How Electronic Arts’ new acquisition will change its future

Summary

  • EA is all set to buy Glu Mobile for $2.4 billion.
  • Glu shares rose substantially by 35 per cent to $12.67 on 9 February.
  • EA is also expected to buy UK-based producer of auto-racing games Codemasters Software Company Ltd.

Gaming company Electronic Arts Inc (NASDAQ: EA), which is the second-largest videogames publisher in the US by market capitalisation, is on a takeover spree. The company said it is all set to acquire video games publisher for mobile games Glu Mobile for $2.4 billion in an all-cash deal, which is expected to close in the quarter ending June. 

Copyright © 2020 Kalkine Media Pty Ltd.

Electronic Arts is known for its computer games and gaming consoles. The company owns some popular game franchises such as FIFA and Battlefield. Glu has popular mobile games such as Diner Dash, MLB Tap Sports Baseball, and many others will now be a part of Electronic Arts portfolio offerings. For each share, Glu shareholders will be entitled to receive $12.50 in cash.  Shares of 3D Mobile gaming company rose substantially by 35 per cent to $12.67 on 9 February. 

Electronic Arts has had mixed success in this segment. The new-age smartphones are usually packed with powerful hardware that can support gaming software. The smartphones are the fastest growing platform that support videogames. Together these companies are slated to create a unique offering in lifestyle and gaming experience.  

Glu mobile shall leverage upon Electronic Arts’ marketing expertise, global presence, and intellectual property to develop future games and unlock the door of opportunities. The 3D Mobile gaming company is expected to work independently on the games despite being its acquisition. Some of the popular games by Glu, such as Madden NFL, NHL, and UFC along with MLB title, shall be now a part of EA's sports portfolio. 

The Nasdaq-listed video games company, Electronic Arts expects to double its gaming subscribers over the course of next five years. 

Besides, EA is also expected to buy UK-based producer of auto-racing games, Codemasters Software Company Ltd (LON: CDM). Electronic Arts exceeded the Wall Street analysts' expectations as it recorded an increase in revenue and net bookings during the holiday-quarter results reported last week.   

Also read: Electronic Arts to Acquire Codemasters to Enhance Racing Games Offering 

Pandemic boon

The coronavirus pandemic and the associated lockdowns greatly benefitted the sector in many ways. According to market experts, a lot of money was spent on mobile games by the consumers worldwide.  

To conclude, the technology in mobile phones nowadays is evolving continuously. Due to its enhanced capabilities, mobile phones as a product have eaten into market share of other product categories such as cameras and music players. Similarly, a lot of gaming enthusiasts are looking forward to high-end mobile phones that support gaming software. EA understands the need of the hour and is proactively covering ground in the sphere of mobile gaming.    

Comment


Disclaimer