Electronic Arts Acquires Playfish For $275 Million

BARBARA ORTUTAY

NEW YORK (AP) — As its packaged video games business lags, Electronic Arts Inc. has snapped up Playfish Inc., the creator of popular social networking games such as "Who Has the Biggest Brain" and "Pet Society," for $275 million in cash.

With the acquisition, EA is diving further into the lucrative world of social online games, which tens of millions of people play on Facebook, MySpace, the iPhone and other platforms.

The purchase will help Redwood City, Calif.-based EA move into gaming in online communities at a time when declining consumer confidence is cutting into traditional packaged video game sales. Just last week, the company launched a version of "Spore," a game that lets players create an evolving universe, on Facebook.

In addition to the upfront cash payment, EA said Monday it will pay up to $100 million in cash contingent on Playfish hitting certain financial targets though December 2011, plus $25 million in equity-based retention agreements with employees.

Later Monday, EA also announced it plans to cut 1,500 jobs, or roughly 17 percent of its work force, as part of a restructuring plan to focus on successful games.