Thursday, December 08, 2005

Electronic Arts buys cell phone game publisher Jamdat

The San Jose Mercury News reports that Electronic Arts will pay $680 million in cash to acquire Jamdat Mobile, to "fuel its growth into cell phone entertainment."

The deal seems to be EA's attempt to head off a possible softening in sales for video games. According to Schelley Olhava at IDC, "cell phone games are a smaller market than traditional video games at about $500 million in the U.S. alone, but the market is growing fast." She said, "EA has a history of dipping their toe in a new market and then buying a company when the market is more mature."

She's right about EA testing the cell phone gaming waters, but I disagree that the cell phone gaming market is is more mature. It's far from it as the main challenge going forward is every game has to be ported for each platform, handset and carrier. It's no longer just three consoles to develop for. However, Jamdat's market leadership and EA's muscle might be a good combo.

P.J. McNealy at American Technology Research said, "This helps them [EA] move from being behind to a position of strength. It's a growth area, and, regardless of the console market, it's a market that had to be addressed."