Why Did EA Buy JAMDAT? Think Sync

Posted by joefunk :: Company News-M&A | Emerging Business Models | Mobile Gaming

Logoheader While the rumors have been floating around for several months, some insiders still expressed surprise last week over the news that EA was finally buying JAMDAT.

The surprise came from not so much that the deal happened, but rather why EA would need to make what some view as an expensive acquisition when they are already the world’s undisputed heavyweight champion game publisher.

The answer, in a word, is infrastructure. EA wants to stay focused on being the best game maker on the planet, and while they have produced some solid cell phone gaming efforts including respectable translations of “Madden NFL” and “Tiger Woods PGA Tour”, JAMDAT has become the 800 lbs. gorilla, the “EA” if you will, of the handheld space.

Having built its foundation on games that translate well to cell phones, like bowling, which has been around since the dawn of cell phone gaming, and traditional puzzlers, JAMDAT is uniquely suited to develop this business. Plus, the 15-year worldwide exclusive license JAMDAT signed for “Tetris” in April of this year was a masterstroke unto itself.

EA isn’t doing anything that bright, prosperous companies (or people), do once they hit a certain level of success: They reevaluate what they are most proficient at, stay focused on it, and then offload the stuff (or in this case acquire the capabilities) that can be done better or more efficiently by other parties. EA has the money to spend, so why not? This is the ideal sort of business venture where the mission of all involved is to keep doing what they do best. With the acquisition, EA can stay focused on making great games and building on their extraordinary franchises for the next gen consoles, and the JAMDAT execs, most all of whom are staying on board including CEO Mitch Lasky (who will helm EA’s mobile games business), can concentrate on leveraging and maximizing those brands on a fast-changing wireless platform.

“This is an important strategic acquisition for Electronic Arts,” confirmed EA Chairman and Chief Executive Officer 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.”

There is almost limitless potential in exploring the inter-connectivity between console and cell phone gaming. Imagine being able to tweak or play mini-games with your console-created “Madden” player or “Sim” character on your cell phone while you’re standing in a long line. How about getting a real-time update on the “NBA Live” game your buddies just finished, complete with SportsCenter-style highlights? Or being able to familiarize your self with weapons and tactics for “Battlefield 2” while commuting to class or work? Or tinkering with you custom car’s gear ratios in “Need for Speed”?

The companies announced plans to publish more than 50 games for mobile phones in the first year after the completion of the deal, which should close in March 2006.

The EA/JAMDAT merger will make sync-ing up cell phone games with console games a much more popular, if not integral, part of the gaming experience - at least as prevalent as online gaming. This acquisition will help bridge the gap between the two gaming platforms faster and ultimately accelerate the process for an industry that introduces powerful new players to the gaming space like handset makers Motorola, Nokia and Sony-Ericsson, and cellular carriers like Cingular, Verizon and Sprint.

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