RealNetworks To Acquire GameHouse

From RealNetworks’ press release:

RealNetworks, Inc. today announced it has entered into a definitive agreement to acquire Seattle-based GameHouse, Inc. a top developer, publisher and distributor of downloadable PC games, in a cash and stock transaction valued at approximately $35.6 million. The acquisition strengthens RealNetworks’ leadership position in the downloadable PC games market by bringing together RealArcade, the leading downloadable games distribution platform and GameHouse, the leading developer and publisher of downloadable games. Moreover, this acquisition contributes to RealNetworks’ overall strategy to be the leading provider of digital media consumer services.

“When we launched RealArcade two and a half years ago, we pioneered a new approach to PC games — downloadable, high quality games that were fun, easy to buy and use, and appealed to a broader market than traditional CD ROM or console games,” said Rob Glaser, CEO, RealNetworks, Inc. “Having sold over 2 million games through our RealArcade platform, we have worked with many successful game developers. Our single most successful developer is GameHouse, who has sold over 1 million copies of their own titles through us and other Internet channels in just 2 ½ years. We believe that merging GameHouse and RealNetworks will strengthen our lead in this vibrant business, and we are delighted to welcome GameHouse to the RealNetworks family.”

“We created GameHouse with the goal of establishing a successful business that would bring entertainment to millions of people,” said Garr Godfrey, CEO of GameHouse. “RealNetworks essentially created the industry for downloadable casual games and we are excited to be joining the industry leader. Together, we have a great opportunity to continue to build a successful games business around the globe.”

Based in Seattle and founded in 1998, GameHouse has consistently published many of the top casual games on the Internet – including Super Collapse II, Puzzle Inlay, and TextTwist. GameHouse distributes these games through its own direct-to-consumer web site (, through third party affiliates, and through distributors that include Comcast, Earthlink,, MSN, RealArcade, Shockwave, Sony, and Yahoo! In 2003, GameHouse generated over $10 million in revenue and $5.5 million of net income.

RealNetworks is acquiring GameHouse for approximately $14.6 million in cash and approximately 3.3 million shares of RealNetworks common stock. Valued as of the close on January 23rd these shares have a value of approximately $21 million. Under terms of the agreement, approximately $18.3 million of the purchase price will be subject to restrictions over a four year period, a portion of which is tied to continued employment of the principal officers of GameHouse. The parties anticipate that this transaction will close in the next two weeks.

RealNetworks expects GameHouse to be approximately $.01 per share accretive to earnings per share in 2004 after acquisition charges and non-cash amortization of intangibles. RealNetworks believes that contributions to earnings from GameHouse Studios will increase in subsequent years. RealNetworks will provide additional information as part of its 4th quarter earnings release scheduled for January 29th.

“Over the last couple of years we have seen how much consumers love GameHouse games” said Andrew Wright, vice president, games, RealNetworks, Inc. “The combination of our deep consumer experience and GameHouse’s proven creative excellence will ensure a continuous stream of top quality content for RealArcade customers and our partners.”

GameHouse will operate as a wholly-owned subsidiary of RealNetworks, GameHouse Studios. GameHouse Studios will continue to distribute games through its network of distributors, and RealNetworks will continue to provide access to a wide variety of games from other publishers through RealArcade. All GameHouse employees are expected to join RealNetworks and they will remain in their historic Seattle Pioneer Square location. Garr Godfrey, will become general manager, GameHouse Studios, reporting to Andrew Wright, vice president games.

RealArcade has provided high quality casual games to consumers for 2 ½ years and offers over 190 downloadable games. Consumers can purchase games or become subscribers to RealArcade GamePass which offers consumers a game a month and discounts on subsequent purchases for $6.95/month. Downloadable games, sometimes called casual games, offer consumers easy, quick and addictive play in a variety of genres on their PC and mobile devices.