Electronic Arts buys PopCap
The Electronic Arts' logo at a computer gaming convention in Leipzig, Germany
Kai Ryssdal: Elsewhere in media conglomerate news today, Electronic Arts, the video game giant, is going to spend more than $1 billion to buy an outfit up in Seattle called PopCap. They make what're called casual online games, which is to say stuff for your mobile phone and PC that doesn't necessarily need a terminal. Bejeweled and Plants vs. Zombies are sample titles you might know, or might not.
But here's the thing. Last year, PopCap had $100 million in revenue. So why's EA willing to pay 10 times that much? Marketplace's Steve Henn reports.
Steve Henn: Electronic Arts made a fortune selling games for the Xbox and Playstation. Games like Madden Football and Battlefield.
But John Davison, V.P. at Gamespot, say EA can't grow if it focuses only on hardcore gamers -- the ones willing pay $50 or $60 a game. He says the company needs to reach hundreds of millions of casual gamers playing on Facebook and their phones instead. And that's were PopCap comes in.
PopCap created hits like Bejeweled, Peggle and Plants vs. Zombies.
Davison: Beyond that they have Bookworm, which, you know, even my mother-in-law plays. It's the only game she has ever played -- but it's huge for her.
And small, cheap -- even free -- games are huge for the industry now too.
Michael Pachter's a video game analyst at Wedbush Securities. He says Zynga, the maker of Farmville and Empire & Allies, has turned the video game business upside down. It gives its games away for free and has attracted hundreds of millions of users who spend hours playing Zynga's games.
Michael Pachter: So Zynga's got two billion minutes a day. I can't even tell you how many hours a year that is, but it's billions and billions and billions -- two billion minutes a day of engagement. And the idea is, if you have that many billions of page views, you can sell those people stuff, you can sell them advertising and virtual items.
EA thinks it can do the same thing with PopCap. In the meantime, Zynga's planning to go public.
Pachter: And the market is talking about paying $10 billion to $20 billion.
Not so long ago, EA was worth that kind of money, too. But not anymore -- and executives there are betting that PopCap will get them back in the game.
In Silicon Valley, I'm Steve Henn for Marketplace.