[by James Pearce] Like most people I expected EA to expand its reach in the mobile game world through acquisitions, and there have been rumors in the industry about a possible take-over of Jamdat for months. For mine, $680 million doesn’t seem that much for a company with 31% of the market, especially since the biggest threat to that market share has been widely seen as EA putting more effort into mobile…the price is certainly a lot lower than the $1 billion figure that was being bandied about. It’s true Jamdat’s market share has been slowly falling and its growth has been slowing down, but that’s to be expected considering the size of its marketshare and the relatively new market for mobile games.
According to Yahoo Finance Jamdat shares closed at $22.77 but have shot up to $27.06 in after hours trading. That’s a far cry from August when the shares fell 26% after Jamdat reported its second quarter earnings. Investors thought the results were ‘lackluster’, although Jamdat had posted a 27% increase over the first quarter and a 128% increase year-on-year. The third quarter results were also at the lower end of the forecast, increasing 113% year-on-year but only a 4% increase over the second quarter, although mobile games do show a seasonal sale cycle.
It’s a good deal for EA, which not only gets Jamdat’s expertise and market share but some huge brands, the biggest being Tetris, which Jamdat acquired along with its acquisition of Blue Lava Wireless in April. At last count Tetris accounted for 33% of Jamdat revenue, followed by Bejewelled on 14%. It’s got plans for other versions of Tetris such as Battle Tetris, so the brand should keep going strong for years. Last month Jamdat launched Lord of the Rings: Legends, which may take off. It has been pointed out that relying on a couple of brands is dangerous for Jamdat, but that’s the way most mobile games companies are — one or two golden geese and a lot of normal chickens. Still, Jamdat doesn’t have to worry about brands now that it will be responsible for the entire EA collection…
The other big issue with Jamdat is the current lawsuit against Jamster for name confusion, it will be interesting to see how EA deals with that. If EA decides its brand is far better than Jamdats it may simple rebrand everything and drop the lawsuit. If it decides that the Jamdat brand is worth saving the whole process could get a lot tougher… (note: I’ve been informed that a decision related to branding has not been made yet)
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