Comments on: Who will buy Electronic Arts? http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/ A veteran's view on marketing games Fri, 20 Nov 2009 21:07:25 -0800 http://wordpress.org/?v=2.8.5 hourly 1 By: Him http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/comment-page-1/#comment-682 Him Thu, 03 Jan 2008 16:23:48 +0000 http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/#comment-682 1. Nintendo are making money on hardware for both the DS and Wii. They should be buying more factories, not western games publishers 2. Microsoft and exclusivity. EAs business model is selling large quantities of reasonable quality products on all formats with a large marketing push. This organisational setup is not compatible with first-party exclusive title development 3. Sony are selling off divisions to pay for a heavy loss-making games division. Next. 4. Google are a web software company. EA a bricks and mortar packaged goods company. EA bring nothing to this deal. 5. Your others are just as tenuous. 1. Nintendo are making money on hardware for both the DS and Wii. They should be buying more factories, not western games publishers
2. Microsoft and exclusivity. EAs business model is selling large quantities of reasonable quality products on all formats with a large marketing push. This organisational setup is not compatible with first-party exclusive title development
3. Sony are selling off divisions to pay for a heavy loss-making games division. Next.
4. Google are a web software company. EA a bricks and mortar packaged goods company. EA bring nothing to this deal.
5. Your others are just as tenuous.

]]> By: bill http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/comment-page-1/#comment-599 bill Wed, 12 Dec 2007 09:27:33 +0000 http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/#comment-599 I dont always see a column that catches my eye..but this one did. I hadnt thought about EA being taken over since they are so big in the game field. You are bang on though.. its very true it would make a good acquisition for someone. Problem is that they are really a production outfit these days. The real developer is Black Box which they took over years back and originated Need for Speed and according to an article in the Vancouver Sun Business section today have another hit with their Skate game. So Black Box is the hitmaker for them. Black Box was created by some folks that left Radical Entertainment and just last week I found out something I didnt know. Radical was started by people that had been involved with Don Mattrick who had created the EA Vancouver franchise that has become a world leader. Back in the early 80s he had developed a game called Evolution and sold it. I know this because i was in grade 10 and invested some money in a software development company called Sydney Development. They bought his game.. proceeded to go under and hence now Vancouver is a world leading game dev center! So as much as i didnt make any money off of that..i can always joke that i helped finance the start! Not to mention the companies that developed games like Galaga, Defender or Spy Hunter that I poured tons of quarters into. so i like your take on that situation. I would only argue that i dont think they are worth as much as a nimble upstart. Online gaming is where its at now.. my roomate is sitting in his room right now trying to kill some.. who knows what. Its obvious.. not to mention i could see one of the companies develop there boxes to run movies through. That would make a lot of sense to try and grab a bit of the movie or vid market on top of the games. Having powerful chips and cards could make that experience better and easier. Just a guess.. but seeing the sandisk system that just came out we can see where the market is evolving.. yet i wonder.. why dont they just do a bluetooth version of that. I also like the people that talk about how games have evolved to the point that people like myself arent even interested in them anymore. The Wii appears to slightly address that issue. Another issue that i wonder about is that if games are bringing in more than movies..then realistically game companies should be taking over the film companies..not the other way around!!! Its just the games folks arent savvy to their power potential..therefore they deserve to die...haha.. ok, cheers and keep the good articles coming.. whatever happened to Rage? -bill stenner vancouver bc *after this email i would like to add i find the list of companies interesting..one especially being Google. They havent stepped into the gaming arena yet..but following their pattern expect something open source styled that would allow everyone else to cannibalise each other. National Amusements is a good one because Viacom is constantly on the move trying to find new markets. One problem who will take over when sumner redstone is gone? he just cut his kids out..so that company will just go to the wolves when he is done. I think we are missing the dark horse asian companies since online gaming is massive with them. I expect to see some of them grow faster than most. I think we are naturally in a huge M&A era.. lots of money floating around..lots of uncertainty and too many players chasing limited money. I dont always see a column that catches my eye..but this one did. I hadnt thought about EA being taken over since they are so big in the game field.
You are bang on though.. its very true it would make a good acquisition for someone. Problem is that they are really a production outfit these days. The real developer is Black Box which they took over years back and originated Need for Speed and according to an article in the Vancouver Sun Business section today have another hit with their Skate game. So Black Box is the hitmaker for them. Black Box was created by some folks that left Radical Entertainment and just last week I found out something I didnt know. Radical was started by people that had been involved with Don Mattrick who had created the EA Vancouver franchise that has become a world leader. Back in the early 80s he had developed a game called Evolution and sold it. I know this because i was in grade 10 and invested some money in a software development company called Sydney Development. They bought his game.. proceeded to go under and hence now Vancouver is a world leading game dev center! So as much as i didnt make any money off of that..i can always joke that i helped finance the start! Not to mention the companies that developed games like Galaga, Defender or Spy Hunter that I poured tons of quarters into.

so i like your take on that situation. I would only argue that i dont think they are worth as much as a nimble upstart. Online gaming is where its at now.. my roomate is sitting in his room right now trying to kill some.. who knows what. Its obvious.. not to mention i could see one of the companies develop there boxes to run movies through. That would make a lot of sense to try and grab a bit of the movie or vid market on top of the games. Having powerful chips and cards could make that experience better and easier. Just a guess.. but seeing the sandisk system that just came out we can see where the market is evolving.. yet i wonder.. why dont they just do a bluetooth version of that.

I also like the people that talk about how games have evolved to the point that people like myself arent even interested in them anymore. The Wii appears to slightly address that issue.

Another issue that i wonder about is that if games are bringing in more than movies..then realistically game companies should be taking over the film companies..not the other way around!!! Its just the games folks arent savvy to their power potential..therefore they deserve to die…haha..

ok, cheers and keep the good articles coming.. whatever happened to Rage?

-bill stenner
vancouver bc
*after this email i would like to add i find the list of companies interesting..one especially being Google. They havent stepped into the gaming arena yet..but following their pattern expect something open source styled that would allow everyone else to cannibalise each other. National Amusements is a good one because Viacom is constantly on the move trying to find new markets. One problem who will take over when sumner redstone is gone? he just cut his kids out..so that company will just go to the wolves when he is done. I think we are missing the dark horse asian companies since online gaming is massive with them. I expect to see some of them grow faster than most. I think we are naturally in a huge M&A era.. lots of money floating around..lots of uncertainty and too many players chasing limited money.

]]> By: Bruce http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/comment-page-1/#comment-591 Bruce Tue, 11 Dec 2007 07:50:04 +0000 http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/#comment-591 This article seeks to illustrate 2 points. 1) Independent video game software publishers are currently big targets for M&A activity. They are in high growth and are in an industry that will be bigger than film or television. EA is just chosen because it is the biggest. All the other big game publishers will go the same way. Small game publishers (unless they are niche players) have no value because the economies of scale are so great. As has been proved in other areas of IP publishing. 2) Many companies, especially the media giants, have the potential for massive commercial synergies by acquiring games publishers. In fact many are in declining market areas and need to acquire game assets in order to survive. Currently they have the advantage of size so they have a window of opportunity. This will soon go as gaming grows and other media contracts. Hence the current M&A imperative. Gaming will be the biggest area of media, this is inevitable. Currently it is still at it's very beginning. The fundementals of interactivity, connectivity and non linearity are so enormous that they will reach into areas that are beyond our current imagination. Education, certainly, will become centred around video games, something we are just beginning to see on the DS. Gaming will be core for Google. They really have no option. Because gaming will be so all pervasive. This article seeks to illustrate 2 points.
1) Independent video game software publishers are currently big targets for M&A activity. They are in high growth and are in an industry that will be bigger than film or television. EA is just chosen because it is the biggest. All the other big game publishers will go the same way. Small game publishers (unless they are niche players) have no value because the economies of scale are so great. As has been proved in other areas of IP publishing.
2) Many companies, especially the media giants, have the potential for massive commercial synergies by acquiring games publishers. In fact many are in declining market areas and need to acquire game assets in order to survive. Currently they have the advantage of size so they have a window of opportunity. This will soon go as gaming grows and other media contracts. Hence the current M&A imperative.

Gaming will be the biggest area of media, this is inevitable. Currently it is still at it’s very beginning. The fundementals of interactivity, connectivity and non linearity are so enormous that they will reach into areas that are beyond our current imagination. Education, certainly, will become centred around video games, something we are just beginning to see on the DS.

Gaming will be core for Google. They really have no option. Because gaming will be so all pervasive.

]]> By: Steve http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/comment-page-1/#comment-589 Steve Mon, 10 Dec 2007 19:51:51 +0000 http://www.bruceongames.com/2007/12/10/who-will-buy-electronic-arts/#comment-589 What would it cost to buy EA- how much of multiple over revenue? How would that compare to the market valuations of the companies you mentioned? Would they bet that large a stake of their business? Would they move outside a core area for such a large acquisition? You mentioned Google, for example, would Google spend upwards of $10b to get into gaming, a non core area for them? I'm not suggesting you're theory isn't interesting but you haven't laid out much of a financial case. I saw the post on seekingalpha, and for a finance site, I expected more data and detail. At your convenience would love to see more justification and insight than this summary you've written. What would it cost to buy EA- how much of multiple over revenue?

How would that compare to the market valuations of the companies you mentioned?

Would they bet that large a stake of their business?

Would they move outside a core area for such a large acquisition?

You mentioned Google, for example, would Google spend upwards of $10b to get into gaming, a non core area for them?

I’m not suggesting you’re theory isn’t interesting but you haven’t laid out much of a financial case. I saw the post on seekingalpha, and for a finance site, I expected more data and detail. At your convenience would love to see more justification and insight than this summary you’ve written.

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