Last week, Electronic Arts (EA), the videogame publisher that is most notably known for its Madden franchise, had a really interesting week.
In an effort to build up its digital business, the company agreed to acquire Playfish Ltd., a London-based maker of online social games, for at least $275 million. A lot of money, eh? I think so, but I guess EA’s decision to cut 1,500 jobs that very same day makes it a little easier to swallow. Not so much for the people without a job.
EA is viewed as a mainstay in the traditional video game development business and its mid-life crisis, so to speak, is now threatening the foundation that video game companies are built on. So what does this mean for the industry? Well, for one thing, it forces EA and other traditional game companies to reevaluate who they are and who they want to be.
EA was at a crossroads – either continue to focus on consoles or make the leap to digital and social gaming. The company’s COO, John Schappert, said that, “Electronic Arts wants its games to be wherever people want to play, whether on video game consoles, mobile phones or, with the Playfish acquisition, social networks.” Makes perfect sense to me, give consumers what they want and they’ll come back for more.
Facebook news feeds are cluttered with updates from games like Mafia Wars and Farmville, so it’s not shocking that social gaming is taking off in a big way. EA has dabbled in this area with the launch of Battlefield Heroes, but only time will tell if the company will leave the comfort of consoles and get aggressive in the online world.
Personally, I think EA has great intentions for its acquisition, but following through and committing to a new business model is a whole different ball game.
Contributed by Jena Coletti. Follow her @jmcoletti