Keeping it casual
Giant video games company EA has announced it will acquire PopCap Games for $750 million. This marks a major development in EA's strategy of shifting to a digital distribution model.
EA had long been one of the dominant forces in the games industry, typically selling its games as boxed product, often costing in excess of £40. But recent developments in the technology industry - especially the rise of social and mobile - have changed the face of gaming, and meant a reliance on the premium, boxed model is no longer enough.
This has led to the rise of ‘casual' gaming, which tends to involved relatively rudimentary games that are easy to play sporadically, for short periods. Prominent examples of these are Zynga's Farmville -which is played on Facebook, and Rovio's Angry Birds mobile game.
Back in 2009 EA bought social games developer Playfish in response to the growing social market, the acquisition of PopCap - whose titles include Bejeweled and Plants vs Zombies - seems primarily to be a mobile play.
"EA and PopCap are a compelling combination," said EA CEO John Riccitiello. "PopCap's great studio talent and powerful IP add to EA's momentum and accelerate our drive towards a $1 billion digital business. EA's global studio and publishing network will help PopCap rapidly expand their business to more digital devices, more countries, and more channels."
Here's the email Riccitello sent to all EA staff to announce the acquisition:
Date: Tuesday, July 12, 2011
From: John Riccitiello (CEO - EA)
To: All EA Employees
Subject: PopCap Turbocharges EA's Digital Transformation
Today, I'm extremely happy to announce that we have reached an agreement to add PopCap Games to the EA family. As you already know, PopCap is a leading provider of blockbuster casual games like Plants vs. Zombies, Peggle, Zuma and Bejeweled. We couldn't be more pleased that this team has chosen to join EA.
Acquiring PopCap extends the leadership we have established since the investment in our flagship casual site, Pogo. It adds to our momentum on the mobile and social platforms and accelerates us toward our goal of achieving $1 billion in digital business in FY12. We're already a major leader in both packaged goods and in digital gaming. But PopCap adds to our portfolio some of the best casual intellectual property in gaming - hit games that are growing fast on mobile and social platforms. Where some companies are built on a single hit, PopCap has made lightning strike again and again. They have built a powerhouse of evergreen casual properties and proven their ability to create new hits again and again on the fastest growing platforms - mobile, tablets, PC, online and Facebook.
The EA that PopCap is joining is a leader in the digital transformation of gaming. In the past four years, EA has embraced an all-encompassing initiative to evolve our games and services to an online model. We're making terrific progress. We have dramatically improved quality, which allows us to extend our games to new formats and revenue opportunities. We are #1 on mobile and smart phones. We are #2 on social network games. And, we just launched our direct-to-consumer platform - Origin - which is backed up by our highly scalable Nucleus registration system that now has more than 125 million users.
When the sale is complete, PopCap will become a part of EA Interactive - led by Barry Cottle.
There is no denying that what we announced today was a business transaction - a full and fair price for a company that has demonstrated they can sustain success and transform to meet and set the pace for high-growth gaming platforms. The deal is compelling. I'd encourage you to read through the press release that we sent out earlier today. You will see EA is making a strong and smart deal in acquiring PopCap. And... beyond the business rationale, and the strategic rationale, I believe PopCap and EA share very, very similar cultural values. Above all, we both put the quality of our games first.
In recent months PopCap has received a lot of offers, including bids from other game companies. Ultimately, PopCap chose EA. Their leadership team tells us that in the end, the decision swung on their recognition of our culture -- the respect that EA shows for games and the teams that create them. They recognize the commitment you make to quality and the innovation that you put into our games. In banker's terms, you closed this deal. You made PopCap want to be a part of the EA team.
Please welcome Dave Roberts (CEO, PopCap), founders John Vechy, Jason Kapalka, Brian Fiete and the entire PopCap team to the EA family! PopCap is headquartered in Seattle, with several smaller studios around the world. I encourage you to meet and learn more about this team. They are an incredibly talented group of people - but you already know that from playing their games.
