVERYTHING THIS WORLD HOLDS DEAR? WHYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY? this is the worst news i have ever heard. Worst. Buy-out. Ever.

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spOOoOOn

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Oh god... Come one.. the only proper thing EA ever released is C&C3 (I feared for it's life). Thank god Mass Effect will come out unscaved. This is getting out of hand though... Does anyone out there actually respect/like EA? They spew out masses of generic uninspired games, and just buy up good companies that actually give a rat's ass about their products and bother with being innovative. I fear for the gaming industry's future :(

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MarshyMan50

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Bioware just got owned.

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Izzytheinsane

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This makes me so sad. We have so few major gaming companies here in Canada, that I can think of, and EA has to snatch up one of my favourites. ****ing ea...

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Lepuke

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NOOOOOOOOOOOOOOO!.... Ok, well thats about all I have to say about that. :(

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sascha23

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Shocking. But fantastic that BioWare can now release titles for all consoles without the publishing relationship with Microsoft getting in the way. This is interesting that Mass Effect's rights are not owned by M$. Would be interesting to see a PC and PS3 port of the title.

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doggy47perfecto

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nooooooooooooo!

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nizaris

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this is a sign of the apoclolipse:

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devilscry

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LOOK OUT MICROSOFT...........EA's coming for YOU!

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343TheFlood

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okay well one more developer gone down the drains

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gun_blade25

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Oh **** no. This is like a god damn nightmare. I feel worse about this than I did about Microsoft buying Bungie back in the day. I would RATHER Microsoft buy them since they are LESS of an evil corporation than EA.

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Avatar image for deactivated-57af49c27f4e8
deactivated-57af49c27f4e8

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dear EA, i despise you

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jcwordlife

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I remembered the latest South Park episode when I saw "Bono" :lol: Le't just hope EA don't screw up these talented devs.

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Col-Neil

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You would think EA would stop trying to control everything eh but guess not if they mess up which you know they will i say burn there HQ lol

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mi6ops

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R.I.P. any chance at having good /quaility titles ever again coming from either of these publishers ,you'll be missed . hello craptastic cookie cutter trash shoveled upon the gaming market .

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demi-OS

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WTF this is horrible, why EA!?! WHY?!?!

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ParkCarsHere

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Wow... EA is taking up everything they can. I'm not sure if this is a good thing (BioWare/Pandemic get more money and therefore they can make even higher quality games) or a bad thing (EA starts to take control and totally screws us gamers by forcing the BioWare/Pandemic guys to constantly shoot out sequel after sequel, each have a lower quality value than the last. EA must be making TONS of money...

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Chew

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At what point does EA decide that it has stifled the game industry enough and just sit back and cash in on all the people buying Madden year after year? Let System Shock live again!!

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dj_belay

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*vader voice* NOOOOOOOO!!!!*vader voice* IF anyone can screw up a game company, its EA.

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findingaplace

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WHY?! Bioware is one of the best RPG developers out there. Makes me wonder what will happen to there games now. Will the quality of there games suffer because of EA looking over their shoulders?

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BraindeadRacr

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I wonder wether I should be scared, or wether I should be exited. Knowing EA, in the past they've managed to screw up just about any licence they've bought, and only creating a handfull of OK/Alright games. I think Mass Effect and Mercenaries 2: WIF are safe grounds, as they're being finalised. Mass Effect Nov 20, and M2: WIF early January... But what about the future?

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The_Fell_One

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Things are just going straight downhill in the gaming world...

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Elk

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*!@#*!

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DarthKalo

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I'm sure MS will still pay for the Mass Effect trilogy to be exclusive.

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Statictrance

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Ea = devil I really loved bioware too... looks like mass effect will probably be the last game of theirs i give an eff about. and i agree with gaara (with the money dreamfall pic if i'm not mistaken) - let's pray the talent offloads and starts anew

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shogoh

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NOOOOOO!!! This is a sign that the end of the world is near Why can't EA die? People must stop buying their boring generic games

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nivet14

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NOOOOOOO!!!!!!!

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dlindenb2000

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Bloody Bastards Bleeding the Industry of Everything Good.

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LuminosityBlaze

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Yikes! EA is starting to become a titan in the game development business. At this rate they will have half of the industry monopolized by the end of this console genereation. PS. Actually they already were a titan, that's why they can even afford to do this in the first place!

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Tactis

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wow this really sucks i hope bioware quits and founds a new company(ala what clover studios did). In the short term, at least mass effect will ship before this takes effect.

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HK-47-M4

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This is a HUGE blow to Microsoft, they had a GREAT relationship with Bioware. But I think Mass Effect will still be 360 exclusive since the deal isn't finalized til 2008. But man, 775 million! That's more than the bribe Toshiba gave to Paramount!

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493722

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its a big shift that EA's doing to make there company to grow bigger to compete aginest Activision. And working together with these two new companies to make bigger and better games in the future. Can't wait to see what they'll make next...............

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comthitnuong

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As long as the quality of their games aren't affected, then I'm fine with it. If they treat these two like they did with Crytek for Crysis, then it shouldn't be that much of a bother.

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shankarrr

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NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

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pgharavi

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Sucks.

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cheezlarson

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before you know it the only two third parties will be EA and 2K finally i get the first post :)

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leapfrog91

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Wow...I hope we just let them do their thing!

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will_serenity

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I wonder if this means we'll get to see some of Bioware's games on other platforms. We all know how EA likes to spread the love :) It would be cool.

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tuna_man

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They better mess with Bioware. Just leave it how it is.

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jmartinez1983

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NOOO not Bioware! Not to EA! This is pretty much awful.

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Gaara79

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R.I.P. Bioware/Pandemic Here's hoping all the talent jumps ship and forms a new studio eh?

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SemiMaster

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So what does that mean for stuff like Mass Effect? The days of exclusives are gone?

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Canitbe

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Unfortunately, in a tight market, this is a necessity for EA to continue to be profitable and competitive.

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The_Tay-Man

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Another one bites the dust. You were a good studio BioWare, I'll miss you :'(.

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Mr_Unknown

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Wow - that's a big pile of money!!!

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JamesL007

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What has EA not brought in the last year, they seem to be picking up Developers like chess pieces. Soon it will only be EA with divisions in itself.

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rjahn96

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Wow the giant only becomes bigger

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SPJglitches

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Insanity. Hopefully this doesn't lead to anything bad.

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