Electronic Arts Accelerates Move Into Social Gaming With Playfish Acquisition

In an anticipated deal Electronic Arts announced November 9 that it will buy Playfish, a London-based company that produces games for friends to play together over social and mobile platforms such as Facebook, MySpace, Bebo, Google, iPhone and Android. Playfish, a two-year-old company backed by Accel Partners and Index Ventures, is disrupting the traditional video game marketplace by offering game experiences that allow people to play with their real life friends via social networks.

The approach is making gaming more mainstream, drawing in people who usually don’t play console games or on-line games. Playfish’s games ” are casual, fun and emotionally driven because you know who you are competing with,” says Accel Partners’ Kevin Comolli. “They touch all of the elements of the social graph.”   

Playfish said Nov. 9 that it currently has over 60 million monthly active players across its ten titles , driving more than one billion game play sessions every month. The company earns revenue via- micro-transactions and in-game advertising.

Each of the company’s ten games has been a hit on Facebook, including Pet Society, which boasts more than 20 million players per month and Restaurant City, which has over 17 million monthly players, according to Playfish. That’s significantly more than one of the most popular multi-player online games, World of Warcraft, which has 12 million.

EA said it will pay approximately $275 million in cash and $25 million in EA stock for Playfish. In addition, Playfish is entitled to payments, of up to $50 million a year if it meets certain performance milestones by the end of 2011.

The acquisition is expected to accelerate EA’s position in social entertainment, helping it to transition from traditional to digital and social gaming. Once the deal goes through Playfish will operate within EA Interactive, the traditional game maker’s  web and wireless division. The EA Interactive Division includes EA Mobile, which has 34% market share in the U.S. and top paid applications on Apple’s App store such as Rock Bank, Madden NFL10, the Sims and Tetris.

The intersection of mobile and social gaming will be a key to expanding the $50 billion gaming market beyond traditional video games, say industry observers.

Prior to Playfish the company’s CEO and Founder Kristian Segerstrale  served as managing director Europe of Glu Mobile and was a co-founder of Glu Mobile Europe, which merged with Macrospace  in 2001. During his tenure at Glu, Kristian led the rapid growth of Glu’s European business, including the creation and distribution of more than 40 mobile titles and helped lead the company’s successful IPO in early 2007.

At Glu the dream was to put “a game in everyone’s pocket,”  Segerstrale said in a recent interview. “There are less than 200 million consoles but more than 3 billion people with mobile phones.” But, with mobile operators serving as the channel to consumers, publishers were more focused on distribution channels than on innovative content, Segerstrale says.  He and Glu’s cofounders left in 2007 to pursue a bigger dream. “When we saw the launch of Facebook’s platform we had a collective ‘aha’ and knew this could have a massive impact on the computer games industry,” he says.

Playfish games integrate player feedback and behavior metrics with internal development carried out on an on-going basis within the company’s four studios in London, San Francisco, Beijing and Tromso, Norway.

Although the company does have operations in California the headquarters remains in London, another proof point that wildly successful global gaming companies can be built out of Europe, says Accel Partners’ Comolli. Accel is also an investor in Germany’s Gameforge, one of the biggest and fastest growing online-gaming firms.

 

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