EA picks up Playfish for social gaming push

Video game developer Electronic Arts announced on Monday that it has acquired social-gaming company Playfish, paying $275 million in cash and $25 million in "equity-retention arrangements." Playfish also is entitled to up to $100 million if it meets performance milestones by December 31, 2011.

EA also announced later Monday that it planned to eliminate 1,500 jobs, or about 17 percent of its workforce, as part of a plan to reduce annual costs by about $100 million.

The acquisition of Playfish falls in line with EA's desire to be more than just a developer for traditional gaming platforms, like consoles and the PC. The company said in a statement that the acquisition "strengthens its focus on the transition to digital and social gaming."

Thanks to the explosive growth of social networks and games made for those platforms, Playfish is enjoying strong performance in the social-gaming space. The company has more than 150 million games installed on several platforms, including Facebook, MySpace, the iPhone, and Android-based devices. According to Playfish, more than 60 million active players per month are playing titles. Its Facebook titles include Pet Society, Restaurant City, and Country Story--all three are among the most-popular games on the social network.

The EA Interactive division, which Playfish will join, has done a fine job of capitalizing on the trend of online and mobile gaming. That division includes Pogo, one of the top casual-gaming sites on the Web. The Mobile side of EA Interactive has captured 34 percent market share in the U.S. with the help of Madden NFL 10, The Sims, and Tetris.

Updated at 10:20 p.m. with details of job cuts.

[mathomp3]

hate to see another company sell out to EA. I have seen so many good companies and franchises go from great to trash in a matter of a year or two after being sucked up into EA. But I can't blame them I mean look at the instant cash flow its enough to pay off all the employees and everyone lives on a beach happy forever, which is what typically happens. Then EA puts stupid spins on the stuff and works to profitize it even more than the games really support. Oh well. Here is to hoping THIS time will be different.

[rca500]

We'll they are also laying off entire departments. I know of two whole departments cut down to 5 people total.

I personally know about 20 people who got the axe today.

I guess the money for that buyout had to come from somewhere.

[Hernondo]

This is an extremely smart move by Playfish. Zynga killing everyone right now, and it's Cafe World is cutting deeply into Restaurant City. Playfish is selling at it's peak.

[cristianc2v]

Smart move by both parties. The social gaming space, recent offer-scams scandal aside, has been astoundingly successful and has even greater potential. This acquisition is an important step towards enabling that potential. For a brief analysis of the success of social gaming check out http://digitalpopuli.com/social-gaming/dissecting-the-success-of-social-gaming/