TechCrunch reports that casual game maker PopCap Games is in "late stage acquisition discussions" to be acquired by Electronic Arts (EA) in a deal valued at $1 billion. Neither company is talking at this point, of course.
First off, the price is just speculation, but assuming the rumors are true, what's the strategic advantage for EA?
EA is best known to gamers for its hardcore games particularly in the console and PC realms, while PopCap's strength is as a casual game maker for mobile devices, Mac and PC. That right there explains the potential synergy between these two respective powerhouses.
If PopCap becomes part of EA, EA greatly strengthens its position in the casual game and social game markets. With pressure from Zynga and other companies like DeNA, which owns Ngmoco, EA may be hedging its bets that it can continue to maintain a dominant presence in the burgeoning social and mobile gaming space.
EA - the world's largest independent video game publisher - routinely buys smaller studios. Recently EA acquired iOS game developer Firemint, makers of the Real Racing and Flight Control games. Its own EA Mobile studio expanded greatly in 2006 when EA acquired JAMDAT Mobile in a $680 million deal, and EA also grabbed one of PopCap's rivals, Playfish, back in 2009 for $400 million, so acquisitions of this size are not unknown in EA's history.
EA is not the first suitor rumored to have offered a deal to PopCap. Zynga, the game maker behind Facebook-based titles like Farmville, is also rumored to have looked at the casual game publisher.