EA looked to buy out Valve

EA

At the top of the sports gaming world, Electronic Arts has recently been looking to expand. With the acquisitions of PlayFish, Firemint, and PopCap within the social/mobile gaming space, the publisher has shown no qualms with buying out smaller companies for its own purposes. According to a report in the New York Times, though, EA isn’t stopping there.

$1 billion. That’s the number EA claimed it would be willing to part with in order to buy out Valve–the company behind the Half Life, Portal, and Counter Strike series. According to the article, though, which cites sources speaking on the condition of anonymity, the private talks broke down without much explanation. It should be noted, however, that Gabe Newell–Valve’s president–has said his company would “disintegrate” if bought out by another company.

“It’s way more likely we would head in that direction than say, ‘Let’s find some giant company that wants to cash us out and wait two or three years to have our employment agreements terminate,’ ” said Newell.

For EA, snatching up Valve at any price could have been a sweet deal, but the proposed $1 billion was purportedly too good a deal, as estimates put Valve’s value at around $2.5 billion. A big part of this price tag has to do with the company’s Steam service, the sales revenue of which makes more money than Valve’s games themselves.

EA’s chief operating officer Peter Moore was happy to give his support to Valve last month, mentioning that the company is “on the cutting edge of the future of this industry.” Whether or not he knew about recently revealed Valve’s plans to develop hardware is unknown, but he did describe the relationship between the two companies as positive. “Gabe’s a great friend of EA’s. We’re a great friend of his, we like to think.”

Though EA is a much larger company, one major improvement it might have made with the acquisition of Valve is with its online sales service. While no numbers are truly available, 2010 estimates of Steam sales surpassed $1 billion, while Origin generated only $150 million in its 2012 fiscal year.

Readers, let’s say you’re in Peter Moore’s shoes. How hard would you try to acquire Valve? Or, if you’re in Gabe Newell’s chair, what kind of deal would you need to part with your company? Play industry expert in the comments below, or over in our forums.

Being undeniably bad at video games has never stopped Sam from loving them, and now he's covering the gaming industry daily. When he's not writing about (or playing) video games, Sam can usually be found watching past-their-prime TV shows on Netflix or reading whatever finds its way onto his Kindle. Twitter: @scnolan13 PSN/Steam: rotcerid