EA getting out of the acquisitions business (for now)
The man in charge of Electronic Arts continues to surprise with the direction he is setting for the company:
Electronic Arts CEO John Riccitiello revealed a core attribute that the megapublisher is prioritizing in the coming years: Thriftiness. He explained the company has no interest in pursuing more multi-million dollar acquisitions for now — rather, he said the company will focus on better integrating some of the major casual game developers it acquired over the past year, including Playfish, the Facebook game developer EA bought out for $300 million (with $100 million in potential bonuses) last November.
When pressed on whether the publisher was considering purchasing the recently let-go Rock Band developer Harmonix, Riccitiello responded that such an acquisition would “look like I’m doubling down on yesterday.” He added, “I’m sure some smart investor will buy the business feeling that they can catch a falling knife, but more people have been cut trying to catch falling knives than have benefitted from getting the timing exactly right.”
I take this as a sign, personally, that EA is sitting pretty in the gaming industry at this point in time. They have a good battery of studios and developers, many of whom are producing quality games…they would seem to be in a good position.
Not that I don’t think EA would hesitate to add a truly promising studio to its ranks if the opportunity arose, of course. At the same time, backing down from acquisitions for a while kind of relates to other recent policy decisions the company has made: it’s better (and better for them) if they let their current studios continue working on making enjoyable games, rather than deal with the hassle and confusion of the acquisition process.
And stop the Borgification ? I can’t believe it – they’ll keep acquiring studios down the road if only to prevent other big publishers such as 2K, Activation or Square to buy them 😛
Zenimax is also growing quite rapidly. I’d be surprised if Splash Damage, for example, didn’t get added to Zenimax’s list of acquisitions sometime soon. As for Harmonix? That was set up by one of the Infocom implementers, if I recall correctly. Perhaps he’ll buy it back. And frankly, I don’t think anyone would give a rat’s arse if EA were to be seen to be “doubling back” if they were to buy Harmonix.
I think the takeaway here is that EA is going to be a lot more…tactical in its acquisitions from now on. My read is that they’d rather pass over buying up a studio that they’ll go on to dissolve in another year and change; they’d rather wait to snap up a developer that will still have a name and a reputation a few years later.
In other words, they want to buy more BioWares, and fewer Pandemics.
And Harmonix would probably end up in the latter camp, were EA to buy it; Rock Band and various related games were pretty big a couple of years ago, but the fad is fading and such games are becoming much more “niche.”
Activision still make plenty of money from Guitar Hero and its ilk, and someone I know works for an Activision studio that does the games – they’re expanding. I’d say it’s premature to say it’s fading and “niche” just yet.
Fair…but equally, look at the sales figures. They’ve been trending down pretty steadily all year.
EA has all their cash tied up in a risky new mmo venture, they can’t afford to bankrupt and then purchase any new outside developers right now.
This seems to back you up, Kenneth.
http://www.develop-online.net/news/36626/Up-for-sale-Harmonix-suing-Viacom