EA Reels in Playfish for $400M

EA Interactive has acquired the social games developer Playfish for $275 million in cash, along with $25 million in equity retention arrangements and $100 million in performance-based considerations through the end of 2011.

Playfish was founded in 2007 and now boasts over 60 million active players each month for its ten games, including Restaurant City, Pet Society, and Country Story. Their games are installed on platforms like Facebook, MySpace, Google, and iPhone. Playfish will now operate within EA Interactive, the company’s web and wireless division.

“The industry is undergoing dramatic transformation, and joining EA is the ideal opportunity for us to push forward our goals to lead in the social entertainment evolution on a faster and much larger scale,” said Playfish CEO and Co-founder Kristian Segerstrale. “EAi’s vision and entrepreneurial culture are consistent with our own, and together, we are in position to be the company that defines new and innovative connected experiences that will change the way people play games.”

After the acquisition announcement, EAi General Manager Barry Cottle told IndustryGamers that Playfish titles may find their way onto Xbox Live, PSN, and WiiWare.

Lovable Country Story characters welcome their new EA overlords, while simultaneously bidding adieu 1,500 Electronic Arts employees, let go in California.

“The great thing about social games is the discovery mechanism is social. You discover games through what your friends play, and that turns out to be an enormously profitable distribution driver,” said Segerstrale. “The challenge for any company in our space is just growth and execution. Are we able to create the best possible experience for our players while being able to grow, and grow these experiences around the world?”

Along with the purchase, EA also announced that it would cut 1,500 jobs, making up more than 16 per cent of its workforce. The move came after the EA’s Calfornia firm saw a 17 per cent revunue drop in packaged games. EA shares rose 53 cents, ending up at $19.53.