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Calabasas, Calif. Terms of the deal were not disclosed. EGT Chairman and Chief Executive Geoffrey Selzer, who will retain that post at the combined company, said further acquisitions in the video game "middleware" market are not out of the question. Selzer said he had been talking with NDL for the past seven-and-a-half months before closing the deal. EGT, which changed its name from Butterfly.net in May, provides the backend server infrastructure for the online multi-player video game community. The merger with NDL adds the actual rendering of images onto the screen to EGT's product line. NDL's product is called Gamebryo. "We're expanding into an entire platform," Selzer said. He cited Electronic Arts Inc.'s $48 million acquisition last April of Canon Inc.'s Criterion software division - maker of Gamebryo competitor RenderWare - as a possible opening in the "middleware" business. Many in the industry think No. 1 game developer Electronic Arts will not allow Criterion to design middleware for competing game developers, so that EA can control even more of the game-developing market. Middleware refers to the audio and graphics engines that software companies make and then sell to the game developers. "There's a great deal of anxiety in the marketplace," Selzer said. Over the next few years, Selzer said, the increasing cost and complexity of developing video games will cause more and more developers to turn to middleware providers, which can help cut the cost of designing and developing games down by a third. Currently costs typically range from $15 million to as high as $50 million. He added that the combined company will also develop software for single-player games. The explosiveness expected in the middleware market could add to more deals if the "right strategic partner or venture partner that was interested in a much more aggressive roll-up strategy" came along, Selzer said. He added that no specific strategic or venture investor is involved with the company at the moment. No layoffs are expected as a result of merger. In fact, EGT expects to add about 20 people to the now 30-employee base, especially in the engineering and business development areas. EGT had the larger valuation of the two companies at the time of the merger. Calabasas, Calif.-based EGT has received $12.3 million in three rounds of venture capital funding from investors that include Jerusalem Venture Partners, Worldview Technology Partners Inc., Walker Ventures, Adena Ventures and Mount Washington Partners. Founded in 1983 by computer graphics pioneer Turner Whitted, Chapel Hill, N.C.-based NDL has not received any institutional funding. Besides Selzer, the other directors are Allon Bloch of Jersusalem Venture Parnters; Colin Savage of Worldview; Gina Dubbe of Walker Ventures; James Condon, former CEO of CyberCash; Dan Kaufman, who has served as both a lawyer and executive in the entertainment and video game industries; and John Austin, who was CEO at NDL and is now senior vice president of business development for EGT. |
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