Electronic Arts 2.0

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Mass Effect, a BioWare title, is a hotly anticipated role-playing game, due out in November.

Pandemic's Mercenaries 2 is a no-holds-barred action game which features realistic, destroyable environments.

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Harnessing New Expertise

According to Michael Pachter, a Wedbush Morgan Securities analyst, BioWare's prowess at designing and producing role-playing games—both original and franchise-based—could help jump-start EA projects that have so far been stuck in the mud. A prime candidate is Lord of the Rings: the White Council. "EA hasn't been able to get it right for two and a half years now," says Pachter. "But if BioWare takes it over, it should do very well in the marketplace," he adds, citing the company's previous hits with titles based on the Star Wars films, which could prove helpful for taking on Tolkien.

In what would arguably be a more interesting development, BioWare could become an incubator of innovative ideas and technologies that could eventually filter into EA's other properties. Gibeau envisions individual EA teams developing technical and gameplay expertise that could be shared across all of the company's titles. He cites, for instance, a dialogue system developed by BioWare for the upcoming Mass Effect game, which allows players to engage in hyperrealistic conversation with computer-generated characters. "The dialogue engine is something we will almost immediately look at as an asset for other teams," says Gibeau.

Analysts seem pleased with the additions to EA's roster, though some balked at the price of the acquisition, which works out to more than $1 million per employee—combined, the two developers have some 800 workers. But, Bank of America (BAC) analyst Michael Savner noted that EA was wise to acquire two of the "best developers within the industry." And Pachter says the two developers combined should be able to deliver EA at least $300 million in annual gross revenue by 2009.

Fans Fear Corporate Control

The tight-knit community of BioWare fans and players, however, weren't so pleased. Gamers flooded the official message boards on BioWare's Web site. "You guys just sold your soul," wrote a gamer from Du Quoin, Ill., under the handle SlaughterX. Others, like a player nicknamed Veacute;linn, were less bellicose, pleading, "BioWare, if there is ANY way you can get out of this, do it now. Do it!"

The discontent may not be misplaced. The history of game developer acquisitions is checkered at best. Fans fear that EA's corporate culture might stifle the developers' future products. The last megagames deal to get as much attention was Microsoft's (MSFT) $375 million acquisition of British developer Rare in 2002, which has yet to produce the commercial or critical success initially anticipated, despite a winning string of blockbusters before the purchase. For his part, Gibeau is stoic: "We treat our studios like city-states," he says. "They'll have their own independence, though we encourage collaboration."

Matt Vella is a writer for BusinessWeek.com in New York.