Electronic Arts Buys Jamdat Mobile

Author: by Nich Maragos, Simon Carless

In a significant move toward establishing a larger presence in the mobile games field, Electronic Arts has acquired mobile publisher and developer Jamdat, responsible for some of the biggest mobile phone games such as Tetris, Bejeweled, and EA's own licensed mobile titles like Need for Speed and Madden NFL. EA purchased Jamdat for $27 per share, a total value of $680 million. The acquisition has already been approved by each company's board of directors, as well as passing approval from Jamdat's stockholders and outside regulatory agencies. The transaction is expected to be complete in EA's fourth quarter, which is expected to take a hit of 10 to 15 cents per share due to the costs of the merger. "This is an important strategic acquisition for Electronic Arts," said EA CEO Larry Probst. "Together we intend to build a leading global position in the rapidly growing business of providing games on mobile phones. We look forward to the Jamdat team joining EA." EA had previously announced a firmer commitment toward mobile game production, and the new acquisition will automatically make them one of the biggest mobile game companies in the industry. The process of folding Jamdat into the larger EA entity will see Jamdat CEO Mitch Lasky as the head of EA's worldwide mobile games studio, which will incorporate both companies' development efforts into one team. "We think the combination of EA and Jamdat will benefit our shareholders," said Lasky. "The combination of EA and EA Sports, along with Jamdat's casual blockbusters like Tetris, Bejeweled and Jamdat Bowling, will create a powerful product line-up." Further information on the acquisition was conveyed by a conference call held shortly after the acquisition, during which senior executives including Jamdat CEO Mitch Lasky and EA CEO Larry Probst commented on the acquisition. During the call, Larry Probst responded to a question about why EA didn't try to grow its mobile division further on its own by commenting: "Obviously, this is a build or buy decision... we clearly are impressed with the job that Jamdat has done, especially in the North American market." He continued, regarding the mobile market: "We could build [our mobile business] over time, but over that same period of time, Jamdat is not going to stand still and wait for us to catch up." Several other details were also ironed out as part of the conference call. A question was asked about Jamdat licenses that might have change of control clauses, to allow the licensor to withdraw if Jamdat was purchased by a rival, and Jamdat's Mitch Lasky noted that the Neversoft/Activision-licensed Tony Hawk series and Gun both had these clauses - though they have not yet definitively been exercised. Lasky also commented that, while Gun is yet to be released on mobile formats, Tony Hawk is not more than 10% of revenue for Jamdat, a threshold past which the company would need to split it out, and has been a "solid performer" for the company. Lasky noted of EA's acquisition of his firm: "We view this acquisition more as playing offense than playing defense". Finally, it was referenced more than once that, though Jamdat is the perceived mobile gaming leader in the U.S., the combined company wants to increase its presence rapidly in both Europe and in Asia, and is working out plans for accelerated growth in territories outside North America, particularly in the Japanese 3D mobile gaming market. [UPDATE - 3.10pm PST - added comments from EA/Jamdat conference call.]