To Make More Microtransaction Money, EA Buys Prolific Mobile Game Studio Glu For $2.1 Billion
EA pays a huge premium to buy GluMobile, a prominent and prolific mobile game developer with 800 employees.
After spending more than $1 billion to acquire Codemasters, EA is opening up its check book once more to acquire the prolific mobile game developer GluMobile for $2.1 billion. EA announced the deal on Monday.
GluMobile is a big winner in the deal, as EA is paying a 36% premium on GluMobile's share price, which reflects the competitive nature of the mobile games scene and EA's interest in taking a bigger piece of the pie. Mobile is EA's most important platform, so it makes sense to see the mega-publisher spend big money to get a bigger foothold.
EA said it expects to make money on the GluMobile deal almost right away, as the publisher said the buyout will be "immediately accretive" to revenue and should help grow EA's total profit starting in the first year.
For EA, this deal is all about making more money from microtransactions, which is a major point of focus for the company as it builds out its live service portfolio.
"Bringing together the best-in-class mobile development teams at Glu and Electronic Arts' mobile business, with a collective portfolio of powerful IP in sports, lifestyle, RPG, casual, and other genres, and leveraging Electronic Arts' marketing and distribution strength to generate global reach, the combined organization will build on EA's network of 430 million players, including more than 100 million monthly active players in mobile, and expand to new audiences and demographics all over the world."
EA CEO Andrew Wilson said of the deal: "Mobile continues to grow as the biggest gaming platform in the world, and with the addition of Glu's games and talent, we're doubling the size of our mobile business. With a deep IP portfolio and an expanding global audience, we'll deliver more exciting experiences for our players and drive further growth for Electronic Arts."
Glu CEO Nick Earl added: "As part of Electronic Arts, we will continue capitalizing on the opportunities ahead in the expanding mobile gaming industry."
EA said it's buying Glu to expand its reach across other key genres, such as sports, RPG, lifestyle, casual, and mid-core, while the deal also helps EA make even more money from live services and microtransactions. "Glu's expertise in building and monetizing sports and casual mobile games, combined with Electronic Arts’ industry-leading IP in sports and beyond, will accelerate the creation of exciting new experiences for broad audiences," EA said.
With the buyout, EA brings on more than 800 new employees from Glu, about 500 of which are game developers. This will add "significant scale" to EA's mobile division.
"The combination of Electronic Arts and Glu will be a mobile growth engine," EA said. "With strong, recurring revenue across a leading portfolio of live services, strength in key mobile genres, a deep roster of owned and licensed IP, access to a large-scale and growing player network, and ability to reach into new regions and markets, the acquisition will be immediately accretive to EA’s total net bookings and is expected to grow underlying profitability beginning in its first year."
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