Topic: Saudi Arabia Public Investment set to purchase EA for 55 billion.

Yeah, if the deal goes through this time next year, I assume mass layoffs and an IP firesale.

I can't fathom the loan payments on 20 billion debt.

The loan won't be cheap either; these things always come at a premium because of the risks involved.

I'd estimate that the interest payments alone would probably be around the $1.5 billion dollar mark, which would be enough to wipe out EA's profits entirely.

Selling off less profitable IP and studios, and job cuts across the board are pretty much a given.

@Magician wouldn’t that be a win that the ips are sold off. Then your favourite company can buy your favourite ip. I only care about fifa nhl and f1.

I'm not keen on leveraged buyouts so $20 billion of borrowing will be added to the company but they will no longer be publicly traded so don't need to create profits for shareholders and the new owner will pay off this new debt through profits. So are looking to play the long game I guess as it could be some years before they aren't servicing this debt. Of course adding $20 billion of debt to the company makes it more vulnerable to going out of business but I guess the new owners will inject new cash if they have to but also want a return on their $35 billion of investment. It feels like EA have become less important in the marketplace but perhaps that is just my perspective as I can't think of any recent EA games I've purchased. However many years ago I seemed to frequently buy EA games. I've had a quick look at current EA IPs and none of them are games I've purchased recently although have some older Battlefield games but I then lost interest in the franchise. I'm not into their sports games.

EA are undeniably a big player in the industry, hence the high selling price, but I've also not bought a lot of games from them recently either. I just find their aggressive monetization to be off-putting, and the only exceptions seem to be with games that are made by external studios who have sufficient creative control and the desire not to do that.

They certainly won't be paying down that loan by running the company as is. As I said before, the loans will be at high risk rates and their current level of profitability might only cover the interest on them. Selling off IP and parts of the company that they aren't interested in is likely to be their first step, and cutting costs - most likely by cutting staff - is the usual means of increasing profitability in the short term. If they had extra money to invest immediately, I don't think that they'd be taking out a punitive rate loan either, so that might only happen further down the line.

As for the long term, who knows? The Saudi government is fond of throwing billions at megaprojects that seem utterly fantastical - like a winter sports resort in the middle of the desert and a city that's a line of skyscrapers stretching for over a hundred kilometers - so there might well be similarly unrealistic objectives behind this.

So, while EA might have long ceased to be the company that I grew up with in the 80s, I can't help but feel a little bit concerned as to what will happen to them. Some sort of pay-to-win LLM generated content hellscape that leads into a bubble that ultimately bursts might be the worst case scenario, but I don't think that it's one that I could confidently rule out.

Well, we assumed EA was going to carve their house up to meet the financial burden.

And...here...we....go.

If I ignore morals and empathy for a second, I almost respect that EA has not felt quite evil enough in modern times compared to their even worse competitors, and so decided to team up with Saudi Arabia to double down on those efforts. It's like a super villain team up.