Vertical integration

Well, there you go, it’s the biggest games industry news item of the year so far: EA has bought Criterion. The number one middleware maker now belongs to the number one developer / publisher.

What does it all mean?

GamesIndustry.biz has interviewed both Criterion’s David Lau-Kee and EA’s Bruce McMillan to find out what they think.

I’m sure many people will be discussing this for quite some time. I will update this post as new commentary comes in.

Update: Apparently this deal cost EA around $48 million, which seems pretty low to me. (Microsoft paid $375 million for Rare.)

Comments 7

  1. Walter wrote:

    Oi. Pretty scary, if you ask me.

    Posted 30 Jul 2004 at 1:02
  2. Erik wrote:

    There are may obvious questions that arise from this, such as whether EA will continue to licence the tech in the long run at all. But even if they do, it’s conspiracy theory galore:

    Inside knowledge about release schedules and design details of major EA competitors? EA suit guy: “Sweet.”

    EA has access to many lead programmers of the competition. EA suit guy: “Eeeexellent.”

    Internal Criterion/EA versions better then external builds? Could even be justified as releasing new tech only after it proved being robust..

    And so on, and so forth…

    Posted 30 Jul 2004 at 14:56
  3. roBin wrote:

    When we were walking through the exhibit hall at Imagina in Monaco (February?), Doug wondered aloud when EA would snap up a middleware company like Criterion. Which, after a brief discussion, I promptly forgot about.

    Now I feel like I owe him a beer!

    Posted 31 Jul 2004 at 0:36
  4. Jurie Horneman wrote:

    I feel like he owes me a beer :)

    Posted 31 Jul 2004 at 15:15
  5. Gabby Dizon wrote:

    While the thought of EA snapping up Criterion is indeed scary, vertical integration hasn’t worked very well in history: witness AOL/Time Warner merger as the most recent example. Also, when publishers buy successful developers, the original team usually leaves after a while.

    What this will most likely do is promote competition among middleware developers. Can you imagine the rest of the indistry helping promote a new middleware platform if only to block EA’s dominance in the industry?

    Posted 05 Aug 2004 at 15:50
  6. Jurie Horneman wrote:

    I don’t see how EA can lose, especially for that price. They get two (apparently) hot games (and at least one hot brand) plus the teams that made them (who probably won’t be able to leave soon), good technology, potential license fees, and they’re causing their competitors some headaches.

    It’s true that vertical integration often doesn’t work – JoWooD, one of my previous employers, tried it and failed. But I think this is different. Even if EA never sells another RenderWare license, they win. This is assuming they know how to develop tools and technology in order to reduce development times, but from what little I know they can do that (which is why the purchase surprised me – I thought they were able to develop their technology in-house). They can also force external developers to use RenderWare, which makes sense in lots of different ways.

    Posted 08 Aug 2004 at 17:50
  7. Jurie Horneman wrote:

    Here’s another thought. Suppose you’re a big developer, and you have built your development strategy on middleware. Suppose EA’s acquisition of Criterion came as a nasty surprise. Would you switch middleware, and be exposed to the same risk again? I don’t think so. My guess is NDL, the only serious competitor to Criterion I can think of (for a broad range of games, on console platforms), will get bought up as well. This might be the end of middleware as we know it.

    My other guess is this will create a headache for Microsoft, and maybe for Sony as well, because it has now become harder to make good next-gen games.

    Posted 08 Aug 2004 at 17:57