Global videogame giant Electronic Arts has made lots of acquisitions—especially in the mobile arena—but how does it make the deals work? “M&A is a challenging, risky activity,” admits Barry Cottle, senior vice-president and general manager of EA Interactive, the division of Electronic Arts that includes Playfish, a London-based social gaming company acquired last year, as well as EA Mobile and Pogo. EA doesn’t pretend to have all of the answers, but its executives agreed to talk to Informilo about how the gaming company integrates startups once it acquires them—an issue of interest to multinationals in all sectors.
“The gaming space moves fast, market segments and different types of genres pop up, so we not only have to use internal efforts to try and innovate but also look at outside companies that are attacking those places, and, when it makes sense, to acquire them and bring them into the organization,” says Cottle. “What is key is you have to get an agreement on the objectives and the measurements, but not dictate the culture on how to get there.”
Plans for Playfish, the fourth European games studio acquired by EA since 2004, include allowing it to stay in London and to retain its culture. The hope is that Playfish will help EA create more hits in social gaming, an area that is expected to help significantly expand the gaming market by attracting a broader audience.
Giving acquired game studios a degree of autonomy is a formula that has worked well for EA, helping it launch new blockbuster games, retain the management of start-ups it acquires, and infuse its top management with young talent.
Take the case of Digital Illusions Creative Entertainment (DICE), a Swedish game studio specializing in first-person shooter games, which was purchased by EA in 2006. Swedish computer scientist Patrick Soderlund, DICE’s chief executive officer at the time of the acquisition, not only stayed on—along with most of the team—but has risen in the ranks at EA.