gaming giant EA (Electronic Arts) made some big announcement this week. The video game giant announced that it will acquire "Titanfall" developer Respawn Entertainment for $315 million in cash and stock.

According to Polygon, the Redwood City-based company made a huge offer for Respawn, a deal which could give EA a huge competitive advantage in the highly lucrative first-person gaming space. In addition to the $315 worth of cash and stock, there’s also a possible bonus of up to $140 million in performance-based incentives. The deal is expected to be closed by the end of this year.

About the target company Respawn

Headquartered in Beverly Hills, California, Respawn Entertainment is a leading game development company founded by Jason West and Vince Zampella. Respawn was the company behind the widely popular shooter game, the action-packed "Titanfall" game series.

Jason West and Vince Zampella founded Respawn after being fired in March 2010 and sued by their former employer Activision. The two have been fired due to breaches of contract and subordination. They have been replaced by Activision head of production Steve Ackrich and CTO Steve Pearce on an interim basis.

The next month, April 2010, the two were reportedly working on a new independent gaming studio known as Respawn Entertainment.

They managed to form a new gaming studio by seeking funding from gaming giants like Electronic Arts through the special funding program called EA Partners Program.

Under the EA Partner Program, the two will retain the rights to all the intellectual properties they produced. EA funded and published Respawn Entertainment’s first ever multiplayer shooter game Titanfall, which was first introduced in June 2013.

In March 2015, Respawn made some follow up move and added some huge enhancements to the original Titanfall game. it announced a sequel to the original game, the “Titanfall 2.”

In addition, Respawn is also working on a new virtual reality game not related to “Titanfall” and “Star Wars” games. In fact, last month, it made a big announcement that it’s working on a VR first-shooter game for the Oculus Rift.

It is scheduled for release in 2019.

About the acquirer EA

Founded in 1982 and based in Redwood City, California, Electronic Arts (EA) was a pioneer of the early home computer games industry. Currently, EA is the second largest gaming company in the US and European market in terms of revenue and market capitalization. It trailed the US-based giant Activision Blizzard and just ahead of the Rockstar Games owner Take-Two Interactive.

The company develops and publishes a number of gaming titles, which includes "Battlefield," "Need for Speed," "Medal of Honor," "The Sims," "Mass Effect" series, Dragon Age," "Command & Conquer," and more. In addition, the company also owns and operates several gaming studios in North America and Europe.

These include EA Tiburton in Orlando, BioWare in Edmonton and Montreal, EA Canada in Burnaby, and EA DICE in Sweden.

EA has been more active in the gaming world in the past years. In fact, last year, it announced a new internal division called Frostbite Labs, which specializes in the creation of new projects for virtual reality platforms. Despite its huge success and rapid growth, the company also experienced some difficulties and issues on the road. One of these was the closure of the Visceral Games last month.

What the deal will bring to the gaming market

As mentioned earlier by VentureBeat, Respawn also made a huge revelation that it’s working on three different projects for Electronic Arts.

The first one is a new title for the action-packed Titanfall game series, the second one is some sort of Star Wars game. And finally, the last one is still an unnamed VR gaming experience.

When asked by the media if the latest deal with Respawn has something to do with the recent closure of the Visceral Games, Respawn’s founders said that the latest deal and the Visceral Games closure are not related. EA’s Patrick Soderlund claims that it was a creative decision and was related to the creative process of developing a new game.

But the real motivation for this deal is that it allows EA to more tightly coordinate with Respawn on the development and release of the video games in the market. This is very important because Respawn’s sales of "Titanfall 2" reportedly suffered great losses due to poor timing of the launch.

The studio made a huge mistake here when it released the shooter game too close to the debut of another big game, “Battlefield 1.” The popular shooter was released on October 21, while "Titanfall 2" was launched on October 28. Overall, the deal will give EA more gaming control and access to Respawn’s massive user base.