Together the two companies, dubbed Ascension CrossMedia Inc. but continuing to use the bitHeads and Bedlam brands with clients, will target an emerging form of gaming called "connected transmedia."
This allows one consumer to play a single game across television, a console like Xbox and mobile, providing application makers with virtual 24-hour access to their market.
Ascension predicts $13 million in revenue, but beyond that, co-chief executive Scott Simpson of bitHeads said financial details of the transaction are confidential.
All current personnel will remain in their jobs and respective cities, and the company is still targeting "aggressive" growth with 14 new jobs currently open.
"Bedlam concentrates on larger predominantly hard-core games, whereas we do downloadable games, not casual games, but lighter quote-unquote 'fun', if you want to think of it that way," said Mr. Simpson, who is co-CEO of Ascension along with Bedlam's Trevor Fencott.
He said the deal will make bitHeads one of Ontario's largest digital media companies, alongside firms such as Silicon Knights in St. Catherines and Toronto's Ubisoft.
"We have very complementary games we develop, but on top of that we both realized (it's not enough) just being a games company any more."
Bedlam Games hit the movie spotlight last year when it partnered with Erich Hoeber and Jon Hoeber, a brother screenwriting team who worked on the movies RED and Battleship.
The Hoeber brothers and Bedlam are now working together on Blood and Glory, a game with the aim to eventually be pitched as a movie as well.
bitHeads, a three-time winner of OBJ's Employees' Choice Awards, has been pursuing its own gaming business through a subsidiary called Playbrains, a game development studio that does both console and PC games.
The company also does development work on computer programs for other applications, like Barbados-based Pyramidal Technologies' bullet analysis software.
Mr. Simpson said Ascension will be better able to combine the gaming and applications side of the business.
Although the company is now at a similar size to other Ontario-based gaming firms, Mr. Simpson said ramping up bitHeads' employee base was not about targeting the competition.
"Those places, we’re amazingly friendly with them and on the board of Interactive Ontario with them," Mr. Simpson said, adding the transaction is more about a "value add."
Ascension plans to release four console games in 2011, with two names revealed so far: Dungeons & Dragons: Daggerdale for Atari, and Sideway: New York for Sony Online Entertainment.
