GameHouse chief: EA’s PopCap deal is ‘huge validation’ for sector

Matt Hulett

Given the timing, EA’s blockbuster deal to acquire Seattle’s PopCap Games for between $750 million and $1.3 billion is destined to be Topic No. 1 in the hallways at next week’s Casual Connect game conference in Seattle, as the rest of the industry figures out what it means for them.

As a follow-up on yesterday’s news, and a preview of those conversations next week, we talked with Hulett, a longtime member of the Seattle tech community who leads the GameHouse video-game business in his role an executive with Seattle-based RealNetworks. Continue reading for excerpts from his comments.

Thoughts on the deal? “We are strong partners with PopCap, and on a personal level and team level we are really happy for those guys. This is a validation that a social, multi-channel strategy is a real winner for PopCap. They basically took a download-only channel and developed really good games for that, namely Bejeweled and other things like Zuma, and they successfully pivoted that business into mobile and social and got a huge valuation for it. I think it is a huge validation for everyone who is doing stuff like that in casual (games).”

Are you surprised by the valuation? “I am not. … The earn-out component (in the PopCap deal) is pretty significant. It is not like it is a slam dunk. They are really going to have to work … (Also) if you can lock up a franchise like Bejeweled, it is going to have a higher valuation than you would as a studio with a one-off hit.”

On Bejeweled’s status as a casual games icon: “It is a hit, but it never dies. It is like Disney marketing Mickey Mouse. For the casual games world, it is one of those hits, and it is like reintroducing Bambi or Mickey Mouse every year. It is perennial hit that everybody knows.”

What does the deal mean for you?  GameHouse is doing “exactly what PopCap did. They got out of the download business aggressively and diversified into mobile and social. … One of the problems that I’ve had is that there has been no value (placed on) a large-scale casual games business, and now we have one. … So, for me it at least puts a framework around the kind of business we are trying to run.”

How did PopCap create these great games? “The entrepreneurial side of me says, there’s always a sense of luck, and that’s a piece of it. But I think one thing that they caught on very quickly was, take the time on a very basic game mechanic and do a world-class job on quality. They are not really structured around being timely on releases. They are focused on getting the product right. And they did that early on and they built an audience, and they never strayed from that and never tried to pump out the next hit. The quality combined with the distribution was the big winner … The other thing that the founders did that was really smart is that they brought in non-games guys to run the business.”

Thoughts on EA as a buyer for PopCap?  “I think it makes a lot of sense.  They are a huge company. They want to own all of the platforms and they love to own IP, and it makes a lot of sense for them. To be honest, they got a great operating team with a great brand. I think it is a great fit. There  were probably a number of other companies interested in that, and they would not have wanted to see Bejeweled go to somebody else.”

Are you surprised that PopCap went the M&A path vs. the IPO path? “I am personally not. It is different being a public company, there’s just a different kind of structure. And obviously EA is public, but it is a little bit different being a divisional president versus being a CEO….

On more deals coming in tech: “It is deal time. There’s a lot of deal activity right now…. Overall, there’s a frenzy in tech and games right now.”

Previously on GeekWire: PopCap co-founder on the EA deal, and the future