Electronic Arts Ups Its Game With Mythic Entertainment Buy

Video game titan Electronic Arts (Nasdaq: ERTS) on Wednesday announced it has entered into an agreement to acquire Mythic Entertainment.

Mythic is recognized for its success in the online gaming space with the "Dark Age of Camelot." The company is currently developing "Warhammer Online: Age of Reckoning" under license agreement with Games Workshop.

Upon completion of the acquisition, Mythic Entertainment will become EA Mythic, a wholly-owned studio dedicated to developing Massively Multiplayer Online Role-Playing Games (MMORPGs). Financial terms of the deal were undisclosed. The acquisition is expected to be finalized in the second quarter of fiscal 2007.

"The addition of Mythic to the EA family reflects our deep commitment to the online gaming market worldwide," said Paul Lee, president, EA Studios. "Mythic will bring one of the industry's most talented MMORPG teams to EA. Together, we will create games that will introduce MMO players to a whole new level of game play and excitement."

EA's Online Track Record

High-speed Internet connections and cost savings are driving more game publishers to the Web. EA is no stranger to the concept of online gaming. It took its popular game "The Sims" online a few years ago after heavy investments in infrastructure.

"EA spent about US$700 million dollars building out its online capability from 1999 to 2002, but it hasn't had much success," Michael Pachter, a research analyst at Wedbush Morgan Securities, told TechNewsWorld. "EA has launched and canceled a couple of online games."

The Mythic acquisition takes the company into full fledged online gaming mode. The trend is made viable by broadband penetration. Forty-two percent of U.S. households have broadband Internet access, according to Parks Associates.

Despite EA's starts and stalls, Valve, the maker of the game "Half-Life," has had success with the online model. Its service, called Steam, has more than 6 million registered users with games priced between $9.95 and $39.95 from various game publishers. Microsoft (Nasdaq: MSFT) is heading into the online gaming world with its Xbox Live service.

S2 Games in March began testing a new Web delivery system. S2 Games plans to peddle its new title "Savage 2: A Tortured Soul" exclusively online when it is released in October. S2 Games expects to slash its retail prices by 40 percent by cutting out the printers, publishers, distributors and retailers.

Bridging the Gap

Patcher expected EA to buy an online gaming company, but he figured it would acquire NCSoft or WebZen, both Korean players, as it looks to take online gaming into the Chinese market. Still, Patcher thinks Mythic is a good buy, with about $25 million in annual revenues.

"EA is trying to bridge the gap in its capability between what it did in 2002 and what it needs to do in 2008 and beyond," Patcher said. "Mythic is a nice bridge."

Dream Come True

Upon completion of the acquisition, Mark Jacobs, the president, CEO and co-founder of Mythic, will become vice president and general manager of EA Mythic. Rob Denton, the vice president, COO and co-founder of Mythic will assume the role of vice president and COO of EA Mythic. Mythic's 175-person development team will remain in Fairfax, Va.

"Mythic has always been a leading independent developer in the online space," Jacobs said. "EA's commitment to the online market as well as its focus on creating games of unsurpassed quality, scope and scale gives us opportunities and resources we could only dream about in the past."