For one thing, it put a value on a business which operates in a market that’s currently almost unquantifiable. This isn't just because the companies involved, Playdom and Zynga being the other leading developers, are loath to fully reveal their revenues – it's also because it's growing so fast.
The total sum EA has paid comes to US$300 million, but should Playfish fulfil 'certain performance criteria' by the end of 2011, it will hand over another US$100 million.
It also marked the established game industry's first move into the complex and nascent world of social gaming. Distributed online, gathering traction via word of mouth, and free to play, monetised through micro-transactions and advertising - every element of Playfish's business lies on the boundaries of how the game industry currently operates, but represents an important guide to how it needs to change in order for it to continue to grow and develop.
After all, even if social games only really attract half of the 250 million players that Playfish CEO and co-founder Kristian Segerstrale claims, then social games represent videogames' most dynamic frontier.
We spoke to Segerstrale about the deal, why he chose EA, what Playfish can bring to EA, and what EA can bring to Playfish.
How did the deal come about?
We've known those guys from some time back. My previous company was a mobile games company [Glu], and we always had huge respect for just how well EA was able to build a hugely successful mobile games business. Now it's part of EA Interactive, which is the same family that we're a part of. So we've been friends for a while.
Kristian Segerstrale, CEO of Playfish (image courtesy Jon Jordan)
Was being bought by a large company something you always aimed for Playfish?
We set up the company to change how the world plays games, so I wanted us to be at the forefront of this huge tectonic plate shift in the games industry as it changes from a physical product industry to a digital service business. We grew pretty aggressively from the start by setting up offices in China and the US and Norway, and raised quite a lot of money to ensure that we could build toward that mission.
What got us excited about the discussions with EA was that by combining we would be able to substantially accelerate the pace at which we could realise our ambition. And that's ultimately what made it exciting for us, because obviously we get access to some of the most loved IPs in the games industry. We're also able to scale up quicker as we have this broader infrastructure around us, and we have the opportunity to explore some additional platforms we haven't been on so far. But our company mission - to change how the world plays games - hasn't changed. We were really struck by how our vision aligned with EA's.
Do you think you could have stayed independent and achieved the same goals?
We felt throughout our conversations with EA ultimately that by partnering we were better able to fulfil the mission that we'd been on faster - we could grow faster, get more players faster, build more and bigger products faster. From the start we always tried to take the aggressive decisions which would enable us to fulfil our mission, and this deal was something that did that.
Will the deal affect the way Playfish works? Will you retain the same level of autonomy?
Yes, we are operating independently. EA is ultimately a collection of acquisitions - EA Mobile, which was Jamdat, Pogo which was an acquisition a long time ago, and now us, so it's a pretty easy act to follow.
Will your role in the company change at all?
My new shiny title is that I'm VP and general manager of Playfish, but I can continue doing what I was doing before, running Playfish.
What do you think EA wants from the Playfish acquisition? What's your interpretation of its aims?
I don't want to put words in the mouth of EA, but I think they've talked quite extensively recently about their digital focus. What I can say is that social gaming has very rapidly emerged as a large and growing part of the game industry, and I think it's since March of this year there was something like 100 million active users in all games on Facebook, and by September this year that was 250 million. It's far more than that now, so it's been growing at this explosive pace. I think what we're excited about is the potential for growth for games in general and especially the digital part of the games industry.
Who Has The Biggest Brain
You mentioned your ability now to work with EA's IP. Which do you feel you could best work with?
This is one of the things we're still figuring out. I think what's exciting about it is that social networks have proven to be a great place to grow new IP. At the same time there is a very large audience out there which we believe has a substantial appetite for some of the big franchises in the games industry. One of the great things about social networks is that a lot of things will work on them, and we've witnessed entirely new categories emerging. Who would have thought that farming - a pretty insignificant category in the games industry - would have such a significant share of the market now?
I think we'll continue to see the emergence of new categories. I believe as a platform matures, typically franchises have a significant role to play - I think iPhone is a great example of a platform that started off as being incredibly diverse - and continues to be - but if you look at some of the biggest franchises on it, the vast majority are gaming franchises. I think EA has several in the top 50.
Would using an established IP demand a different way of designing a social game?
I think we've barely stretched the surface of social gameplay as an industry. Yes, we've learned some mechanics and some things that work, but at the same time there's plenty of opportunity for innovation in mechanics and gameplay styles in general. One of the great things about being able to bring some of these franchises to networks is combining them with interesting new mechanics that innovate the franchise.