Electronic Arts (EA) Acquires Playfish, Targets Facebook

Electronic Arts has stepped into the arena of social gaming by purchasing Playfish. It was announced on the company's website Novemeber 9^th that the struggling giant (EA) has acquired Playfish, a leader in creating social networking games. EA purchased Playfish for about $250 million in cash and $25 million in equity. EA stated this strengthens and accelerates their position in social entertainment. Some view this as a quick and almost ugly fix to the game making giant's problems.

"Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space," said Barry Cottle, Senior Vice President and General Manager of EA Interactive.

Electronic Arts was founded in 1982 by Trip Hawkins and it was a pioneer of early computer games. It had grown steadily into a powerhouse since that time but in 2008 it lost a staggering 1 billion dollars.

EA also announced that it is cutting 1500 jobs, which is about 17 percent of it's overall workforce, after posting the news that it lost more than 42 million in the 4^th quarter of 2009. A large portion of this loss was the purchase of Playfish.

Playfish has already installed more than 150 million of it's games on Facebook, Myspace, iPhone and Google and has the gaming giant EA throwing in everything but the kitchen sink to acquire it. With over 1 billion play sessions per month this could shoot the company to the forefront of social gaming online and make it an even greater powerhouse.

EA is most well-known for its franchise Madden NFL games and its recent hit Rock Band series. But, the console sales of the games EA makes has seen sales slide every month for just about every title (including Madden & Rock Band) while EA mobile leads with mobile applications worldwide so the gamble in the iPhone, Facebook market might have huge ramifications for the gaming giant.

Does this signal mean the end of game development as we know it? Will we see more online social interaction games versus those that you can set at your computer and play by yourself? Only time will tell but with this acquisition of Playfish, and the "all in" mentality of EA, it seems that the signal is very clear. Gaming is changing as we know it. And with the drop in it's console games, the 17 percent that was with EA in a time when social gaming wasn't as important, paid the price of these changing times.

Sources:
Electronic Arts, Electronic Arts Acquires Playfish
Alex Wiltshire, EA Announces 1500 Layoffs, Edge Online