EA Buys PopCap Games in Deal Worth Up to $1.3 Billion
Rumors of PopCap Games acquisition today are confirmed as EA announces its purchase of the casual games developer for $750 million, plus earn out that could bring it up to $1.3 billion. The deal was first reported by TechCrunch a few weeks ago.
According to the press release issued by EA, the deal is scheduled to close in August. Its impact on EA’s fiscal 2012 results increases Q1 guidance from a range of $500 million to $525 million versus the original range of $460 million to $500 million of non-GAAP revenue. For the full-year non-GAAP guidance, EA is amending its original figures of $3.75 billion to $3.95 billion to a range of $3.8 billion to $4.025 billion to account for PopCap’s contributions to the remainder of the fiscal year.
During a press conference call on the matter, EA CEO John Riccitiello and CFO Eric Brown joined PopCap CEO David Roberts in laying out the strategy behind the deal and what we can expect from it.
On the money side, the bottom line is that PopCap — while expensive — is worth the money. It relieves EA of the burden of creating new intellectual property for casual games, it strengthens EA’s content offerings on Origin and Pogo, and it cements EA’s position on Facebook as the number two developer behind Zynga. EA expects PopCap to be accretive 10 cents or greater in fiscal year 2013. The brunt of the costs for the acquisition will show up in Q2 FY 2012, when EA was already planning on taking a hit in marketing costs for big-ticket Q3 game releases.
On the content side, EA believes its doing PopCap a favor by outsourcing certain parts of the development process (such as updating games for new mobile devices) to its other studios. This frees up the creative people at PopCap to actually be creative in developing new games or new IP. EA also brings additional support to PopCap in Asia, where the casual games developer recently launched its Plants vs. Zombies franchise on social network Renren.
Now that PopCap belongs to a public company, we expect to get a better look at its earnings — particularly broken out by platform. No new information on PopCap’s revenues for 2010 or 2011 were provided on this call and Riccitiello declined to get into specifics, citing EA’s upcoming earnings call as the source for that information. As for clues to upcoming PopCap game releases in social and mobile, Riccitiello says that fear of ambush prevents them from discussing any title releases in detail.
“For good or for bad, our proposition going forward is to provide less visibility on what’s in the mobile social pipeline,” he says.
July 12th, 2011 at 4:35 pm
Well, at least we can be thankful it wasn’t Zynga.
July 13th, 2011 at 2:23 am
Actually, wooga is currently the second largest developer of social games on Facebook (by both MAU and DAU), and EA is only 2nd by MAU and 3rd by DAU.
Yes, when EA and PopCap merge users, EA will jump back up the rankings. But considering that both companies have bled users over the past month, I don’t see how this deal is going to “cement” EA’s position. Both wooga and Playdom are growing at a much greater rate than EA or Popcap. Until EA and Popcap actually start growing again, this merger is nothing more than a numbers trick.
July 13th, 2011 at 7:27 am
EA and PopCap aren’t losing users fast enough to close the gap that would for between them and wooga if the totals were combined. As of today, it’d be about 14 million MAU ahead.
July 13th, 2011 at 8:01 am
[...] down the list is where the real action seems to be taking place. Following yesterday’s announcement that EA would acquire PopCap Games this summer for up to $1.3 bullion, we see PopCap’s two [...]
July 13th, 2011 at 4:30 pm
@Bean Queen — Interesting that the price tag on this is $1 billion and Zynga just happened to have $1 billion sitting around when they filed their S-1 a week or so back…
July 15th, 2011 at 8:35 am
[...] disadvantage if a rival developer releases a copycat game first. The latter point is the reason EA says it will not be disclosing upcoming PopCap Games social and mobile releases in its earnings reports; [...]
July 15th, 2011 at 6:01 pm
[...] as EA states that it will use $550 million in convertible debt to finance part of its recent PopCap purchase. As noted by VentureBeat, this is likely to allow for greater financial flexibility when it comes [...]
July 17th, 2011 at 8:33 am
[...] EA Buys PopCap Games in Deal Worth Up to $1.3 Billion [...]
July 26th, 2011 at 3:47 pm
[...] out revenues earned by Playfish or discuss upcoming social game releases out of the newly-acquired PopCap Games. Release dates for its upcoming games, The Sims Social and Risk: Factions, are still unspecified, [...]
August 1st, 2011 at 5:19 pm
[...] be interesting to see if games from developers that recently merged with publisher — like PopCap with EA or Lolapps with 6waves — manage to move all the way up into the top [...]
September 6th, 2011 at 10:51 am
[...] 5 percent in previous years, according to James Gwertzman, who heads the unit for Electronic Arts. Before it was acquired by EA, PopCap said it made more than $100 million in revenue last year so a back-of-the-envelope guess [...]
February 1st, 2012 at 2:12 pm
[...] 30 percent growth in revenues on a trailing-twelve-month basis. EA bought the Zuma Blitz developer in the summer; its newest Facebook title, Solitaire Blitz, is currently in open [...]
May 7th, 2012 at 4:27 pm
[...] social game business increased rapidly in summer and fall of last year after acquiring PopCap and launching The Sims Social. At one point in September 2011, the developer was No. 2 on [...]
May 8th, 2012 at 5:01 pm
[...] social game business increased rapidly in summer and fall of last year after acquiring PopCap and launching The Sims Social. At one point in September 2011, the developer was No. 2 on [...]