January 18, 2005 4:00 AM PST
Electronic Arts plays hardball
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studio Criterion, a division of imaging giant Canon, for $48 million. While Criterion has several popular game franchises, including the racing series "Burnout," it's more significant as the owner of RenderWare, the most popular piece of "middleware" used to create video games. RenderWare tools were involved in the development of about one-fourth of all game titles released last year, according to company estimates.
RenderWare is an important asset to Electronic Arts as the company prepares to make games for high-powered new consoles expected to arrive on the market late this year, said Brian O'Rourke, an analyst for research firm In-Stat. Game makers will have to do a lot more work to exploit the capabilities of the new machine, he said, and a uniform development environment will help keep costs under control.
"The consoles are becoming very expensive to develop for, and they are going to get more expensive," O'Rourke said. "Publishers need to be ready for this more expensive publishing environment, and that means doing whatever they can to be more efficient. These guys (EA) are thinking way, way in advance for the next generation."
The big question behind the scenes is whether EA will continue to license RenderWare to outside developers or keep the technology in-house, forcing competitors to adopt potentially expensive new technology in the midst of a difficult hardware transition.
David Doak, director of Free Radical Design, an independent developer best known for its "TimeSplitter" games, noted that some of EA's biggest competitors, including Take-Two's "Grand Theft Auto" series, rely on RenderWare.
"The middleware market, certainly for this generation of consoles, has been quite monopolized by RenderWare," Doak said. "For people not working with EA, that's going to come as quite a bit of a shock that EA now has control over those tools."
EA's Brown said the company plans to continue licensing RenderWare to other developers, and he characterized the middleware products as a minor part of a deal motivated mainly by the "Burnout" game franchise.
"Controlling RenderWare was just not a big part of the rationale for this agreement," he said. "We hope other developers continue to use RenderWare middleware, but whether or not they do has very little impact on how we measure the success of that acquisition."
Looking ahead, Wedbush Morgan Securities analyst Pachter expects EA to continue to make aggressive moves to expand, possibly into the burgeoning Asian market for online games, where EA has minimal presence now. The company is also in the midst of a bid to take over Swedish development studio Digital Illusions, which has worked on EA-published games such as the "Battlefield 1942" series.
Pachter expects EA to continue working on acquisitions and other business maneuvers to ensure the company remains No. 1 with the next generation of game machines. "They don't like it one little bit when anyone challenges them," he said. "They're trying to prove to people they're the big fish in the small pond."
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