Why EA saw decline in mobile revenue despite obtaining big hits through Glu and Playdemic acquisitions

Electronic Arts spent a total of $3.5 billion on mobile acquisitions in 2021, adding several hit games to its portfolio. However, its mobile revenues have been actually declining ever since, as the company seems to be repeating the same mistakes it made over a decade ago.

Kim Kardashian: Hollywood reportedly lost over 40% in revenue after joining EA’s portfolio

The original post appeared in the latest episode of Deconstructor of Fun newsletter. It was written by the blog’s co-founder and Savage Game Studios CEO Michail Katkoff, who previously worked at companies like Zynga, Rovio, Play Ventures, and FunPlus.

Here are the key takeaways from the article.

• EA had a few hits in its mobile portfolio, including Star Wars: Galaxy of Heroes, Plants vs. Zombiles, and Need for Speed: No Limits. These titles, however, eventually stopped growing, with new games like Command & Conquer: Rivals and Sims: Mobile missing their mark.
• Things should have become better when Big Fish Games president Jeff Karp joined EA to lead its mobile division. On top of that, the company made two big M&A deals in 2021 by acquiring Glu Mobile for $2.1 billion and Playdemic for $1.4 billion.
• As a result of adding eight new IPs to its portfolio, EA’s mobile net bookings for the third quarter of FY2022 (ending December 31, 2021) grew 68% year-over-year. The numbers looked great on paper, but the reality was much grimmer.
• To prove this point, Deconstructor of Fun looked at 21 top-grossing mobile titles in EA’s portfolio, which account for 96% of its mobile revenue.
• It turned out that the company’s mobile revenue for the first quarter of 2022 (ending March 31) actually decreased by 23% year-over-year, with downloads increasing by 22% over the same period.

Deconstructor of Fun: titles marked in orange are the ones that have joined EA’s portfolio in 2021

• While these numbers are in line with Sensor Tower’s latest report on mobile games spending in Q1 2022, downloads increased for only six out of EA’s 21 highest-grossing titles. And all the key IPs acquired by EA in 2021 — Kim Kardashian: Hollywood, Golf Clash, Disney Sorcerer’s Arena, and others — saw their revenues decline after joining the company.
• According to Deconstructor of Fun, the key problem here is that EA tried to integrate Glu and Playdemic into its corporate structure instead of keeping their autonomy (like, for example, Zynga did with all the studios it has acquired).
• This move resulted in leaders and executives fleeing their companies, which is the same mistake EA made when acquiring PopCap and PlayFish more than 10 years ago. As a result, it is obviously hard for the company to operate all these games without the people who actually created them.