EA buys PopCap -- does that mean Activision needs to buy Zynga?

Summary:This week, casual game maker PopCap, best known for Plants vs. Zombies and Bejeweled, agreed to be acquired by Electronic Arts in a deal said to be worth around $650 million.

This week, casual game maker PopCap, best known for Plants vs. Zombies and Bejeweled, agreed to be acquired by Electronic Arts in a deal said to be worth around $650 million. The move came as a surprise to many, as PopCap has been making serious moved towards an IPO, and as recently as a few weeks ago, company representatives told me that a public offering was definitely their long-term plan.

With one of the biggest producers of social/casual games being snapped up by a major mainstream game publisher, are similar companies going to become acquisition targets as well? The most obvious name to consider is Zynga, maker of FarmVille, Mafia Wars, and similar Facebook games. After all, John Riccitello, CEO of Electronic Arts, told the New York Times: “We’re not going to knock down Zynga tomorrow — they’ve got a great business — but we’ve got an opportunity to close that gap.”

Talk like that should make Zynga attractive to EA’s long-time rival Activision, the only video game publisher that poses a serious threat to EA’s quest for market domination. The two companies have swapped the top spot in the video game business a few times over the years, on the strength of valuable franchises such as Call of Duty (Activison) and Madden NFL (EA).

But even though that would make for a great narrative in this decades-old rivalry, it seems unlikely in our analysis. PopCap’s founders are still involved with the company, but not as CEO. Current Chief Executive David Roberts often jokes that he is the “adult supervision” at the company.

Zynga, on the other hand, is run by co-founder and CEO Mark Pincus -- and as we’ve seen with Facebook and Mark Zuckerberg, successful companies that retain a founder as CEO, especially an outsize personality like Pincus, often prefer to go it alone, rather than get absorbed into a larger company.

Both PopCap and Zynga made their desires for an IPO clear. But while PopCap obviously had a price that caused it to abandon that plan, it’s not clear that Zynga could be similarly swayed at any price.

Topics: Mobility, Banking, CXO, Legal

About

Texas native Libe Goad resides in New York City and has spent the past decade covering technology and video games for publications including Blender, PC Magazine, Bust, Seventeen and Sync. Libe is currently the Editor-in-Chief of AOL's award-winning Games.com group, covering the growing social and casual games industry. Previously, she... Full Bio

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