After lengthy negotiations, Electronic Arts closed it’s anticipated acquisition of social gaming startup Playfish for $275 million in cash. An additional $25 million in stock will be set aside for retaining the top talent at the startup, and another $100 million in earnouts are part of the deal as well if the business hits certain milestones. So the total value of the deal could amount to as much as $400 million when all is said and done. Although, earnouts have a tendency to come up short (see Skype).
Playfish is based in London, and has raised $21 million from Accel Partners and Index ventures. The Accel investment is from its European fund. Playfish’s estimated annual revenues are $75 million.
Last year at a presentation at the Founder’s Forum in Hampshire, England, CEO Kristian Segerstrale put up a slide with a dinosaur and expressed his desire to “kill EA.” Now he’s joining them instead. Funny how that works.
Playfish operates social games on Facebook, MySpace, Hi5, and other social networks which have been installed more than 150 million times, and claims 60 million monthly active users. It’s top games include Pet Society, Restaurant City, Country Story and Who Has The Biggest Brain?
Social games are increasingly popular and Electronic Arts needed to buy one of the top players: Zynga, Playfish, or Playdom. The issue is that all three make their money from trading in-game virtual currency for advertising offers. Many of these offers are outright scams, which may explain why Playfish got less in upfront cash than the $350 million to $500 million range it was looking for, and the last $100 million is in the form of an earnout. Playfish perhaps also is not as exposed to these scammy offers as its competitors.
Kevin Comolli, a partner at Accel, tells us that the “vast majority” of Playfish’s revenues do not come from lead generation or other types of advertising offers for virtual currency. His take on the whole Scamville affair is that “exposure is ultimately helpful. It needs to be a durable business. Cleaning this up important.”
Wow… that’s a lot of dough. How about some financial figures for Playfish though? Congrats regardless.
It does say that Playfish’s annual reveues are $75 millions.
Congrats to playfish. They always invested on quality over spam – a rare exception. It’s nice to see that the business world appreciates it.
oh and quit it with the scams already. show us some statistics; most insiders say sms offers account for less than 0.5% of the virtual goods revenue.
Since TC broke the story, we have seen CEOs replaced and companies change direction.
That clearly indicates it is a significant issue. Not some 0.5%.
“Follow the platform, not the press.”
http://www.zene...fers-scams.html
nice to see money moving around.
Great to see an M & A report, but where are the financials on Playfish? If you don’t have them, or can’t get them, please at just acknowledge that.
Playfish is a privately held company. Their financial statements are not disclosed. But we’ve estimated their annual revenues at $75 million.
much appreciated – thanks
just go online to companies house and buy the reports – pretty cheap and for other than very small companies will give you the financials of the company.
Hate to be the grammar jerk, but twice in one short article?
“its anticipated acquisition” / “Its top games”
I bet you hate to be an idiot too. Because both of those were used correctly.
I’m not sure why the author “fixed” it. Now it’s wrong.
The article hasn’t been changed; the typos you see now have been there all along. I included corrections in my comment and apparently confused you by using quotation marks.
Pretty nice for a company that launched the first game 2 years ago. 300MM. Not bad! Congrats!
This ain’t no fantasy sport! Congrats to the team at Playfish
Gongrats to Playfish, they deserve it. Great company that always invests in original quality games and treats their users well.
” Electronic Arts closed it’s anticipated ” — how about fixing your grammar?
How about you shove Strunk and White up yours? Uptight moron.
In 18 months, will this look outrageously expensive when the big 3 are 3 other companies? … Probably but at least they are in the game.
Funny how dinosaurs always seem a lot more cuddly when they’re carrying $275 million in cash.
Anyway, good move on EA’s part.
LOL! A lot of money but congratulations ^ ^
I agree this is a good move although it would have looked a lot smarter 6-9 months ago. Good of EA to buy the #2 for once rather than being driven/compelled to overpay for #1.
Like any good startup though this deal paying out depends highly on their ability to keep the business drivers. In an environment that moves as quickly as social gaming, you need people at the helm that will push and innovate nonstop.
Congratulations to everyone involved.
Actually, by their own admission, Zynga was making about 30% of its revenue from the scams in question. Not insignificant at all.
You REALLY think Zynga is going to tell everyone how much they REALLY make? Highly unlikely. Those numbers were strategically released to throw everyone off and offset the Playfish acquisition momentum. Their business is driven by Virtual Goods. Plain and simple.
no post about google buying admob yet?
This is great news for zynga, et al. EA is going to absolutely drive this company into the ground, they have no idea how social games work. SPORE on facebook with only 40k monthly uniques even after all the press coverage?? That’s laughable.
Playfish’s exposure to offers has until recently only been via Trialpay, regarded as significantly ‘cleaner’ than the other offer providers and absent afiak any mobile offers. I believe they recently tested superrewards for earning soft currency on Pet Society, but I doubt that’s a significant earner. I’d estimate their overall offer revenue to be ~5% or less.
Great deal for EA. Congratulations to all @ Playfish, this is a well deserved win.
I wonder if this starts a land grab for the other two top players, especially by Activision, Sony, etc. EA was smart to buy when they did, because I’d expect the asking price to rise as acquisition options become more limited.
Congrats to Playfish! Your games always stand out as quality originals in a sea of copycats. You guys really deserve it, and I wish you continued success and growth as part of EA. Bravo to Sami, John, and team.
Great to hear the M&A are biting.
Let the clean actors win, and the dirty ones die…
Selling out before they lose their revenues?
Ironically, EA acquired Playfish on the day that they (EA) laid off 1500+ employees!!!!!!!!!!
$300 million to buy a new company but not enough to keep employees—despite publishing “better that anticipated quarterly receipts”????????
agreed