EA's acquisition of Criterion Software on Wednesday, however, is not so much about obtaining a new game that will fly off the shelves. The highlight of the purchase is RenderWare, Criterion's development tool for creating games. RenderWare is a piece of middleware -- it provides a framework that standardizes the game development process and allows rapid prototyping over multiple platforms (all three major consoles and the PC).
RenderWare is widely used in the industry. Its user list is a veritable who's who of the gaming industry, with companies like Activision
EA's competitors will understandably be apprehensive about this deal. Having to license RenderWare from EA would smart, but it is the least of their concerns. The acquisition allows EA to combine RenderWare with its own in-house tools, cutting production costs and reducing time to market. In an industry where production costs for top titles are in the millions and release schedules are a joke (Activision's upcoming Doom III was originally scheduled for release two years ago), access to Criterion's crown intellectual property will be a strong advantage.
While the move will benefit EA immediately, this acquisition will pay off the most in the future. Criterion is already working on the next incarnation of RenderWare, which will work with the next generation of consoles planned for 2005 and 2006. Being able to train developers on the new software early will give EA a tremendous head start.
With upcoming titles Madden NFL 2005 and The Sims 2 having tremendous pre-order sales, and technology for high-speed development when the next-generation consoles are released, EA's future both short term and long term continues to look bright.
Both Electronic Arts and Activision are Motley Fool Stock Advisor recommendations. Subscribe today with a six-month money-back guarantee.
Fool contributor Tim Goh does not own any stake in the companies mentioned.
More from The Motley Fool
IBM Struggled With the Tax Man in the 4th Quarter
A long-awaited return to actual sales growth was overshadowed by a $5.5 billion one-time tax charge.
1 Big Improvement That Apple Needs to Bring to the New iPhone SE
It's time for a new display.
Sears Holdings' Store Closures: No Problem for Seritage Growth Properties
Seritage Growth Properties gets most of its rent from Sears and Kmart. But the numerous store closures at both chains won't hurt Seritage as it works to increase its rental income and diversify its tenant base.