Electronic Arts has been on a buying spree for the last few months – but its latest purchase was an absolutely essential one.
The publisher announced plans Monday to acquire Glu Mobile in a deal worth $2.1 billion. It’s a pairing that might not make sense at first. Why, after all, would the company behind Madden, Mass Effect, and Battlefield want a mobile gaming company best known for fare like Design Home, Diner Dash, and Kim Kardashian: Hollywood?
It comes down to a few things. First, EA desperately needed a mobile division. Despite several attempts to make an impact in the mobile space over the past 10 years or so, EA has never been especially successful. Activision’s buyout of Candy Crush Saga developer King five years ago set the company on a mobile path that has been hugely profitable. EA (and its investors) have been trying to find a way to emulate that.
Glu, of course, isn’t King. A game featuring Kim Kardashian doesn’t have the widespread appeal of Candy Crush. But it’s stupidly popular and is a cash machine. Last year, Glu had revenues of $540 million. And it has a healthy future with its own games, including Disney Sorcerer’s Arena.
By acquiring Glu, EA bypasses recruiting and staffing a team that gets how the mobile game audience works. It will add over 500 mobile developers and more than 15 live services that span a variety of genres. More importantly, it will gain knowledge in the casual sport and lifestyle genres – something that can be especially valuable as it tries to broaden the audience for FIFA, Madden, and NCAA Football.
“Our acquisition of Glu combines amazing teams and deeply engaging products to create a mobile games leader with proven expertise across many fast-growing genres,” said Andrew Wilson, CEO of Electronic Arts. “Mobile continues to grow as the biggest gaming platform in the world, and with the addition of Glu’s games and talent, we’re doubling the size of our mobile business. With a deep IP portfolio and an expanding global audience, we’ll deliver more exciting experiences for our players and drive further growth for Electronic Arts.”
Glu also comes with a Major League Baseball deal via MLB Tap Sports Baseball. That not only broadens the potential for EA Sports, it gives the company a successful template for its franchises to follow.
EA isn’t a complete nonplayer in mobile, of course. It does have Bejeweled and Plants vs. Zombies among its catalog, both of which are standards. Neither, though, has a buzz about them these days. So the new thinking Glu provides could give the company fresh inroads to customers.
EA also just came a step closer to wrapping up its purchase of Codemasters, gaining the approval of that company’s shareholders. Very few of its franchises have solid mobile offerings – and while they don’t seem to be a fit for Glu’s area of specialty right now, it’s another avenue EA could explore at some point.
Glu and EA are an odd couple, yes. But they bring different players to the table, which is likely part of what made a purchase so appealing. EA has a good understanding of the core console and PC gamers with games like Battlefield. And it has a handle, at least, on casual gamers who flock to its sports titles (though there are certainly core players who devour those games).
It has zero presence, though, with the lifestyle audience – the people who play games like Design Home and Kim Kardashian: Hollywood and would never consider themselves gamers, though they spend heavily on those titles and others like them. Glu has a lock on those. And, utilized properly, that could add significantly to the bottom line at EA.
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