Electronic Arts Says Independent Game Studios Are Ripe for Acquiring
The videogame industry will continue to see a flurry of smaller mobile and social acquisitions as larger studios see the value in picking up small, creative teams of developers.
“We are always on the lookout,” said EA Interactive’s EVP and GM Barry Cottle, following the announcement that EA has acquired Firemint, an independent game studio in Australia, and Mobile Post Production, which is focused on porting games to multiple platforms.
“I do think this is an overall trend for the industry. You’ll start seeing more of these acquisitions as opposed to the large-scale type because of the nature of openness of the marketplaces. It creates opportunities for third-party independents.”
That’s a big shift from the past when game developers did not have direct access to consumers. Now with the proliferation of social networks like Facebook and mobile app stores like iTunes and the Android Market, it’s easier to create a hit title on a small budget.
Take Firemint, for example:
Its hit game, Flight Control, was released on March 6, 2009, and within the first three and a half weeks, Firemint sold nearly 600,000 copies on the iPhone. As of January 2010, it had sold 3.9 million copies and Apple listed it as one of the all-time top paid iPhone apps. The game is currently 99 cents in the App Store and has since become available on the Android Market for $2.99.
All this from a small 60-employee shop in Melbourne, Australia.
EA did not say how much it paid for either company, but Cottle described both as small acquisitions. The acquisitions are not material to the company’s financial results. EA will report first-quarter results tomorrow. The small purchases are a big shift from the past. EA is well known for purchasing Playfish, a social game developer, for $400 million, and Jamdat Mobile for $680 million, way back before the first iPhone. More recently, it purchased Chillingo, a mobile games publisher.
While small, Cottle said, the acquisitions support all three of the company’s principles: Quality, speed and scale.
“The lack of barriers to entry and ability for independent developers to get into the marketplace has led to a whole host of new very talented developers,” he said. “These guys [Firemint] are two for two in hits and when looking at their future slate, we are excited and confident.”
Meanwhile, Mobile Post Production helps EA get games to market faster.
“Fragmentation is not getting better,” Cottle said. “It’s getting worse, and we’ve had a long-standing relationship with MPP. They are fairly small acquisitions, but they bolster our three tent poles.”
Other companies are also adopting the strategy of acquiring small mobile and social developers.
Zynga has been acquiring at least one social or mobile game developer every month, picking up a handful of employees each time. Its most recent acquisition, Wonderland Software, will be the basis for its new offices in the U.K. MindJolt recently bought two gaming companies, SGN and Hallpass Media, and casual game maker PopCap Games acquired ZipZapPlay to expand into social gaming.