Electronic Arts Inc. became the subject of takeover speculation on Friday, sending its shares up 16% in early trading, before the report was dismissed and other news outlets dismissed the possibility of an impending deal.
A report published in USA Today by GLHF — a gaming and esports site and content partner of USA Today’s For the Win column — said Amazon.com Inc . could announce as soon as Friday an offer to acquire EA, the publisher of hit games Apex Legends , FIFA and Madden titles. The news sent EA shares soaring early Friday morning, before David Faber cast doubt on the CNBC report after it was published. USA Today later added a note to the top of the original story saying it “violated our editorial standards regarding the use of unnamed and unverified sources” and the language about an upcoming announcement was removed.
EA and Amazon declined to comment on the report. EA shares rose 4.9% at 11:56 a.m. in New York, valuing the Redwood City, California-based company at $37 billion.
It’s been a landmark year for deals in the video game industry, from the impending purchase of Activision Blizzard Inc. by Microsoft Corp. for $69 billion until Take-Two Interactive Software Inc.’s acquisition of Zynga. for 11 billion dollars. The sector has thrived during the pandemic, and although sales have slowed this year, game companies are still seen as attractive sources of long-term revenue thanks to titles that can be monetized years after release. Live service games, which are continuously updated over time, and microtransactions made within games accounted for 71% of EA’s revenue last fiscal year.
Amazon has also been on the hunt for deals this year, despite already being under intense antitrust scrutiny. Earlier this month, Amazon announced an agreement to buy iRobot Corp. for $1.65 billion, following a $3.49 billion deal just two weeks earlier to buy physician office chain One Medical.
With consolidation in the gaming industry, EA has long been suspected of being a takeover target. Amazon, Apple Inc. and Walt Disney Co. are mentioned as potential suitors.
Known for its Star Wars and sports games, EA has yet to release any major new titles this year and is still dealing with the fallout from Battlefield 2042, which debuted last November to mediocre reviews and poor fan reception.
Amazon hasn’t been able to make much of an impact on gaming on its own, even after hiring industry veterans and buying video game streaming service Twitch. EA has a lineup of live-action titles like Apex Legends and The Sims that could appeal to the tech giant, especially after the success of Netflix Inc. with shows like The Witcher and Arcane being built around major video games. A deal could give Amazon franchises from popular role-playing game developer BioWare such as Dragon Age, which is set for an animated Netflix series that was teased earlier this year.
EA also dominates the sports field and regularly releases the most popular football and soccer games. Its FIFA franchise – which will no longer be officially affiliated with world football’s governing body after launching this year – sells millions of copies a year. It generated even more revenue with its FIFA Ultimate Team microtransactions, which brought in $1.62 billion in the company’s 2021 fiscal year.
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