Is Amazon Buying Electronic Arts Or Not?
Major corporate acquisitions happen all of the time, so when news recently broke that Amazon was on the verge of buying game maker Electronic Arts, it wasn't shocking. However, contradictory reports soon sprung up, and nobody knew if the studio responsible for The Sims, Battlefield, and FIFA would be under new management or not.
It's an age old tale, a small indie studio makes a genuinely good game that turns into a huge success, and a large company turns up, and buys that studio. One recent, somewhat surprising, acquisition was Sony's $3.6 billion purchase of Bungie. For those that don't remember, Bungie's breakthrough title, Halo: Combat Evolved, was one of the games that helped the original Xbox stand out in a console market Sony was absolutely dominating. Bungie was an indie studio at the time, but was fairly quickly bought out by Microsoft. Then came the numerous Halo sequels and spinoffs, along with newer franchises like Destiny. Now we're in an odd position where a new Halo game could, and likely will be, a PlayStation exclusive.
What would Purchasing EA get Amazon?
Electronic Arts is one of the gaming world's giants. Since it was founded in 1983, the company has gone on to release some of the largest and most successful games in history. The Battlefield series, Dead Space, Mass Effect, Dragon Age, Army of Two, and Apex Legends are amongst the litany of action games in EA's library. Then there are the sports games, which include the FIFA series, Madden, NBA Live, and many others. Oh and they're also responsible for The Sims, which is meant to involve guiding virtual characters towards a better life but usually just doubles as gaming's premier murder simulator.
It was also one of the companies that pioneered some of gaming's less popular practices that are now, for better or worse, pretty standard in the industry. This includes the use of micro transactions, subscription-based services and pushing multiple DLC packs of varying quality. These practices tend to cause a lot of visible upset in the gaming community, but may have made EA's current shareholders quite happy. The company has also reported steady annual revenue growth (via Macrotrends)
On top of everything else, EA isn't just EA. Just as it could be acquired, over the years, EA has gobbled up plenty of smaller gaming companies too. Its notable acquisitions include Dice, which made the Battlefield series, Respawn which made Titan Fall, and RPG maker BioWare which is best known for Baldur's Gate, Mass Effect, and Dragon Age. EA currently operates more than 40 studios worldwide (via Video Games Chronicle).
Where did the rumors come from?
While EA is one of the bigger fish in the games industry's lake, there are still plenty of companies that are far, far bigger. So the idea EA could be bought out by one of the globe's most successful businesses isn't too farfetched. The rumors of an EA takeover, and its first links with Amazon, appear to have stemmed from a Puck article by that made two crucial claims, the first was that "Electronic Arts have held talks with a number of different potential suitors, including Disney, Apple and Amazon." Secondly, a source claimed that "EA has been persistent in pursuing a sale, and has only grown more emboldened in the wake of the Microsoft-Activision deal."
So, with large takeovers happening in the game industry, EA's current owners keen on a merger, and Amazon having allegedly been amongst the companies in EA's sights, the stage was set. Amazon has the funds to acquire a majority stake in a company of EAs size, though the developer would be its biggest purchase by far. EA has a market cap (the value of all its current shares added together) of around $36.74 billion. Currently, Amazon's most expensive acquisition has been Whole Foods, which cost the retail giant around $13.7 billion back in 2017. So with all the key ingredients there, news outlets may have been on the lookout for suggestions a deal was being discussed. An on Friday, one of USA Today's affiliates said it had just that.
Is Amazon going to acquire the gaming giant?
So is Amazon set to purchase one of the gaming world's big boys? Probably not. The rumor first hit mainstrean news when a company, Good Luck Have Fun (GHLF), sent out the story. GHLF doesn't publish news on its website; instead, it provides gaming coverage to other outlets. One of those outlets is USA Today's gaming page, For The Win (FTW), which is where this story first gained traction. The story quickly gained traction with several other outlets and the online community as a whole. There was only one, pretty massive issue. The story turned out to be unverifiable.
FTW soon modified the article to say the claims have been refuted, and an editor's note at the top of the piece claims that GHLF originally ran a story that "violated [its] editorial standards," and the piece had used several "unnamed and unvetted sources." The original piece was taken down and replaced with an article that claims the takeover has been "rumored." The new piece referenced outlets like CNBC, which claimed to have spoken to its own sources and reached the conclusion that an Amazon takeover of EA was not on the horizon.
The Associated Press has rules relating to the use of anonymous sources, and why they only directly apply to its newsrooms, they may be used as a best practice guidelines. If GHLF had followed AP's sourcing guidelines, this rumor might never had gained traction. For example, if the source was run past a news manager, extra scrutiny may have led to the story being scrapped.
A story about a potential takeover is certainly a case where anonymous sources may be considered if the leak is interesting enough. However, it's the outlet's job to vet those sources.