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Electronic Arts Confirms $750M PopCap Acquisition, $550M Earnout
Electronic Arts Confirms $750M PopCap Acquisition, $550M Earnout
July 12, 2011 | By Frank Cifaldi




Electronic Arts has confirmed earlier rumors that it would purchase Plants vs. Zombies maker PopCap by announcing a $750 million acquisition, along with a potential $550M earn-out.

EA will pay approximately $650 million in cash and $100 million in EA common stock to be issued to PopCap shareholders, the company said. In addition, the company may pay additional funds of up to $550 million based on performance milestones through 2013.

The move enhances EA's global position in the casual, social, mobile, browser and free-to-play markets, continuing forward momentum that began with its 2009 acquisition of Pet Society maker Playfish, which cost the company $400 million.

"We picked EA because they have recast their culture around making great digital games," said David Roberts, CEO of PopCap. "By working with EA, we'll scale our games and services to deliver more social, mobile, casual fun to an even bigger, global audience."

"EA and PopCap are a compelling combination," added EA CEO John Riccitiello. "PopCap's great studio talent and powerful IP add to EA's momentum and accelerate our drive towards a $1 billion digital business."

Riccitiello noted: "EA's global studio and publishing network will help PopCap rapidly expand their business to more digital devices, more countries, and more channels."

The transaction is expected to close in August, 2011.

Founded in 2000 in Seattle, PopCap Games currently houses approximately 475 employees, and was responsible for franchises that include Bejeweled, Plants vs. Zombies, Zuma, Bookworm and Peggle.

The company's franchises have been top-grossing iPhone titles and also hold significant positions on Facebook, where key titles such as Bejeweled Blitz have large followings.


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Comments


Kris Morness
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This should be a dream acquisition for EA! Fills a perfect gap. Just watch out for the iteration trap in 2-3 years from now. Slotting lots of product into various quarters, for example.

Bryan Wagstaff
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The iteration trap in a few years?



Look at Bejeweled, Bejeweled 2, Bejeweled 3, Bejeweled Blitz, Bejeweled Twist.... Next in the lineup is Peggle, Peggle Extreme, Peggle Nights, Peggle:Dual Shot, ... Or how about Bookworm, Bookworm Adventures, Bookworm Adventures Volume 2, ...



I think PopCap has already entered the iteration trap.



That said, I think this does help EA in the mobile space, as long as they keep the popcap culture alive. EA has improved significantly in that respect, they aren't "the borg" that came in and destroyed the culture like they were a decade ago.

Joe McGinn
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Worst. Acquisition. Ever.



EA's process-driven production people will *despise* the way Popcap develops that great IP. As you hint at in the iteration trap ... that's just not how PopCap works. P v Z took *four years* to develop.

Mikhail Mukin
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This of cause need to be analized from financial point of view... How much profit those games bring/year etc... But from development point of view it is hard for me to understand how it can be worth so much...



What exactly is in $750 mil?



IPs? This is a hard question for me... In the last few years I tried so many variants of matching objects and tower defence and word games etc on various sites (all of them - for free) that it is hard to imagine that particular versions of them that PopCap produces will bring so much more $ compared to various clones... but I would need to see financial details to know... Would not making clones (with various "twists") of those games and buying a lot of traffic to put them on top be cheaper then $750 mil?



Technology? But those games are not the once requiring some genius multiplayer and graphics engineers or excellent system designers or "unique" Pixar-quality artist visionaries... Any "solid" person with a few years in the industry could do this. (BTW: I'm in no way trying to offend people working at PopCap and other "casual" game companies - I have friends working on things like that and might work on them in the future! But having worked on both complicated AAA console games and on simpler "2D" things with a small team I think I more or less know the difference...)



475 people? Well, you can offer people some $50K sign up bonuses or something and you will easily get as many good devleopers as you want (especially in the current US job market)... And it will be way cheaper...



Plus... I don't know how much of PopCap is actually in Seattle (or only the top guys/leads?) but developing simple games in USA does not seem to make a lot of sense financially. Why pay ~$10K/person month (with medical, taxes, 401 etc) when you can do ~$3+K?



As EA shareholder, I hope it will work out better then buying Bioware/Pandemic...



And congrats to PopCap guys! When EA bought us, the retention bonuses were nice... Well, when they shut us down later, the severance pay was nice too :)


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