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Games - Thursday, October 11, 2007

EA Puppet Master John Riccitiello Buys Games Studios For $825M From His Former VC Firm

EA bought out Elevation Partners' ownership in two games studios - Pandemic and Bioware - For $825M. In 2005, Elevation had bought those studios for just $300M. The deal makes Elevation's John Riccitiello look like a puppet master. Riccitiello previously was President at EA and left for Elevation describing his vision to make a Pixar in the gaming business. Riccitiello rejoined the game publisher in April as CEO and is thanking Elevation partners with this deal. EA's PR folk claim that Riccitiello didn't vote on the acquisition or participate in the negotiations, though he did endorse the deal. Riccitiello apparently left the room when directors voted. With his stake in Elevation Riccitiello stands to personally make $4.9M reports Barrons.

Apparently Riccitiello is biting his words. When he bought the two game studios he offered his opinion that game distributors like EA have too much control in the business and that the creatives who make the games should be able to stay independent and go public.

Now looking like a sage Wall Street analyst Michael Pachter - an analyst with Wedbush Morgan Securities - last year said that Elevation Partners' gaming roll-up wouldn't work and that going public would be difficult: "They don't have any chance of success," Pachter said, noting that Wall Street investors tend to prefer their video game makers to be part of a conglomerate. "There's not an appetite to segment the different links in the value chain, Pachter continued. The best evidence of that is that we have companies like Viacom, Disney and News Corp."

One of the good guys from Pandemic's: Mercenaries 2 - World in Flames.

Read - CNET