OCT. 22, 2007 • After paying over $800 million in cash and stock to acquire VG Holdings (BioWare and Pandemic Studios) on Oct. 12, at a promotional event in South Mumbai 10 days later, Electronic Arts reveals that a potential future development studio in India is being considered. The same week EA told investors that it planned to close some facilities and reduce staff by about 350 employees throughout its divisions. On Nov. 6 EA closed down its Chicago studio, citing costs at the location that had grown dramatically during the past three years, while revenue from the games developed there had not.
Impact: Electronic Arts’ revenues have been stagnant for nearly four years. New CEO John Riccitiello clearly intends to shake things up. EA rested on the comfortable heels of Sony for too long and now the company needs to move forward. However, the cost of acquiring VG Holdings from Riccitiello’s old company Elevation Partners is mind boggling. With large media companies like Time Warner, Disney and Viacom investing heavily in the game space the cost of content is suddenly rising dramatically. This is great news for independent developers, but means change will be expensive for the old guard.
