Electronic Arts announced that it will acquire Titanfall maker Respawn Entertainment for $315 million in cash and stock. There is also a possible bonus of $140 million on the table. This deal could bring a new, long-term franchise to the table for EA. Which would give them an edge in the multi-billion dollar first-person shooter genre. Properties include Titanfall, Battlefront and Battlefield. But the total purchase price could end up being $455 million if Respawn hits its incentive targets. This is known as an earnout. The deal includes $151 million in cash, $164 million in restricted long-term stock grants for Respawn, and a variable earnout up to $140 million.
That’s a lot of money, isn’t it? This demonstrates what kind of high stakes there are in the gaming industry. But that’s not always the perception. It also shows that this is a highly sought after company, and EA wants to get their hands on it Can you blame them? And is it worth all that money? It would seem so.
In an interview with GamesBeat, Vince Zamella, CEO and co-founder of Respawn, he indicated:
“We have worked together a long time from the inception of the studio. [An acquisition] has come up from time to time. The question was, where we are in the industry, how do we take the next step in making bigger, better games. We see the need for bigger resources to make bigger games.”
What does it mean for EA? Well, it will allow EA to more tightly coordinate the development and release of the games. Last year, sales of Titanfall 2 (October 28) apparently suffered because it was released too close to the debut of Battlefield 1 (October 21). And Titanfall 2 has some pretty incredible graphics, so this is a shame. This kind of control will be beneficial to the industry as it will drive up gaming sales. But will it benefit the consumer? Perhaps from a creative perspective. Which mean you are likely to see better, higher quality games. The timing of the games will likely only benefit EA, but you can’t blame them with that, can you?
Respawn was founded by Vince Zampella and Jason West. These are the two creators of the Call of Duty franchise. What’s interesting is that EA funded and published Respawn’s first game, Titanfall, which debuted in 2014. The game was a multi-player shooter and it won 75 top awards for innovations such as running on walls and battles between foot soldiers and giant mechs.
Zampella says that they are going to make things better for the fans. Respawn is building a game for the Oculus Rift VR headset, and this deal means that it is still in the works. They are excited to be able to create a game using VR because they are big believers in the medium and the immersion of VR. Andrew Wilson, CEO and EA made the following statement about this deal:
“We’ve seen firsthand the world-class caliber of Respawn as a development studio with incredible vision, deep talent and an inspiring creative mindset. Our longtime partnership is grounded in a shared desire to push the boundaries and deliver extraordinary and innovative new experiences for players around the world. Together, we’ve brought this to life in the Titanfall franchise, and now with the Respawn team joining EA, we have exciting plans to accomplish even more amazing things in the future.”
The deal is expected to be finalized by the end of the year.