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.


[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.
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.

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