Game Over: Electronic Arts Drops Ubisoft

Electronic Arts (Nasdaq: ERTS  ) , based in California, just sold its stake in the Montreuil-sous Bois, France-based company, Ubisoft. The partnership formed by the two companies who both develop, publish, and distribute entertainment software worldwide ended after a six year run. EA indicated a change in their strategic priorities. They want to "remain focused on growing our capability as a developer and distributor of online content and services."

The statement issued by EA stated: "More recently, the Ubisoft position has been viewed as a portfolio holding, rather than a strategic holding." Thus, EA reduced its stock portfolio to go its separate way. Bloomberg's BusinessWeek reported that persons familiar with the deal estimated the transaction to be worth 94 million Euros ($122 million USD). In Paris trading, Ubisoft's stock went up 1.7 percent. EA's stock, closed Monday at $15.09, at the low end of a 52-week range of 14.06-22.14 on the NASDAQ.

EA hit the streets in 1984 with titles for the Apple II and Commodore 64 including "Realm of Impossibility" and the classic "Seven Cities of Gold," which also came out in '87 for the PC. "John Madden Football" set them up for a foray into sports, seeing the company add to the genre in 1991 with the "PGA Golf Tour" for the Amiga. The late 90s saw auto racing, basketball, soccer, hockey, baseball, and Xgames added to the EA titles.

By 2010, devices supported by EA included Microsoft's (Nasdaq: MSFT  ) Xbox 360, PS3, PC, Nintendo DSi, PSP, Wii, and Apple's (Nasdaq: AAPL  ) Mac and iPad. Series included children's titles, such as the "Littlest Pet Shop," and for teenaged girls, "Charm Girls Club." Harder hitting titles, such as "Army of Two" continue to offer "Blood and Gore, Intense Violence, and [bad] Language." EA subscribes to the ESRB, which provides ratings that attempt to provide accurate and objective information about the content in computer and video games so that consumers can make an informed buying decision.

Electronic Arts sold well over one million copies in fiscal year 2010, with five titles that each sold over four million copies. FIFA 10 should have been no surprise given the excitement over the African based games this year. "Madden NFL 10" kept the football theme alive, along with recent versions of "Need for Speed," "The SIMS," and "Battlefield."

Ubisoft had grown over the years by acquiring other related companies, including Red Storm Entertainment and Blue Byte Software. The company continues to go strong with titles such as "All Points Bulletin" developed by Realtime Worlds. The Criminals and the Enforcers vie in this title, available for PC. The game allows players to customize their entire identity, how they look, what they wear, the cars they drive, and even their music.

"The Prince of Persia, Forgotten Sands," an action/adventure game, is the latest in that series. It opened to mixed reviews. Three game magazines gave it high marks for graphics, sound, and complex level design, but the combat system was downgraded for being too basic. Nevertheless, Ubisoft will continue to be a force in the games industry.

Ubisoft and Electronic Arts parted company on good terms, apparently. It looks to be a "No Contest" divorce. Ubisoft responded to the separation as "good news for Ubisoft, which regains its independence, although Electronic Arts has always supported our strategy."

This article has been lightly edited. Microsoft is a Motley Fool Inside Value selection. Apple and Electronic Arts are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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