Electronic Arts announced it will acquire Titanfall maker Respawn Entertainment for $315 million in cash and stock, plus a possible bonus of $140 million. The deal could bring a new long-term franchise into the fold for the big third-party publisher of video games, giving EA an edge in the multibillion-dollar first-person shooter genre with properties such as Titanfall, Battlefront, and Battlefield.
The total purchase price could hit $455 million if Respawn hits its incentive targets, known as an earnout. The deal includes $151 million in cash, $164 million in restricted long-term stock grants for Respawn, and a variable earnout up to $140 million. That’s a lot of money, and it shows what is at stake as EA lines up franchises that could pay off for years to come. It also shows how high the stakes have become in the $108 billion game industry, as you would think that a company like Respawn would be able to exist as an independent game studio.