Not Playing Around. EA Buys Playfish For $300 Million, Plus a $100 Million Earnout.
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.
Playfish is based in London, and has raised $21 million from Accel Partners and Index ventures.
Playfish operates social games on Facebook, MySpace, Hi5, and other social networks which have been installed more than 150 million times. 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.
