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CjnLion avatar 5:02 AM on 07.07.2011  (server time)
Another One Bites: EA/PopCap Deal

It would seem that Electronic Arts is poised to devour another developer in an effort to dominate the casual sector of the games industry. This in and of itself isn’t anything new for a company that has earned a reputation for acquiring the best developers of their respective genres in order to maintain dominance over the industry as a whole. In fact, this isn’t even the first casual development studio that they’ve acquired, and it’s certainly not the first attempt they’ve made themselves.

PopCap Games was, however, a company that was considering going public, and I would’ve invested my spare kidney into that IPO. Perhaps some executives at Electronic Arts feel the same, considering that they’re willing to spend $1 billion on the deal.

Perhaps this acquisition is evidence of a shaky market for IPOs, as some outlets suggest, but I can’t see how LinkedIn and Pandora could do so well in a supposedly volatile market when their success is largely based on social trends and are, in my mind, relatively risky as compared to a company that has consistently proven it has the creativity and leadership not only to dominate the casual games industry, but to pull in customers that would otherwise disassociate themselves from the genre.

Case in point: Plants vs Zombies.

Perhaps my interest in PopCap intensified over the last year as I came to appreciate their presence here in China (I live in Shanghai). While I’ve heard plenty of people in the States enjoy Bejeweled or Plants vs Zombies on their iPhone or iPad, the number of Americans doing so pales in comparison to the number of Chinese consumers. Both games are hugely popular here, especially in the mobile space, and speaking their English titles here will spark recognition even in those who otherwise know very little English. Although PopCap has a studio in Shanghai, their marketing presence is minimal – as with most successful digital entertainment in China, PopCap has achieved popularity through word-of-mouth.

It should be noted that PopCap’s games are victim to the overwhelming amount of piracy that plagues the most successful games in China, and so it is difficult to estimate the amount of profit that the company is making in Asia as compared to the number of people playing their games. PopCap has been smart about this point, however, and seems to charge very low rates for their products in the Chinese market (seemingly 1/10 of the U.S. price when converted).

Nevertheless, the fact that PopCap has achieved such popularity and have even considered their pricing strategy in the Chinese market places them leagues ahead of their Western competitors. The Chinese games industry, like most Chinese markets, is extremely difficult for Western entrants. If anyone could pierce the jade shroud, I’d place my bet on PopCap.

So it is with a heavy heart that I accept that I will probably not own shares of PopCap Games. To be fair, Electronic Arts has come a long way since the days when it was known as ‘the publisher where companies go to die.’ I would guess that EA would allow PopCap to head up its casual games departments and maintain some autonomy, as it did with Bioware and its respective specialty in role-playing games.

I have no doubt that we will continue to see great things from PopCap, even if this deal is finalized.

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