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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Jebril

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NO for all you PS3 fanboys because Bioware still has a contract with M$ if you look the Publisher for Mass Effect is still Microsoft exclusivity isnt changing for that game.

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kambion313

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this is horrible, form being owned by interplay (for gamers, by gamers) to being owned by EA (go f yourself we need your money).....wow....this is horrible for my favorite games of all time....DOES ANYONE think that games like planescape torment or fallout 2 could have been made if EA owned BIOWARE/BLACK ISLE BACK IN THE DAY......NO!

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knicknut17

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Does this mean that a year or so from now I will be able to play Mass Effect on my PS3? If yes, then I am going to be one happy gamer! I love Bioware. I just hope EA doesn't screw this up.

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LOGGER13

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Maybe the regulatory commission will block this buyout, else we should all expect more watered down games for every console now. Man, this is not good news.

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Jebril

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"EA makes top some top notch games in my opinion, such as orange box and Need for Speed series, Tomb Raider Legends series." WTF??!! Tomb Raider is by Eidos and Orange Box is by Valve, -_- I like NFS but only because I'm a big fan of racers and personally PGR and Forza beat NFS for me. Remember EA is the company that rehashes and reuses material over and over and when they try something new they make Boogie.....THIS ISNT GOOD!! Their going to waste all those talented developers at Bioware making them do Sport RPGS!!

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vunacar

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Someone should drop a bomb on ea, nuclear if possible!!!

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IFLYLIKEWILMA

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Great. The Borg just assimilated my favorite developor.

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iliyun

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Next Month........... E.A. buys Ubisoft !!!!!! {2 months later} E.A. buys Bungie !!!!!!! {5 months later } E.A. buys Capcom !!!!!!! that same year all gamers leave videogames and find a new hobby!

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Kebn

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uh.... oh...... this is not good!

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iliyun

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Wow look at these messages. This really shows when it comes to E.A. alllll gamers Unite . It doesn't matter if your a Wii Fanboy or a PS/360 Fanboy. In such rare occasions are Gamers this passionate in their oppposition to E.A. and their often half baked games. ......DOWN TO E.A. !!!! DOWN with Half Baked Games !!!!!!!!!!

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TheGrandMiG

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last time i checked THE_PREZIDENT, EA did not make the orange box. it just published it.

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ELJUDEZ

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There goes the neighborhood.

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titus124

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Dose that mean we will get a new jade empire!

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TheGrandMiG

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yet another developer is assimilated by the EA collective...

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iliyun

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Send the Terrorists after E.A. !!!!!!!!!!!!!!!!!

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claret10

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This is not right why GOD WHY!!!!!!!!!!!!!!!!!!

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nadav1991

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NOOOOOOOOOOOOOOOOO

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Get_Shorty

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Someone stop must stop EA!!

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bartonle

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I agree with the THE_PREZIDENT, EA makes top some top notch games in my opinion, such as orange box and Need for Speed series, Tomb Raider Legends series. This is good news, Mass Effect might get a little cooler, and might get released on the PS3. Which would be awesome.

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G_Tizzle

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NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO... this really does sum it up. Surely some kind of international compettion comission shoudl stop the conglomeration of EA and make them pay for ruining the games industry?

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master_blue

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"The two studios' combined operations are expected to yield around four or five games each year for the next three fiscal years. " Oh my how shallow and generic those will be.

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c_mcafee

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NOOOOOOOOOOO!!!!!!!!! Well, damn.

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DaysBecomeYears

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oh well, it was good while it lasted....

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martin_f

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I actually fear for Mass Effect, don't you tyhink it would ave been better staying at Microsoft?

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THE_PREZIDENT

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Why do people say EA sucks? That their games sucks? Their games are really top notch. Last EA game which was "The Orange Box" Got an 9.5.

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VFA-102

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I don't this acquisition was a good developement for gamers. EA has been putting out games just for the sake of games. I hate to think what will happen to those ip's in the future.

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smith447

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damn it! EA SUCKS.

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THE_PREZIDENT

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Mass Effect will be ported to the PS3.....................(sarcasm)

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RKO619FU

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wow i don't think this is going to make any difference i mean its not like Ea will change anything they will change 1 or 2 things that concerns the public and thats it ur all acting like every bioware game in the future is going to suck just because they are now owned by EA. oh and another thing people r saying that mass effect will now suck i will be surprised if they change it at all because EA likes the money and this is ment to come out next month so they wont bother changing it to make sure that comes out when it was suppose to anyway so they can get the money sooner rather then later

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Cerza

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and just when I thought my week couldn't get any worse, it did... this is pretty much the worst news imaginable... good work EA you will be the death of the industry...

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daztaru

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y do u care

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littlestreakier

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wow that's a lot of money ea spent...well...hopefully they don't mess up all the great series they just aquired...

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initiald411

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sargemat that link says not anytime soon it doesn't say it won't :)

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Scroll-Lock

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I expect the key people of bioware to pack their bags and make another studio. Again. Shame that.

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SonicHomeboy

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This is starting to get ridiculous. I miss the EA I grew up with during the 16-bit days. :(

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Delongman

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I dnt understand people who hate EA sooo much! If they buy companies out, it's because they have future projects and probably could forsee future goals with this buyout. It's all business so stop acting like they're just doing this to show that they've got cash (which they do!!!) and as if they're out there to destroy the game industry. I'd understand you're concern if they made totally crap games and all (which they dnt), but just becoz they bought BioWare? Plus half of you dnt even know their plans (i reiterate!)! What i'm saying is dnt put a company's business into your love for games. Who knows? This might just bring up some interesting suprises to the gaming world!

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zaokamura

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I cant belive this crap!

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thekey

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This is why I'm starting to HATE video gaming. It's no longer fun any more.

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Ardiendo_1

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Nooooooooo! I really hope EA doesn't slap its name across the cover of Mass Effect because it has had NOTHING to do with it's development. But this is EA and increasing their revenue is all that matters.

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Megavideogamer

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Now EA can make more games that Suck. Bioware and Pandemic will now Suck under EA control.

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Legendkillerh2

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Soon, EA will buy the world. Then the moon, then all the other planets. and eventually everything in the freaking galaxy. down with EA.

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vade1414

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WHYYYYYYYYYYYYYYYYYYYYYYYYY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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DonutTrooper

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Remember that movie back a couple years ago, Independance Day, where humans have to fight off aliens? It really reminds me of this. The aliens go from planet to planet in a strong force, and use up all of the natural resources then move on. Their sizes get bigger, but all they can hope for is the support of the smaller planets. This is like EA. It seems like they put out a game, and after that if no results are shown, they need to stretch it out with expansions, product placement, and sequels (like the natural resources) until they've milked it dry. After that happens, their only hope is to take over other companies (ie, planets) to continue making money. Their existing wealth through things like the Madden license and so on are one of the few things that keep them going on their own until the next killer app that they buy (like the aliens' size with power built up from other planets). I don't care if Mass Effect is multiplat now or anything...but EA, DON'T ****ING RUIN IT FOR ME!!!

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demi-OS

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At this rate a electronic arts published mercenaries game will probably be released before world in flames.

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demi-OS

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Japan has won...

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OrionNM

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It seems that there isn't enough time for EA to mess things up too much for Mass Effect, however this is still quite disheartening. I was looking forward to ME, and it's sequels, and now I'm very hesitant about just how good this series will actually turn out.

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Col_Swamp

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not sure how to take this news...........

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uncledeath2005

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That's not good...

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ldonyo

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How long do you think it will be before there is a new development studio founded by former BioWare and Pandemic employees?

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msalz1

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NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!!!!!! Damn you EA.....Damn you to hell!!!!!!!

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