EA storms mobile gaming market with Jamdat acquisition

EA storms mobile gaming market with Jamdat acquisition
SAN FRANCISCO - The world's largest publisher of PC and console games, Electronics Arts has announced that it had agreed to pay $680 million for mobile game maker Jamdat Mobile Inc. This announcement pushed Jamdat's shares up by 17 percent on Friday.

The Los Angeles-based Jamdat is the biggest presence in the huge $2.6 billion mobile gaming market and even though EA does have some titles for the wireless devices, it decided that it wants to wrest the initiative by acquiring Jamdat. The latter was just a start-up company when Mitch Lasky joined as the CEO in 2000.

Under Lasky, Jamdat has grown from strength to strength. Analysts had always maintained that the mobile-gaming market was concentrated on mainland Europe and Asia. But Lasky proved them wrong by hanging on in the US market and today boasts of a 25 percent share of the same.

Jamdat has an enviable presence in the mobile gaming market thanks to games like Jamdat Bowling, Bejeweled and Tetris. Observers say that the company, which has posted four profitable quarters since it went public, is on target to post revenues in excess of $80 million this year.

Lasky will be the head of the mobile gaming units at EA as well as Jamdat. “We wanted to win worldwide (leadership), and we think this combined position will let us do it a lot faster than if we were to do it on our own,” he said when asked about the deal.

Electronic Arts has been looking to establish a firm foothold on the mobile gaming segment and although it has some games on wireless devices, it has quickly learnt that making games for mobiles requires a very different set of skills and hence its deal with Jamdat makes business sense. EA has said that it will be paying $27 in cash for each Jamdat share. This is about 19 percent over what Jamdat's closing price ($22.77) was on Thursday at the Nasdaq Stock Market.

Commenting on the deal, Larry Probst, EA chairman and chief executive officer said, “We decided we wanted to move really fast on this, so we joined with the leader in North America to enable our content to be deployed on mobile phones more aggressively here and globally."

The Redwood City, California-based Company also said that together with Jamdat it will be bringing on 50 games for wireless devices by next year. This deal with Jamdat is expected to close by the end of EA's fourth-quarter on March 31.