5 ms·

EA Buys Playfish For $300 Million, Plus a $100 Million Earnout

26 points by transburgh 17y ago

dschobel 17y ago
Last year at a presentation at the Founder’s Forum in Hampshire, England, CEO Kristian Segerstrale put up a slide with a dinosaur and expressed his desire to “kill EA.” Now he’s joining them instead. I love the idea of terrifying your potential buyers into an acquisition rather than wooing them on bended knee. We need more of that.
- khangtoh 17y ago
  That's pretty typical. Startups get bought out because they start taking market shares away from the 8lb gorilla. If they're wooing them, there's really something wrong there and they should start thinking real hard how to compete and gain market share against the gorilla rather than the former.
  - byrneseyeview 17y ago
    I don't want to make too much of the typo, but Playfish really is a horde of 8lb. gorillas.
    - khangtoh 17y ago
      EA did spurn off an unit named 8lb gorilla to make iPhone games. http://www.joystiq.com/2009/07/11/ea-quietly-opens-8lb-gorilla-to-make-smaller-iphone-games/ http://www.joystiq.com/2009/07/11/ea-quietly-opens-8lb-goril...
      - byrneseyeview 17y ago
        Oops. Thanks for the correction.
  - electromagnetic 17y ago
    Agreed, on face value it seems a bit nuts to openly announce you're targeting a megacorp like EA. However, Playfish is a tiny company. If they're getting bought out for ~300 Mil I doubt their revenue is much more than 1/10th that, probably maxing at 60 Mil. Before Playfish announced they're targeting EA's consumers, EA likely didn't think twice about the puny company. Playfish's annual revenue is likely a drop in the ocean to a company making 4.2 billion in annual revenues. Playfish's announcement likely got EA to investigate the company and see that they're making consistent profits and might be a worthy investment. Football and Soccer players don't hound down the team they want to play for, they get in wherever they can show that they're a major threat to the team they want and then say "make it worth my while!"
- pchristensen 17y ago
  Kind of like Mint/Intuit?
Tiktaalik 17y ago
I'm a bit surprised that EA didn't try to simply just win this market over themselves. With their stable of franchises it seems like it would be a feat they could have achieved. They even already have a casual focused online site, Pogo.com. I expected them to try to retool a team from that group into doing just Facebook games, but it seems like they didn't really even attempt it. I suppose they felt they just didn't have enough man power.
- tomjen2 17y ago
  They would properly make more by jumping ahead of the game and starting to earn 75 million/year.
  - chaosprophet 17y ago
    And they would no doubt be using Playfish's top minds to tailor all EA franchises for social/casual gaming.
- electromagnetic 17y ago
  Retooling a team to go from programming real games in real languages to making a flash game is a rather absurd prospect. Are they really going to convince people to leave teams working in their Sports division, or get anyone to leave one of their major franchises with real experience? If I was working on a new Medal of Honour or Battlefield, or even The Sims, you'd have to shoot me in both kneecaps before I'd consider taking my name off a game that could boost my career. All you're going to get to make these games are either raw flash kiddies, or you have to take over a company with experience in making money on flash games. IMO I'm not surprised one bit, buying a company like Playfish was EA's only move to make.
  - Tiktaalik 17y ago
    That's why I said retool a group from Pogo.com. If you look at that site it's pretty clear that EA's had folks working on casual flash games for ages. It would not be a difficult move over to get folks from that group working on Facebook apps.

26 points by transburgh 17y ago

Last year at a presentation at the Founder’s Forum in Hampshire, England, CEO Kristian Segerstrale put up a slide with a dinosaur and expressed his desire to “kill EA.” Now he’s joining them instead. I love the idea of terrifying your potential buyers into an acquisition rather than wooing them on bended knee. We need more of that.

khangtoh 17y ago
That's pretty typical. Startups get bought out because they start taking market shares away from the 8lb gorilla. If they're wooing them, there's really something wrong there and they should start thinking real hard how to compete and gain market share against the gorilla rather than the former.
- byrneseyeview 17y ago
  I don't want to make too much of the typo, but Playfish really is a horde of 8lb. gorillas.
  - khangtoh 17y ago
    EA did spurn off an unit named 8lb gorilla to make iPhone games. http://www.joystiq.com/2009/07/11/ea-quietly-opens-8lb-gorilla-to-make-smaller-iphone-games/ http://www.joystiq.com/2009/07/11/ea-quietly-opens-8lb-goril...
    - byrneseyeview 17y ago
      Oops. Thanks for the correction.
- electromagnetic 17y ago
  Agreed, on face value it seems a bit nuts to openly announce you're targeting a megacorp like EA. However, Playfish is a tiny company. If they're getting bought out for ~300 Mil I doubt their revenue is much more than 1/10th that, probably maxing at 60 Mil. Before Playfish announced they're targeting EA's consumers, EA likely didn't think twice about the puny company. Playfish's annual revenue is likely a drop in the ocean to a company making 4.2 billion in annual revenues. Playfish's announcement likely got EA to investigate the company and see that they're making consistent profits and might be a worthy investment. Football and Soccer players don't hound down the team they want to play for, they get in wherever they can show that they're a major threat to the team they want and then say "make it worth my while!"
pchristensen 17y ago
Kind of like Mint/Intuit?

Tiktaalik 17y ago

I'm a bit surprised that EA didn't try to simply just win this market over themselves. With their stable of franchises it seems like it would be a feat they could have achieved. They even already have a casual focused online site, Pogo.com. I expected them to try to retool a team from that group into doing just Facebook games, but it seems like they didn't really even attempt it. I suppose they felt they just didn't have enough man power.

tomjen2 17y ago
They would properly make more by jumping ahead of the game and starting to earn 75 million/year.
- chaosprophet 17y ago
  And they would no doubt be using Playfish's top minds to tailor all EA franchises for social/casual gaming.
electromagnetic 17y ago
Retooling a team to go from programming real games in real languages to making a flash game is a rather absurd prospect. Are they really going to convince people to leave teams working in their Sports division, or get anyone to leave one of their major franchises with real experience? If I was working on a new Medal of Honour or Battlefield, or even The Sims, you'd have to shoot me in both kneecaps before I'd consider taking my name off a game that could boost my career. All you're going to get to make these games are either raw flash kiddies, or you have to take over a company with experience in making money on flash games. IMO I'm not surprised one bit, buying a company like Playfish was EA's only move to make.
- Tiktaalik 17y ago
  That's why I said retool a group from Pogo.com. If you look at that site it's pretty clear that EA's had folks working on casual flash games for ages. It would not be a difficult move over to get folks from that group working on Facebook apps.