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.
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
On September 9, classic rock fans will have a chance to strap on a plastic guitar and jam along with the biggest act in popular music history.
Artfully orchestrated buzz has been building for The Beatles: Rock Band since the start of 2009, and the team of developer Harmonix and publisher MTV Games (and distribution partner EA) hope to provide a bright spot in an otherwise drab video game market with one of the few video game products for the 2009 holiday season that has a real chance of appealing beyond core gamers.
We've gotten our hands on a final retail version of the game (minus the new Beatles-inspired instruments, but our old Rock Band gear worked fine), and gave it a test drive in CNET's AV Lab. Check out this video to see our extremely shaky music skills, and read our hands-on impressions below.
Dan:
Music aside, this is essentially the same Rock Band game you've been playing for two years, but with nicely done overhauls of the menus, graphics, and interface, including some very cool animated Beatles segments. The biggest change to the actual gameplay is the inclusion of three-part vocal harmonies (you'll need three USB mics). We found out the hard way that these songs are actually pretty tough to sing, and nailing the harmonies is even tougher.
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In just a few weeks, John Madden will unleash his annual iteration of a yearly purchase obsession for NFL fans worldwide. For some, this matters little. For die-hard fans like Scott, though, it's an addiction that must be tempered with some sense of restraint. While Jeff enjoys Madden but prefers NHL, Scott has a year-long addiction to endless New York Jets franchise seasons that borders on complete OCD.
In previous years, we had gotten a chance to play Madden a little earlier on. This year, however, our enthusiasm (or at least Scott's) had to wait until EA's Holiday Showcase this week in New York City, where Madden 10 lay waiting, along with a sofa. We had a promise to each other: Jeff would take on Scott for half of Madden, and Scott would try to keep up with Jeff in NHL 10 afterward.
How did it play? This is our story. ... Read more
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Will Wright, creator of the SimCity and Sims franchises, is interviewed by John Battelle at last week's Web 2.0 Expo.
(Credit: James Martin)Will Wright, one of the best-known names in gaming, is leaving Electronic Arts to set up his own "electronic think tank."
Wright will be the head of Stupid Fun Club, a venture aimed at developing concepts that can serve as the nexus for video games, movies, TV shows, toys, and other entertainment products. EA will invest in the venture, with the game maker and Wright each owning equal percentages of the company.
"The entertainment industry is moving rapidly into an era of revolutionary change," Wright said in a statement. "Stupid Fun Club will explore new possibilities that are emerging from this sublime chaos and create new forms of entertainment on a variety of platforms."
Wright spoke last week at the Web 2.0 event, talking about the role games can play when they extend one's one life into the digital realm.
"Most people are very narcissistic," Wright said. "The more you can make the game about that person, the more interested, the more emotionally involved they will get."
EA Chief Executive John Riccitiello said he is looking forward to partnering with Wright in his new effort and praised Wright's contributions to EA.
"Will is a great designer, and he's been part of a great legacy of globally recognized game franchises like The Sims, SimCity, and Spore," Riccitiello said. "The teams that have been leading those franchises in recent years have a lot of exciting content coming."
Wright co-founded game studio Maxis, responsible for SimCity, the Sims and, more recently, Spore, with Jeff Braun in 1989. EA bought Maxis in 1997. Upon Wright's departure, EA said Maxis is set to be run by Lucy Bradshaw, the unit's general manager. It is currently working on a Spore Galactic Adventures expansion pack.
Starting Monday, Electronics Arts will sell its popular video game Spore free of any digital rights management restrictions.
It's part of a slew of titles which EA will offer on Valve's Steam distribution platform, according to a report by Ars Technica. Besides Spore, the collection will include Warhammer Online, Need for Speed Undercover, Mass Effect, and FIFA Manager 09. Crysis, Crysis: Warhead, and SiN Episodes: Emergence are already available on the service, and there are more on the way.
Prices for the DRM-free versions are said to be on par with what the games would sell for in a box in a retail store.
It's a move likely to win EA some points with gamers after the disastrous public response to its DRM policy for Spore. Originally the company locked the game using DRM software called SecuROM to no more than three machines, which it later upped to five.
NEW YORK--This may be the last year that video game giant Electronic Arts releases a title that doesn't log on to the Internet, CEO John Riccitiello said in a keynote address at the Media & Money Conference here Tuesday.
That's a testament to how quickly the game industry is evolving, Riccitiello explained. "If you go back three, five, seven years ago, a video game was entirely captured on a disc that we sold. We were in the packaged goods business." Things have changed: "Today what we do, more typically, is we build an online game which often has as much code on a server as it does on a disk and the CPU in your household."
"We chose a particularly aggressive form of DRM," says EA's John Riccitiello. That earned the company some very vocal complaints.
It's also a time when the gaming industry is continuing to grow beyond its central demographic of young males and its well-stocked library of first-person shooters and race car rallies. That's evidenced by Riccitiello's return to EA; he left the company in 2004 to make a career detour into private equity, but returned last year when, he implied, the company needed his leadership.
"Relative to where we'd been historically, our game growth was down, our sales were down, and our profits were down," Riccitiello said. Plus, there was stagnation. "The game industry had gotten a little overhooked on sequels, and EA is not immune to that. We just released our 18th Madden."
EA then restructured its business into four different "labels," with new emphasis on casual games and atypical releases like its smash hit Spore, which Riccitiello described as "a spectacularly original and interesting game."
"There are more species in Spore today than there are species on the planet Earth," Riccitiello said of the game, in which players raise a creature from a one-cell being into an advanced society. "It's a staggering degree of diversity."
But in an ironic twist, Spore, as ground-breaking as it is in the entertainment world, has been plagued by complaints about the alleged backwardness of its digital rights management system (DRM). Riccitiello said that he personally isn't a fan of DRM, but that the technology isn't there yet to make a game piracy-proof without it. "We chose a particularly aggressive form of DRM, which 99.8 percent of consumers would never notice, but that two-tenths of one percent got incredibly focused and formed an online PR cabal," he claimed. "We can eliminate piracy by essentially blocking the online service from the pirate. That's the future of DRM. The present of DRM isn't quite there yet."
DRM or no DRM, Riccitiello said that Spore is the start of a revolution. "I ultimately believe that a consumer is going to want to be involved with a game that they help build rather than one that they just watch or experience," he said. "Spore is probably the industry's first big step in that direction, and I would encourage you to look out for The Sims 3, which comes out this spring and which is another big step in that direction."
In-game advertising is in
EA is also experimenting on the in-game advertising front, which Riccitiello said is still not a mature business but is slowly getting there. "Presently, Barack Obama is advertising in one of our games today," he said. "We think it's very forward-thinking on the part of a presidential candidate."
When asked whether he would consider using Google's nascent AdSense for games, Riccitiello replied, "The quick answer is, of course we would partner with them and anybody else who would write us a check." Though he admitted to being "more bearish than bullish" on in-game advertising in the short term due to both psychological and technological hurdles, he says there's big potential for it down the road.
Innovation's nice, but a bigger question right now is whether the game industry will take a big hit amid economic downturn. Riccitiello said he doesn't think it will, but remained cautious. "I think it's going to be a strong holiday season...the video game industry so far this year has been stunningly strong," he said. Typically, innovation like what the industry is seeing now is "enough to overcome underlying recessionary trends."
But he admitted to the obvious: "We don't have a game industry index that goes back to 1929, so I don't have any data from what happens to the game industry in a market meltdown."
EA did lose a battle earlier this year when it tried to acquire smaller rival Take-Two Interactive in a bid that ultimately fizzled because the two companies couldn't see eye-to-eye on a price. After months of back-and-forth negotiation, Riccitiello said that the deal's potential relevance had passed.
"We wanted it to influence the holiday sales of their big franchise, Grand Theft Auto," he said. When it drew too close to the holiday season, that's when things really fell apart (though they'd been pretty messy all along).
The journalist interviewing Riccitiello onstage, Wall Street Journal editor Kevin Delaney, suggested that perhaps the EA chief could relate to Microsoft CEO Steve Ballmer, a veteran of a high-profile failed takeover bid himself.
Riccitiello laughed and replied, "Steve Ballmer's got his own challenges."
After fighting off an unsolicited buyout offer and reviewing its options with other potential suitors over the past five months, Take-Two Interactive Software announced on Thursday it has decided to remain an independent company.
Take-Two, publisher of the popular video game franchise Grand Theft Auto and other titles, said it has completed its strategic review and determined that it would like to continue operating as an independent entity, following a couple of strong quarterly results.
"Take-Two's recent performance demonstrates our potential to create value for the long term. We have delivered solid financial results and expanded our portfolio of leading titles, which includes the powerful Grand Theft Auto franchise," Ben Feder, Take-Two chief executive, said in a statement.
He added that Take-Two also has no debt and has yet to draw on a $140 million credit line, giving the company financial flexibility.
Nonetheless, Wall Street has yet to applaud the company, since Electronic Arts withdrew its unsolicited $2 billion buyout offer in mid-September. After that announcement, Take-Two shares plummeted nearly 25 percent to end the day at $16.57 per share. The stock closed on Wednesday at $15.93 a share.
"Take-Two's board of directors and management have a clear mandate from stockholders to maximize value," Strauss Zelnick, Take-Two's chairman, said in a statement.
EA went public with an unsolicited buyout offer for the company in February at $26 a share and then launched into a hostile bid in March. In August, EA dropped its hostile tender offer, and the companies entered negotiations up until several weeks ago, when EA stepped away from the deal.
Electronic Arts may have attempted to appease angry customers by amending its digital rights management policy on Spore, but the company's DRM troubles aren't over yet.
Earlier this week, a class action suit was filed in the Northern District of California Court on behalf of Melissa Thomas and all other Spore purchasers. The suit contends that EA violated the California Consumer Legal Remedies Act and Unfair Competition Law by failing to inform consumers that by installing Spore, they also inadvertently install a program called SecuROM. SecuROM is a copy protection program that limits the number of times software can be installed on a PC. In the case of Spore, that limit was set to three (and later upped to five).
"Although consumers are told the game uses access control and copy protection technology, consumers are not told that this technology is actually an entirely separate, stand-alone program which will download, install, and operate on their computer," reads the complaint (PDF). "Once installed, it becomes a permanent part of the consumer's software portfolio. Even if the consumer uninstalls Spore, and entirely deletes it from their computer, SecuROM remains a fixture on their computer unless and until the consumer completely wipes their hard drive through reformatting or replacement of the drive."
The suit accuses EA of "intentionally" hiding the fact that Spore uses SecuROM, which it alleges is "secretly installed to the command and control center of the computer (Ring 0, or the Kernel) and [is] surreptitiously operated, overseeing function and operation of the computer, and preventing the computer from operating under certain circumstances and/or disrupting hardware operations." The suit also claims that SecuROM takes over a portion of a PC's processing resources "to transmit information back to EA."
The filing asks the judge to certify the class action complaint and award all plaintiffs the $49.99 purchase price plus damages.
The copy protections associated with Spore have dogged the highly anticipated game since its launch earlier this month. The original restrictions placed on the game outraged many consumers, thousands of whom retaliated by posting negative reviews of the game on Amazon.com or downloading it illegally from file-sharing sites.
Tor Thorsen of sister site GameSpot contributed to this report
Faced with growing criticism about the way its newly released game Spore is activated on computers, gaming publishing giant Electronic Arts did a little retooling of its own.
EA has increased the number of computers that can be loaded with the game to five from three, despite earlier precautions with its digital rights management (DRM) policy intended to reduce piracy of its copyrighted software.
Spore, released two weeks ago featuring unlikely creatures that can be tailored to the user's liking, has altered other DRM limitations embedded in the software, the company announced.
Frank Gibeau, EA Games Label president, said in a statement:
We've received complaints from a lot of customers who we recognize and respect. And while it's easy to discount the noise from those who only want to post or transfer thousands of copies of the game on the Internet, I believe we need to adapt our policy to accommodate our legitimate consumers.
EA announced it will not only increase the number of computers that users can load one copy of Spore onto, but will also offer ways in which users can receive additional activations of the gaming software if warranted.
The game publisher also plans to fast-track its development efforts on creating a system that will allow consumers to de-authorize machines and transfer authorizations to new computers.
Nonetheless, Gibeau added:
We're willing to evolve our policy to accommodate our consumers. But we're hoping that everyone understands that DRM policy is essential to the economic structure we use to fund our games and as well as to the rights of people who create them.
EA said it believed at the time it created Spore that its DRM policy would not present any problems. The company noted that 75 percent of its customers tended to use only one computer for running their games and that less than 1 percent of its users relied on three or more computers. It also added that it told consumers that they could receive more than three activations if warranted by calling into the company's customer service.
Despite the criticisms over its DRM policy for the game, reviews of the game itself were labeled fairly high.
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CBS News science and technology correspondent Daniel Sieberg speaks
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