Ok, so EA recently acquired Bioware and Pandemic from Elevation Venture Partners for about $800M. The currentCEO of EA (John Riccitiello) was one of the founders of Elevation Venture Partners, and formerly the EA President/COO.
EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. (Elevation Venture Partners) and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp.
Now, this obviously raised a lot of eyebrows for several reasons (wonder who really cashed out on this deal eh?).
EA has a terrible reputation of destroying studios after acquiring them, and an equally bad reputation in the MMORPG space. There were some doubts when EA acquired Mythic, but promises were made and the world generally had happy thoughts that EA/Mythic would deliver Warhammer Online and have a nice success.
Oddly enough, after the acquisition, EA tasked Mythic with giving good ole’ Ultima Online (over ten years old now!) a cosmetic facelift. Ok fine, but aren’t these guys already busy with a MMORPG project?
So, EA picks up two extremely well respected studios, and more promises are made…they won’t be dismantled, EA is looking for hot new original content, Bioware is rumored to be working on a sweet Star Wars MMORPG (even though Sony already slaughtered that franchise and Lucasarts annoyed lots of people with the crappy last three movies), etc. etc.
Ok, fine, maybe EA has turned over a new leaf since Riccitiello returned earlier this year. But oh no! Rumors are flying about EA laying off a lot of staff (many of them from Mythic), and relocating the Mythic team to Virginia. What the hell?
If they can’t afford to be paying staff and need to cut costs, why the hell did they just blow $620M in cash to acquire two studios (800 employees) and take on the long term financial burden of all that staff? Is EA losing confidence in Mythic/Warhammer? Is this in any way related to the recent beta delays for Warhammer?
What is going on at EA? Are they going to use the acquisition for some accounting trickery for the end of the quarter? I dunno…
I do know that if I was an employee at EA, I’d be damn nervous and I’d start farming my resume out. That company has been a house of cards for too long now, and it wouldn’t surprise me if their stock starts tanking relatively soon. Sure, maybe acquiring Bioware and Pandemic will inject enough new blood to influence and catalyze some change, but EA (and all of their studios) are notorious for burning out talent quickly and replacing it with inexperienced college grads they just farm out of “game design” programs at various Universities.
It seems that EA has been playing the “increase valuation through acquisition” game for a long time..new studios in multiple other countries (including China) have been launched in the last 24 months, and there is even a brand spanking new one here in Raleigh that will be working on a NASCAR title (cause, you know, North Carolina = NASCAR, so developers here would naturally be better at design…it’s a southern thing).
I’m giving EA a big thumbs down. Booo.