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EA signs five-year Facebook deal

By Julianne Pepitone, staff reporter

NEW YORK (CNNMoney.com) -- Electronic Arts has signed a five-year deal to use Facebook Credits as the only accepted method of payment for its games on the social networking site.

Under the terms of the deal, EA will receive 70% of revenue from Facebook Credits and Facebook gets the other 30%. Consumers use the credits to play games and buy virtual goods within the apps.

EA's (ERTS, Fortune 500) catalog includes games from Playfish, an app maker EA bought last fall. Playfish games Pet Society and Restaurant City are two of the top 10 games on Facebook, as measured by daily active users.

"Gaming has emerged as the most popular category of applications on Facebook," said Barry Cottle, a senior vice president at EA Interactive. "The natural step is for EA to broaden its relationship with Facebook."

The deal announced Tuesday is a boon for Facebook, which has made a big push for Facebook Credits. Facebook has been trying to formalize relationships with gaming companies -- and get rid of bad blood.

For example, Zynga was reportedly threatening to pull its games off Facebook and start its own platform earlier this year.

The Credits revenue split was reportedly one of the main sticking points, but Zynga signed its own five-year deal with Facebook in September. It, like EA, will also receive 70% of revenue from Facebook Credits.

Earlier this year, Facebook made similar five-year deals with two other major social gaming companies: Playdom, which is now owned by Walt Disney (DIS, Fortune 500), and Crowdstar.

After announcing the deal, EA reported fiscal second-quarter earnings after the closing bell. The company lost $201 million, or 61 cents a share, narrowing from a loss of $1.21 a share a year earlier. Excluding one-time items, EA earned 10 cents a share. Analysts were expecting an adjusted loss of 10 cents a share.

Shares of EA ended 2.5% higher at $16.01 on Tuesday but dropped almost 2% in after-hours action. To top of page

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