Two of Playfish's Cofounders Are Leaving Their Positions at EA

Electronic Arts' purchase of social game developer Playfish in late 2009 was a watershed event. The deal, valued at up to $400 million, signaled that traditional gaming companies believed social games and the Facebook platform are a part of their future. Disney followed suit with its acquisition of Playdom last July, and numerous traditional gaming and media companies and individuals have also moved into the industry. Fast forward more than a year, and Playfish appears to have indeed become a more important part of EA's portfolio -- yet questions remain for it and EA. An important part of the deal was EA's and Playfish's belief was that it could bring existing hits to Facebook gamers in a big way, and while efforts like FIFA and Madden have gotten it more than 5 million monthly active users between them, that has not yet happened to the scale of the company's other original hits. Meanwhile, EA has confirmed to us that two of Playfish's cofounders will be leaving at the end of March: Sebastien de Halleux, Playfish's chief operating officer and now EA Interactive vice president, and Sami Lababidi, who has headed up Playfish's development and technical operations since the company's founding. Both will continue to stay on as consultants, according to a company spokesperson. It is not unusual for the cofounders of an acquired company to leave. But in this case, only one of the four Playfish co-founders will remain after the other two depart -- chief executive Kristian Segerstale, now general manager of the company within EA. The fourth, Shukri Shammas, left in March of last year, according to his LinkedIn profile; he'd been the chief financial officer before the acquisition, and the senior director for general and administrative, for a short time afterwards. When the acquisition was announced, EA and Playfish described it as being to a large degree about intellectual property. Playfish would promote EA's existing titles to Facebook users, creating new formats for classics. The results, so far, have been mixed. Value of Existing IP Still Generally Unproven in Social Games Playfish has retained its spot as the runner-up to Zynga in terms of traffic, according to AppData, our independent tracking service covering Facebook applications and developers. Comprising the main portion of EA Facebook properties, Playfish is currently the third-largest social game developer on the Facebook platform by monthly active users, at around 36 million as of today. Zynga is in first place with 276 million, Crowdstar is in second with 41.4 million. Looking at daily active users -- a better metric for estimating how well social gaming companies are able to monetize -- Playfish is in second, with 6.19 million DAU. That's healthily above most other competitors, but still dwarfed by Zynga's 60.1 million. Another important point on traffic: when Playfish sold, it had around 60 million MAU and 13.6 million DAU. While social gaming companies have greatly improved monetization in the past year or so, that halving of traffic likely mitigated those successes. As we've covered elsewhere, most of the largest developers on Facebook had significant growth challenges in 2010, even as dozens of smaller developers built businesses targeting niche audiences. Playfish continues to be a valuable part of EA. Combined with other mobile and online properties, including EA Mobile and Pogo, it will help account for fiscal year digital revenues of $750 million -- a bright spot in EA's overall business. And yet, an important part of the deal's premise was that Playfish would bring its hit franchises to social gaming, creating an upward spiral of cross-promotion of usage and revenue between Facebook and the rest of EA's games. How have they fared? Take a look at the list below. It shows the 20 largest EA games on Facebook, including Playfish and all others, based on MAU. Name MAU DAU 1. Pet Society 11,419,929 2,042,183 2. Restaurant City 7,222,537 1,636,875 3. Hotel City 3,523,047 464,101 4. EA SPORTS FIFA Superstars: Real football & soccer! 3,304,339 535,702 5. Madden NFL Superstars 2,198,535 273,581 6. Country Story 2,100,769 314,267 7. SCRABBLE 1,185,630 366,981 8. My Empire 1,112,379 104,044 9. Bowling Buddies 662,062 63,759 10. Word Challenge 607,642 62,986 11. Geo Challenge 447,812 36,550 12. Pirates Ahoy 440,512 70,165 13. Who Has The Biggest Brain? 408,810 24,540 14. Crazy Planets 389,094 33,930 15. Monopoly Millionaires 314,584 90,177 16. Pogo Games 182,418 24,057 17. EA SPORTSâ„¢ PGA TOURÂ® Golf Challenge 139,354 11,040 18. Poker Rivals 120,440 16,392 19. Gangster City 117,345 11,763 20. Minigolf Party 70,639 3,021 Pet Society and Restaurant City, formative simulation-game hits on Facebook, that were widely copied by other developers in 2009, are still in the lead. Meanwhile EA titles like EA SPORTS FIFA Superstars and Madden NFL Superstars have gained respectable traffic numbers -- it's possible that these games and others you see on the list have accomplished what EA intended in terms of cross-promotion. But it's hard to tell. Hotel City, an original-IP title launched by Playfish in early 2010, is instead the third largest on the platform. It is possible that EA/Playfish will come out with major new titles in the future that utilize EA branding from other parts of the company. But the most significant new social games today continue to be original works. For example, Zynga has succeeded by iterating on original concepts proven by other developers, then using its own game-design skill, cross-promotion heft, and large advertising budget to make itself the biggest winner -- FarmVille and now CityVille being the quintessential examples. While EA's entire market cap is $6.12 billion today, Zynga is reportedly trying to raise more money from investors at a valuation of between $7 billion and $10 billion. Looking forward, Playfish continues to be busy hiring employees and publishing more games. It has so far done as well as anyone trying to cross-promote games between Facebook and the rest of its properties (Disney's ESPNU College Town is another solid example), but now EA will need figure out how to continue building on the business now that most of the founders are moving on.

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Two of Playfish's Cofounders Are Leaving Their Positions at EA

Eric Eldon

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Eric Eldon