Some More Analyst Reaction to Electronic Arts' Play for Jamdat

A few more posts and article about the deal. At Wireless Week, American Technology Research analyst P.J. McNealy said, We believe (the buy) helps to immediately position Electronic Arts as the leader in the mobile gaming space and is a significant long-term acquisition."

Rene Solorzano at Lehman Brothers wrote in a research note, "We found the valuation rich given Jamdat's remaining assets and believe that ultimately Electronic Arts may have used its cash more efficiently using a build-out model."

Over at the M:Metrics Blog, Seamus McAteer wrote:

EA's acquisition of JAMDAT was well timed for both companies. JAMDAT shareholders secure a handsome premium on their holdings of close to 20% at a time when the company was struggling to sustain substantial quarter over quarter growth; was facing new competitive threats, not least from EA; and was facing a new challenge of financing a more broad based distribution strategy that would include direct to consumer models. EA instantly secures a leadership position in the mobile gaming sector in the US. Its acquisition of JAMDAT will give it a market share of about 25% in the market and a deep portfolio of fresh content for its strong European mobile group. The acquisition also heralds a new phase in the mobile content sector that will be defined by cross platform media brands. Expect to see more aggressive moves by other gaming, Web and diversified media brands to snap up other strong mobile pure plays.

Lastly, Thomas Husson gives a European point of view to the deal at the Jupiter Analyst Weblogs. He writes "this is one of the most important deal in the mobile content space so far." To put things in perspective on the current small size of the cell phone gaming market, Husson notes "JAMDAT reported $54.6M at the end of Q3 2005 and in fiscal 2005, EA posted revenues of $3.1 billion."

Husson analzyes the deal and concludes:

Still. $680M is a huge amount of money. JAMDAT had already spent $127M to acquire TETRIS rights. To recoup the investment, it means selling more than 1M copies of the game during 2.5 years (= 1Million*31 months* $4/game)...Obviously, the investment is strategic and means more than that since TETRIS is already among the TOP selling games at least in most European countries: enhancing the company's relationships with carriers. By the way, TETRIS already represents more than 20% of JAMDAT total revenues...The company will have to diversify and to launch new games particularly in Europe, where Bejeweled and Mahjong have not been that successful. International revenues represented only 15% of JAMDAT revenues last quarter. No doubt FIFA Sports, SIMS 2 and NEED FOR SPEED will help...