After months of speculation, EA confirmed yesterday that it's completed a buyout of social gaming giant Playfish, the developer behind popular titles such as Restaurant City, Who Has the Biggest Brain, Pet Society and Country Story.
Playfish has an install base of over 60 million players across Myspace, Google, Facebook and iPhone, prompting a buyout deal of $275 million coupled with $25 million in equity retention agreements. A further $100 million could also be made available depending on how the Playfish brands meet performance milestones between now and the end of 2011.
"Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space," says Barry Cottle, Senior Vice President of EA Interactive.
"EAi has been successfully leading the charge for EA, and with the addition of proven expertise from Playfish, their broad consumer base and strong game brands, we're moving ahead aggressively in our plans to lead in the category of cross-platform social entertainment."
While this move clearly demonstrates EA's commitment to the social age of casual gaming, it's landing criticism elsewhere for not showing the same commitment to its staff.
Only hours after the Playfish announcement, the gaming giant gutted its workforce at several key EA locations. In total, 1,500 lay offs will be made by next March, consisting of 900 in game development, 500 in publishing and 100 from management in an effort to save $100 million per annum.
"Laying off employees and closing facilities is never pleasant," CEO John Riccitiello said during an EA conference call. "We have a lot of compassion for those impacted but these cuts are essential for transforming our company. Our operating expenses will be reduced by at least $100 million compared to our current run rate."
The axed jobs take 12 in-development projects with them down the pan, while the company also suggested it will be reducing its portfolio to only the most profitable franchises.
Evidently these savings are coming through nicely, having paid for - and tainted - the acquisition of Playfish.
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