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November 11, 2009

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EA grabs Playfish as part of game plan

AS its packaged video games business lags, Electronic Arts Inc has snapped up Playfish Inc, the creator of popular social networking games such as "Who Has the Biggest Brain" and "Pet Society," for US$275 million in cash.

With the acquisition, EA is diving further into lucrative social online games, which tens of millions of people play on Facebook, MySpace, iPhones and other platforms.

The purchase will help California-based EA move into gaming in online communities at a time when declining consumer confidence is cutting into traditional packaged video game sales.

In addition to the upfront cash payment, EA said on Monday it would pay up to US$100 million in cash contingent on Playfish hitting certain financial targets through December 2011, plus US$25 million in equity-based retention agreements with employees.

Later on Monday, EA also announced it planned to cut 1,500 jobs, or roughly 17 percent of its work force, as part of a restructuring plan.

Games are a popular pastime on Facebook, with the top 10 games attracting more than 100 million active users, according to Facebook Platform Manager Gareth Davis.

This is about a third of the site's total active users.

In all, 22 of the top 25 applications people used on Facebook were games, said Barry Cottle, senior vice president and general manager of EA Interactive.

Playfish, a two-year-old startup based in London, will run as a stand-alone business within EA Interactive, which is also home to online gaming platform and EA Mobile, which publishes such games as "Rock Band" and "Tetris" for the iPhone.



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