Electronics Arts buys social game maker Playfish

Electronic Arts Incorporation has acquired privately held Playfish for USD 275 million in cash plus other considerations, as the maker of the "Madden NFL" series extends into the growing social gaming sector.

Two-year-old Playfish, headquartered in London, makes games for people to play on computers with their family and friends, unlike traditional video games that need dedicated consoles. Its hits include virtual pet game "Pet Society", and game show-styled skill game "Who Has The Biggest Brain?"

Under the deal, EA paid about USD 275 million in cash and USD 25 million in equity retention arrangements, EA said on Monday.

In addition, the sellers are entitled to additional variable cash consideration, up to a maximum of USD 100 million, contingent upon the achievement of certain performance milestones through December 31, 2011.

EA said the deal accelerates its position in social entertainment and strengthens its focus on the transition to digital and social gaming.

The deal comes at a crucial time in the video game market, which has seen sales slump this year amid a dearth of blockbuster titles and as consumers carefully watch their spending habits due to the tough economy.

Even price cuts in recent months for Sony's PlayStation 3, Microsoft's Xbox and the Nintendo Wii failed to have a dramatic effect on sales of games. But some expect the market to turn this holiday season, with the launch of big titles, including Activision Inc's "Call of Duty: Modern Warfare 2".

Playfish said it is owned by its founders, management, staff and outside investors including Index and Accel. It has more than 150 million games installed and played worldwide on platforms such as Facebook, MySpace, Google, and Apple Inc's iPhone, the company said.