Electronic Arts will pay America Online (AOL) $US81 million to become the exclusive provider of games and related entertainment content to a potential audience of millions of people who access games through AOL and its subsidiaries, the companies said this week.
Under the terms of the agreement, Electronic Arts (EA) will provide games and other entertainment to an estimated 19 million AOL subscribers worldwide.
In addition, the five-year deal gives Electronic Arts the right to provide content through AOL's home Web site (http://www.aol.com/), which is visited by an estimated 28 million people monthly, and the game channels at AOL's CompuServe, Netcenter, ICQ and Digital City subsidiaries, said Mark Blecher, vice president of marketing and electronic commerce at Electronic Arts.
The Californian company is the owner of computer games including Sim City, Need for Speed, and Command and Conquer, as well as Madden NFL and other EA sports games.
The agreement calls for AOL and Electronic Arts to relaunch their games offerings simultaneously mid next year, giving users multiple Web sites where they can reach the same content, Blecher said.
"Right now what [AOL users] get is a variety of games from a number of different games manufacturers," Blecher said. "What will happen following this deal is everything there will be provided by EA."
In addition to Electronic Arts games, the sites will feature games created by Kesmai and WorldPlay, both of which Electronic Arts said it intends to buy. Kesmai, owned by News Corp, and WorldPlay, a division of AOL, produce a large number of games currently available on AOL's sites, Blecher said.
Kesmai specialises in multiplayer games delivered directly to consumers over the Internet. Its most popular titles are Air Warrior, Aliens Online, Starship Troopers, and Multiplayer Battletech.
Details of the two acquisitions were not released at this week's announcement, but if approved by regulators, they will follow the addition of two other companies -- PlayNation, a San Diego-based company bought in September, and Bottle Rocket, a New York-based company bought last month -- to the Electronic Arts portfolio.
"We think [the venture with AOL] is going to be a very broad-based consumer product," Blecher said.
"We are trying to build games for anyone who likes to play games." That includes everything from sophisticated interactive games for dedicated players to sports trivia and parlour games, he said.
Electronic Arts plans to make money on the venture by charging subscriptions to some games, the model it currently uses for its popular "Ultima" game, which has 135,000 subscribers paying $10 per month.
Initially, there will be more free games than subscription-based games, but Blecher said the offering will evolve into a more equal blend of free and subscription-based games. Advertising sold by AOL's sales force and the sale of electronic games will provide other revenue, Blecher said.
The $US81 million Electronic Arts agreed to pay AOL comprises a cash payment and a portion of future advertising revenue, Blecher said.