Nov. 9 (Bloomberg) -- Electronic Arts Inc., the world’s second largest video-game publisher, will acquire Playfish Inc., a maker of games played on Facebook’s Web Site, for $400 million in a bet that social networking will be a platform for growth.

Electronic Arts is paying $300 million initially, including a $25 million retention agreement with Playfish employees, and up to $100 million if the company meets certain profit targets, the Redwood, California-based company said today in a statement.

The company is looking to social networks for growth as sales of titles made for consoles have fallen 12 percent in the U.S. this year, according to data from researcher NPD Group Inc. The market for games made by Playfish and rivals including Zynga Inc. and Playdom Inc. will almost triple to $2 billion by 2012, according to ThinkEquity LLC.

“Because of the size of the market and the rate that it’s growing, it’s an important area to get in,” Barry Cottle, senior vice president and general manager of EA Interactive, said in an interview.

More than 250 million people played games on Facebook in September, Cottle said. Playfish’s most popular game, Pet Society, has more than 20 million active monthly users. Other titles include “Restaurant City” and “Who Has the Biggest Brain?”

Microtransactions

Started in 2007 by former Glu Mobile Inc. executives Kristian Segerstrale and Sebastien de Halleux, Playfish offers free-to-play titles and generates revenue by selling virtual goods to users through so-called microtransactions. The closely held company, based in London and San Francisco, is backed by Accel Partners and Index Ventures.

“They will be a team dedicated to winning the social networking space,” Cottle said.

Electronic Arts rose 35 cents, or 1.8 percent, to $19.35 at 11:23 a.m. New York time in Nasdaq Stock Market trading. The shares had gained 18 percent this year before today.

The company, led by Chief Executive Officer John Riccitiello, has recorded a loss in four of its past five quarters, when accounting for changes in deferred revenue. When the company reports results today for the quarter ended Sept. 30, it’s projected to have a profit of $30.3 million on sales of $1.14 billion, according to analysts surveyed by Bloomberg.

Electronic Arts had no debt and $1.84 billion in cash and short-term investments as of June 30. The acquisition is the company’s second since it backed out of efforts to buy Take-Two Interactive Software Inc. last August after the maker of “Grand Theft Auto” rejected a $2 billion offer.

The last purchase was in December, when the company bought J2MSoft Inc., the South Korean developer of RayCity, TAAN and Debut, for an undisclosed amount.

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net;

Last Updated: November 9, 2009 11:25 EST