Mergers & Acquisitions In The Gaming Industry
When gaming companies acquire or merge with other gaming companies, they do so because they want to expand their player base, but some do so just to increase their influence in the gaming industry. The game studios that does this type of practices are usually companies that are worth billions and billions of dollars. Take Electronic Arts as an example. One of the biggest gaming companies in the world, has made their biggest acquisitions of $750M of Popcap games. This goes to show you that major companies are willing to splurge, in order to gain influence in the gaming industry, which also means less competitor. In this essay, we’re going to take a look into EA’s acquisition of gaming studios and the consequences that follows. When gaming companies make acquisitions, it’s usually in the millions or rarely, billions. Electronic Arts are no stranger to this kind of practice. They’ve been acquiring gaming studios for decades, with their most expensive acquisition of Popcap games. How can they do this you ask? Well, it’s because they created some of the most well-known games that’s played by the millions. Games like Battlefield and Star Wars are some of EA’s most famous games. It’s not only the sales of games that gives them the financial advantage. EA is notoriously known for implementing microtransactions into their games. This feature allows the players to spend real money to get in-game cosmetics and items that will give them an advantage over players that don’t spend money. This feature has generated them millions of dollars. Microtransactions helped gained EA millions in revenue, which is crucial in helping EA acquire gaming studios. EA has some of the biggest financial advantages from its smaller deals, such as acquiring KlickNation, the gaming company that created Star Wars: Galaxy Forces, the game that makes them $100M per year. It also provided them some of the world’s most well-known game IPs, such as Plant vs Zombies, by Popcap games. However, the bigger deals that EA made haven’t really paid off yet. In fact, according to Takahashi (2017), EA’s $750M acquisition of Popcap games has been described as “The company’s worst failure”. Why is EA’s $750M acquisition of Popcap is a failure you ask? Well, I will be explaining next why some people view EA’s acquisition of gaming studios as an “Ax killer”. Electronic Arts is known for acquiring gaming studios and shutting them down suddenly.
The reason being is that because they see great games being released by these studios and shows great interest in them, enough interest to buy them out. Once EA has bought the studios, they start to enforce their own business decisions into making new games. Decisions such as adding microtransactions and adding a bunch of DLC (Downloadable Content). This puts an immense amount of pressure on the developers and since they’re pressured to do all these things, they rush with the development of the game and when they release it to the public, the game is riddled with bugs and game-breaking glitches, basically an unfinished game.
After receiving several backlashes and complains, EA decides that the developers are no longer useful to them, then EA decides to close the game studio they bought. This might seem like a very evil act by EA but not all acquisitions are bad. Some are even beneficial. BioWare Pandemic was acquired by EA in 2008, with an estimated price tag of $705M. Even though EA decided to shut down Pandemic studios, they kept BioWare studios open, which created one of the biggest anticipated games, Anthem, which is planned to be released in 2019.
