Electronic Arts Inc. has snapped up Playfish Inc., the creator of popular social networking games such as Who Has the Biggest Brain and Pet Society, for $275 million in cash. With the acquisition, EA dives further into the world of social online games, which tens of millions of people play on Facebook, MySpace, and the iPhone. The purchase will help EA move into online communities at a time when declining consumer confidence is cutting into traditional packaged video game sales. Just last week, the company launched a version of Spore on Facebook.

In addition to the upfront cash payment, EA will pay an additional $100 million contingent on Playfish hitting certain financial targets though December 2011, plus $25 million in equity-based retention agreements with employees. Playfish makes money by selling virtual items for its free games, which currently have 60 million monthly players.

Source: AP