EA Acquires Mobile Gaming Company PopCap for $1 Billion

by Matt Klassen on June 29, 2011

The fact that increasingly powerful mobile devices are providing users with a new and portable platform for gaming has not gone unnoticed in the traditional console and PC gaming markets, a paradigm shift that gaming companies will need to adjust to if they want to remain relevant in the years to come.

The issue for many companies, however, is the type of games that mobile users tend to play. Mobile games like Angry Birds, Bejeweled, and other delightfully addictive time wasters are considered casual games, games that users can pick up and play for a few minutes, without the time commitment that many hardcore, more involved, games require.

Despite the fact that the games are simpler and less involved, one such company that has struggled to break into this casual gaming space has been Electronic Arts (EA), a frustrating reality that has led the gaming giant to acquire the popular mobile gaming company PopCap for a cool $1 billion.

Truth be told, I would say that calling the mobile gaming revolution a paradigm shift may be slightly overstating things, as I prefer to think about the growth of mobile casual games as simply another revenue stream in an increasingly diversifying market, a new frontier of casual gaming that is attracting a new breed of non-traditional gamers.

That said, there’s little question in my mind that EA significantly overpaid for the company behind such mobile gaming titles as “Bejeweled” and “Plants vs. Zombies,” as the gaming company’s history of unsuccessful acquisitions—acquiring social network gaming company PlayFish for $275 million in 2009, Angry Birds publisher Chillingo for $20 million last October, and mobile game maker Firemint earlier this year for an undisclosed sum—may have turned this move into one of necessary desperation.

Further, there’s little question that this acquisition is a huge gamble for EA, as the $1 billion price tag is exceptionally steep given the fact that EA has a total market capitalization of about $7.2 billion.

But here’s why the deal to acquire PopCap is a good move for EA: First, it gets EA into the mobile casual gaming space with established titles like “Bejeweled” and “Plants vs. Zombies,” a market that EA has traditionally struggled to crack with its cadre of more involved hardcore games—a genre that unfortunately does not play out well on mobile devices.

Second, acquiring PopCap means that the mobile gaming company is no longer available to EA’s competitors, and should any of those competitors been able to wrangle PopCap; it would have surely been a devastating blow for EA.

In the end, EA has taken a huge risk in acquiring PopCap, a move that on the one hand could buckle the company if it doesn’t pay dividends but on the other could vault EA to the top of the mobile gaming world, competing with the likes of market mainstays Zynga and Rovio. Which way it ends up going, however, is up to EA.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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Truth July 3, 2011 at 1:54 pm

This article is false. The deal isn’t done yet. EA is in talks with Pop Cap, nothing more.

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