Electronic Arts Acquires Another Social Game Company as Zynga’s IPO Nears

Electronic Arts has acquired a small social games company, KlickNation, in its ongoing quest to challenge Zynga as the dominant game maker on Facebook.

KlickNation, which has been developing free role-playing games on Facebook for the past two years, will join EA’s BioWare label to create a new social division called BioWare Social.

The unit will be based in Sacramento, but will work closely with some of EA’s existing employees in San Francisco. BioWare Social will be led by KlickNation’s CEO Mark Otero.

BioWare is best known for creating such role-playing hits as Mass Effect and Dragon Age, and is currently preparing to launch the highly anticipated Star Wars: The Old Republic.

Prior to this acquisition, Electronic Arts had made two other significant purchases to bolster its social gaming business, acquiring PopCap for $750 million earlier this year; and Playfish for $400 million, back in 2009.

In comparison to the other acquisitions, the purchase of KlickNation is relatively small. The company’s biggest game on Facebook, Age of Champions, only registers 140,000 monthly active users, and Electronic Arts didn’t even bother disclosing the terms of the deal.

But right now the industry is in a talent war, with the leading social games company, Zynga, gobbling up many of the smaller social games studios across the country.

Electronic Arts is currently the second-largest game developer on Facebook after Zynga, with its most popular game, The Sims Social, attracting 30 million monthly active users.

Still, the Sims game has failed to top two of Zynga’s most popular games, CityVille and FarmVille.

Electronic Arts has made it abundantly clear that it intends to challenge Zynga’s dominance in social gaming. If successful, EA may have a chance to win back some of the attention Zynga has been stealing away from it.

It just may not happen fast enough. Zynga is heading out on its road show next week to convince investors to pony up for its initial public offering.

As part of its pitch, Zynga is seeking a $10 billion valuation in its IPO, according to Reuters; that would be higher than Electronic Arts’ current public valuation of $7.8 billion.

It is asking for a higher valuation despite Electronic Arts recording 10 times greater revenue, compared to Zynga, in the three-month period ended Sept. 30. Electronic Arts reported revenue of of $3.8 billion; Zynga reported revenue of $300 million.


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