In June, Electronic Arts made what seemed like a peculiar announcement. It revealed one of its biggest-ever purchases, and its third major acquisition in less than seven months.
It wasn't for a well-established maker of PlayStation or Xbox games, or a studio that EA had a long history of collaborating with. It was for the developer of a single mobile title called Golf Clash owned by Warner Bros. Games; EA was paying $1.4 billion for the app and its developer Playdemic. That's nearly four times what EA paid for Titanfall and Apex Legends maker Respawn Entertainment back in 2017. It's also double the amount the company paid for Bejeweled and Plants vs. Zombies creator PopCap Games a decade ago, the last major EA mobile acquisition prior to this year.
The Playdemic acquisition wasn't even EA's biggest purchase of the year, though. That title belongs to Glu Mobile, a prolific mobile game studio and publisher that EA bought for $2.4 billion in February. But as the second major mobile acquisition and the third $1 billion-plus purchase since last December, when EA bought racing game maker Codemasters, the Playdemic news made clear something is changing inside EA.
EA spent years becoming a household name with sports franchises FIFA and Madden and putting out major console and PC hits like The Sims and Mass Effect. Now it wants to expand its footprint. The company's strategy is in many ways emblematic of what the biggest game makers in the industry are now pursuing: a full, cross-platform portfolio that reaches consumers wherever they are, be it on smartphones, in the living room on console or playing on a pricey gaming PC. This approach is how big game publishers are discovering new audiences, and keeping those audiences in their ecosystems, now that almost everyone who wants a dedicated gaming device already has one.
The best-selling console of all time, Sony's PlayStation 2, sold just over 150 million units in its lifetime. Today's market leader, the PS4, has an install base of about 116 million. That pales in comparison to the roughly 1.3 billion smartphones sold in 2020 alone. The largest untapped market, it turns out, is consumers who have game consoles in their pockets but haven't realized it yet.
"We do our best to learn about players, what their expectations are, what their needs are. And then whether it's our own [intellectual property] that we have, like Plants vs. Zombies; whether it's a sports brand, like the NFL or NBA or Madden; or whether it's 'Star Wars' … I think they are all viable entertainment, and that we're fortunate that we have those relationships and partnerships that exist today," Jeff Karp, the chief of EA Mobile who rejoined the company last year, said in an interview with Protocol. "And if we feel like we can provide a compelling offering on mobile, that's something that we're highly interested in pursuing."
EA's mobile moment
Mobile is the fastest-growing gaming category, accounting for more than half of the $175 billion global games business, according to analytics firm Newzoo. Though EA has owned PopCap for 10 years, the company hasn't made substantial efforts to capitalize on mobile growth outside the launch of Star Wars: Galaxy of Heroes in 2015. That's now beginning to change.
"When I started about 15 months ago, it was a decision by Andrew Wilson and Laura [Miele] and Blake [Jorgensen] to really aggregate mobile into one unified team," Karp said. He spent 10 years at EA before departing in 2010 to enter the mobile market, returning to help the company reinvent its smartphone strategy after stints at Zynga and Big Fish Games.
One of Karp's focuses when coming back was figuring out "how do we continue to become a leader in mobile," he said. "And we think that leadership will come from a combination of growth of our current games organically as well as accelerating that through M&A."
Karp said EA has also stopped thinking of its portfolio through platform distinctions like console, PC and mobile, and has begun thinking of it in terms of content category. "What we have done most recently is really kind of converted ourselves into what I'm calling verticals," he said. "So we have a vertical in sports, we have a vertical in shooters, we have a vertical in 4X and RPG, and we have a vertical in casual." In other words, the distinctions between platforms are falling away, and EA no longer sees mobile as a market composed only of casual gamers.
"EA has typically been a little slower to the game, at least to mobile," said Jeff Sue, a general manager at advertising platform Mintegral who specializes in mobile gaming monetization. "I think that totally changed when they brought in Jeff Karp." Sue said that while EA's mobile portfolio is small now, the Glu and Playdemic acquisitions give it an avenue to grow that audience and potentially expand it to other platforms. "They're going to follow suit with where everyone else is going by melding consoles, mobile and PC and figuring out cross-platform strategies there, similar to Zynga."
"I don't think EA's moves in the market say anything negative about any particular platform, but rather that there are huge opportunities for large publishers to bring their big franchises to more consumers than ever before," explained Craig Chapple, an analyst with the gaming analytics firm Sensor Tower. "The trend in the games industry appears to be one of a cross-platform future, where the same experiences, or at least [intellectual property], are available across devices, whether that's mobile, console or PC."
"The games industry as a whole, and particularly mobile, has become a hotbed for M&A, due to factors such as a maturing market, a lockdown bump and competition for acquisitions of the world's most talented studios, perhaps leading to further activity from the big publishers," Chapple added. "In EA's case, it's clearly signaling its ambition to greatly expand its mobile business, by first hiring Jeff Karp … and acquiring successful mobile games companies like Glu Mobile and Playdemic."
EA isn't renewing its efforts just through acquisitions. It's also doing the once-unthinkable: bringing big-budget console and PC shooters to mobile, too, so that major franchise hits like Apex Legends and Battlefield can have a presence on smartphones. "It wasn't that long ago — three or four years ago — that shooters weren't really that viable on a mobile device," Karp said. "Now you're starting to see great brands and great franchises really break through."
With Apex Legends, EA is reportedly partnered with Tencent, which through its subsidiaries Lightspeed & Quantum and TiMi Studio Group has been instrumental in bringing games like PlayerUnknown's Battlegrounds and Call of Duty to mobile. Tencent is also effective at helping such games take off in China's competitive and regulation-fraught mobile market.
"Why I suspect that they are taking this plunge now is also because mobile gaming has grown closer to PC and console games," said Tom Wijman, market lead on Newzoo's games segment. Newzoo forecast back in June that so-called premium mobile games — shooters, multiplayer online battle arenas (MOBAs) and real-time strategy games — would become a major force on mobile due to increasing performance gains from smartphone chips. As a result of these performance gains, big publishers are chasing the opportunity to expand their console and PC franchises to smaller screens.
"The audience for mobile games is vast: Billions of people around the world have access to mobile devices. There have been some great technological advancements on smartphones, enabling more console-like experiences on mobile," Chapple said. "But while the technology for these big, triple-A titles such as Genshin Impact exists, there's still a huge demand in the market for more accessible, casual games like Candy Crush Saga."
Playdemic's Golf Clash is best known for successfully adopting the casual-geared "clash" genre of games popularized by Finnish gaming giant Supercell (now owned by Tencent) and merging it with a competitive sports game. That resulted in a surprisingly popular mobile hit even among players who don't watch or follow golf. Now, it's more likely we'll see Golf Clash migrate from mobile to console and PC.
"One of the things that I also see driving EA's strategy in mobile … is the idea that gaming is growing beyond what platforms you play on," Wijman said. "This is cross-play but also the social element of gaming. I think that is core to EA's strategy, and it's the driver behind the decisions they've been making."
EA's live service future
Mobile presents such a big opportunity for game makers not just because the platform provides access to more — and a much wider variety of — players. Mobile also invites new business models, primarily the free-to-play and microtransaction-driven approaches to monetization that have made the mobile market larger than the console and PC markets combined.
Yet EA hasn't been the most savvy when it comes to implementing such models across its library. For years, the publisher tried shoehorning mobile monetization strategies, like aggressive in-game purchasing and various mechanics designed to extract more play time from consumers, into its premium console and PC games.
The goal was to transform its portfolio into live service games that could keep generating revenue long after launch. But EA did this clumsily, oblivious to the ways in which customers felt nickel-and-dimed by paying $60 just to access a product out of the gate before being asked to pony up for microtransactions.
EA's approach became so egregious that it was voted the worst company in America not just once, but two years in a row starting in 2012. The not-so-scientific results were featured on the now-defunct Consumerist website, and they were clearly the product of an online campaign from disgruntled fans. Still, EA took the message to heart, with newly appointed CEO Andrew Wilson calling the poll a "wake-up call."
The company embarked on a soul-searching effort to find out why it kept making products that enraged so many of its dedicated fans. But EA didn't seem to learn, and its approach to monetization culminated with the disaster that was Star Wars Battlefront II. That game, released in 2017, became a lightning rod for controversy, forcing EA to revamp its loot box and in-game purchasing systems before the game fully launched. EA also issued a public apology.
"I'd be lying to you if I said that what's happened with Battlefront and what's happened with everything surrounding loot boxes and these things haven't had an effect on EA as a company and an effect on us as management," longtime EA executive Patrick Söderlund, who left the company in 2018, said at the time. "We can shy away from it and pretend like it didn't happen, or we can act responsibly and realize that we made some mistakes, and try to rectify those mistakes and learn from them."
In the years since, EA seems to have cracked the code and found more success turning many of its properties into live service games. It's done so by relying on the blueprint set forth by its FIFA Ultimate Team platform, which unabashedly relies on loot boxes (except in markets, like Belgium, where loot boxes are banned) and its exclusive team licensing and player likeness deals.
This model — relying on microtransactions and scoring lucrative licensing deals — is now the financial engine of the games industry, propelling hits like Fortnite, Roblox and Call of Duty: Warzone to unprecedented financial heights. It's also the secret to EA's continued success: In its last fiscal year, EA generated more than $4 billion in live services revenue, nearly two and a half times the amount it made by selling full games.
"I think the No. 1 thing that we look at is that these aren't games, they're essentially live services," Karp said of EA's mobile strategy. "We are building to open up the restaurant, but as soon as the restaurant opens is when we kind of really learn and continue to adapt and evolve."
This service approach is now informing how EA thinks about all of its future games, and it's beneficial for multiple reasons. On mobile or with free-to-play games regardless of platform, players are less likely to express concern about monetization. "People have a higher tolerance for advertisements and monetization if they didn't pay for the game in the first place," Wijman said.
That doesn't mean EA is abandoning its single-player games or moving away from big-budget console releases that harken back to the glory days of gaming. Rather, like its competitor Ubisoft, which also announced a renewed investment in mobile and free-to-play earlier this year, EA looks at its expansion to smartphones as additive.
"There are many areas around the world that do not necessarily have a high concentration of consoles," Karp said. "So we think games like FIFA, games like Apex, games like Battlefield — those are great opportunities for us to really extend those brands and put them in more players' hands."
EA's approach represents a clear roadmap for how the video game industry sees the future of not just free-to-play and mobile gaming, but also how to grow its most well-established series. In this future, it won't matter where you play or even necessarily how a specific game makes money, because that, too, will be tailored to the platform and will be ever-shifting depending on what context you're playing in.
"For now, we're going to keep talking about the boundaries of platforms, but the boundaries are fading. You need to be on all platforms, and you need to have games you can play across platforms," Wijman said. "All of their big franchises, from sports games to Apex Legends to Battlefield, I wouldn't be surprised to see all of those on PC, console and mobile. Broadly speaking, that is where EA is headed, but it's also where all the larger publishers are heading."
