Industry Update is contributed by our friend and gaming junkie Alexander Liss

Big news last week as publishing giant Electronic Arts snapped up casual game start-up Playfish for a $300 million fee. Social games are hot these days so it’s a plus for EA’s bottom line, right? Don’t be so sure.



Before we start singing the praises of the deal, I think people need to step back and consider the underlying disconnect between the consumer niche each company aims to fill. We wrote on our blog last week that games aimed at the core, aka “hardcore” audience, are focused on offering a longer and longer experience — 20 hours, 40 hours, 60 hours, or more. Big game studios have to deliver a product that is guaranteed to provide a return on investment. Hence, they keep the same gameplay formula but go for “bigger is better.” But many consumers don’t find this satisfying, and opt for the more compelling experience of bite-sized indie games that have the freedom to be unconventional.

EA is tied-in to the “hardcore” publishing model, offering annual franchises like Madden and Need for Speed. Playfish is playing fast and loose in the start-up space, although they want to milk their own budding social game franchises for sure. So EA will port some Playfish IP to WiiWare, PSN, and XBLA, and it’s a win-win? Not so fast. There’s growing evidence that casual games are growing at the expense of core games in a zero-sum game. But casual games, meanwhile, seem to have this growing problem of being dependent on questionable marketing tactics to grow their user base, a practice which faces increasing opposition and even the threat of lawsuits.

EA also announced 1500 layoffs last week concurrent to their acquisition of Playfish, another sign of an industry in trouble. But acquiring Playfish is hardly going to be a sure-fire ticket to success.