With Disney having acquired Tapulous, DeNA acquiring ngmoco and now EA buying Chillingo for $20M in cash, these are very interesting developments and reminds me of the start of an acquisition frenzy that happened in mobile in the mid 2000′s. Is another one on it’s way?
Having been in mobile for 10 years, I’ve seen this space evolve to what it is today. Back in the day of early mobile gaming Jamdat was the big player in this space and in 2005 they were bought by none other than EA for a cool $680M in cash. Now obviously the scale of the deal is much different, but at that time EA was having trouble breaking into mobile, Jamdat was the biggest player around in this space, and also Jamdat was not only a publisher but a developer. They created their own games and owned the game IP unlike Chillingo who is strictly a publisher – the rights to Angry Birds are actually owned by the developer Rovio, who updated their Twitter profile stating so. The Jamdat acquisition led to a feeding frenzy in mobile where mergers and acquisitions almost became a weekly occurrence with smaller publishers and indy developers being snapped up by larger players trying to now keep up with EA. Obviously those were early days in mobile but one can also say that it’s still early days in mobile given the massive changes that have happened in this space with Apple taking a sledge hammer to the garden walls of Mobile Operators and opening up this space and making it easier for indy publishers and developers to survive and thrive.
Chillingo is a great example of this. No where near the scale of larger publishers such as EA, they’ve been able to carve out a nice business publishing iPhone apps and have had a number of successes with Angry Birds being one of the most successful iPhone games ever and recently with Cut the Rope that’s hit number 1. Not knowing anything about Chillingo’s revenue, $20M in cash most likely though makes for a very nice evaluation given Chillingo owns distribution rights to games but none of the IP rights to the games or brands meaning they’re only keeping a percentage of overall sales with the rest going back to the IP owner – the developer. This bodes well for indy publishers/developers such as Brisk Mobile or other successful companies like Backflip Studios which comes to mind who own the publishing and IP rights to their titles. You can see a number of titles in the AppStore that have been successful from indy developers. This is so great to see and makes for a wonderful ecosystem. At Brisk, Medieval has been a successful brand for us with Medieval HD reaching the number 1 spot in the US for about a week. Obviously not an Angry Birds type of success, but still a successful title none the less. What is interesting about the Chillingo acquisition is that EA has not only taken notice of this success by indy titles (which I’m sure they have taken notice for a while now), but actually acted about it and did something by acquiring Chillingo to be a part of it.
It’ll be interesting to see if this Chillingo acquisition causes a similar ripple effect in the industry that happened in 2005. Will larger players take notice and now also want to be a part of original content creation as opposed to just pumping out branded console rehashes and act in a similar way to EA? I guess only time will tell.
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