Early last evening, a big bit of industry news hit the internet, with casual gaming mogul PopCap Games right in the center. The company behind Bejeweled, Plants vs. Zombies, Bookworm, and other high-grossing titles, was in the process of being acquired by an (at the time) unknown buyer. Today we find out that Electronic Arts is behind the purchase, and the number that they paying is staggering: $1 billion+.
[Update (July 12, 2011) Electronic Arts has acquired casual game maker PopCap for $650 million in cash and $100 million in stock.]
Electronic Arts, which has made its living from a console-heavy games lineup and the diehard crowd, has had little luck in the social gaming circuit, getting away with titles such as The Sims… and that’s about it. Assuming that the purchase of PopCap could boost their social and mobile gaming portfolios, this could be exactly what EA needs to turn the tide in their favor.
The purchase also knocks rivals like Zynga and Chinese company Tencent out of direct competition. Tencent, specifically, has both the necessary market capital for the purchase and the aim to break into the North American social gaming scene. Zynga, who was assumed to be making the purchase last night, has acquired similar — yet smaller — social gaming companies in the past two years. However, given PopCap’s price tag, it seems that the offer was too rich for Zynga’s blood, leaving room for EA to step in.
Currently, PopCap’s revenues are somewhere around $100-150 million, giving EA the chance to make back their expenditure in an estimated three years. EA has an estimated market capital of $7.49 billion, and the purchase will set them back nearly 13%, yet the ends will certainly justify the means.
This is a huge step for EA and for PopCap — both companies could now see their profits rise exponentially. PopCap titles like Bejewled and Plants vs. Zombies are on everything from iOS devices to Facebook. EA now stands to profit from those games, while also gaining crucial social and mobile gaming experience for future projects.
Once the deal has been finalized, we’ll bring you the latest information. In the mean time, what do you think of EA acquiring PopCap? Who benefits the most from the deal, and what do you think are the pitfalls?
Source: Tech Crunch