Video game giant EA in talks to go private in blockbuster $50 billion buyout

[Daniel Sims]

The big picture: The Saudi Arabian government has invested tens of billions of dollars into the video game industry in recent years, drawing criticism from gamers amid accusations of "sportswashing." Now, the kingdom – alongside other major investors – may be eyeing one of the industry's largest publishers in what could become the biggest leveraged buyout in history.

Sources told The Wall Street Journal that Electronic Arts is in advanced talks to go private through a $50 billion leveraged buyout. If finalized, the deal – expected to be announced as soon as next week – would be the largest transaction of its kind on record.

Potential investors include Saudi Arabia's Public Investment Fund, private equity firm Silver Lake, and Jared Kushner's Affinity Partners. While Saudi Arabia has poured billions into sports and video games in recent years, the EA acquisition would represent its single largest gaming investment to date.

Saudi Arabia already owns about eight percent of Nintendo, making it the company's largest outside investor. The kingdom also holds minority stakes in Activision Blizzard, Electronic Arts, and Take-Two Interactive, the publisher of Grand Theft Auto.

Its multibillion-dollar push into sports and video games is part of a broader strategy to diversify the economy beyond oil and position the country as an entertainment hub. However, critics accuse the kingdom of "sportswashing" – using high-profile investments to rehabilitate its global image and distract from human rights abuses, including the 2018 killing of Washington Post journalist Jamal Khashoggi, which US intelligence agencies linked to Crown Prince Mohammed bin Salman.

Complaints from gamers prompted Riot Games to withdraw from a partnership with Saudi Arabia in 2020. In late 2022, esports organization Team Liquid announced that it would donate half of its winnings from Saudi-hosted events to a pro-LGBTQ+ group, citing the kingdom's criminalization of homosexuality.

The potential EA deal also raises concerns given the track record of private equity and leveraged buyouts. Because such acquisitions typically require the acquired company to shoulder the debt, they often lead to aggressive cost-cutting, resulting in layoffs, reduced services, or even closures.

While there is no guarantee that EA – whose franchises like EA Sports and The Sims generate enormous profits – would face the same outcome, the company's strategic goals could shift significantly under new ownership. Following reports of the buyout, EA's stock rose 15 percent.

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Video game giant EA in talks to go private in blockbuster $50 billion buyout

 

[Puiu]

Let them buy EA. they'll still make just crap.

 

[yRaz]

Let them buy EA. they'll still make just crap.

I actually think EA is a publisher, not a developer. What EA needs to do is step back and let their developers make games instead of micromanaging them in hopes of a greater turn on investment. EA has many talented people working for them, they just need to leave them alone and let them do their jobs. They would probably make better games going private because they wouldn't have investors breathe down their necks to higher middle managers to micromanage everything the developers are doing.

I've seen a great deal of companies get ruined by investors and managers. I honestly don't understand the business model of buying successful companies and running them into the ground then selling off their assets.

 

[axiomatic13]

I will never knowingly give my money to the Saudis or a Kushner. I will never buy anything from EA again if this goes through.

 

[Phylop]

Private Equity is just as bad if not worse.

 

[Theinsanegamer]

I actually think EA is a publisher, not a developer. What EA needs to do is step back and let their developers make games instead of micromanaging them in hopes of a greater turn on investment. EA has many talented people working for them, they just need to leave them alone and let them do their jobs. They would probably make better games going private because they wouldn't have investors breathe down their necks to higher middle managers to micromanage everything the developers are doing.

I've seen a great deal of companies get ruined by investors and managers. I honestly don't understand the business model of buying successful companies and running them into the ground then selling off their assets.

EA owns many developers, they're not just a publisher. Who do think makes all their games?

And the last time their staff was "let alone to do their thing" the result was anthem and the near bankruptcy of Bioware.

 

[yRaz]

EA owns many developers, they're not just a publisher. Who do think makes all their games?

And the last time their staff was "let alone to do their thing" the result was anthem and the near bankruptcy of Bioware.

I remember seeing the Anthem trailer from E3. I wanted to play the game that they envisioned. If I remember correctly, EA asked the developers to focus on micro transactions instead of game mechanics and we all ended up with a game noone wanted to play

 

[MonicaPython2]

For EA it is a quite big investment

 

[godrilla]

For EA it is a quite big investment

Imo 50 billion in indi devs would return a higher roi.

 

[NumberNine]

I love it. If anyone deserves the full experience of a Private Equity buyout and everything that's to follow, it's our dear old friends at Electronic Arts. Congrats, you've finally met a bigger, meaner monster than yourself - and they own you now.

 

[ScottSoapbox]

Going private could return gaming monetization sanity without Wall Street pressure.

Going private equity will increase gaming monetization insanity with VC pressure.

 

[hahahanoobs]

Yay for EA not having to disclose their financials!

 

[Theinsanegamer]

I remember seeing the Anthem trailer from E3. I wanted to play the game that they envisioned. If I remember correctly, EA asked the developers to focus on micro transactions instead of game mechanics and we all ended up with a game noone wanted to play

You remember wrong.

You should really do some research on the tranwreck that was Anthem. The one thing EA mandates was they keep the flying mechanic. You know.....the one good thing that game had. EA was forced to pull the leashes and force them on a path because Bioware wandered for years unable to make crucial decisions or progress on the game. They were eternally convinced that their "BiOwArE mAgIc" could save the game and they didnt have to worry about the game not going anywhere.

Half a decade and all bioware could do was concept art and the E3 vertical slice. That's it. Bioware had free reign. EA didnt mandate anything until they saw that the company was content with burning tens of millions producing absolutely nothing, so they had to step in and force the devs to actually make a game and the studio's management was gutted and replaced with EA picks to ensure the game was actually done.

It's popular to bash on EA and all management because "management bad" but half that management are former devs. The devs are just as bad, sometimes worse. DICE did the same thing, to a lesser extent, with BF2042. The whole structure is rotten to the core and needs burnt down.

 

[Thrackerzod]

Why would anyone give 50 billion dollars for Blockbuster? Isn't there just a single store left?

 

[mailpup]

Why would anyone give 50 billion dollars for Blockbuster? Isn't there just a single store left?

Wut?

 

[urielejh]

EA owns many developers, they're not just a publisher. Who do think makes all their games?

And the last time their staff was "let alone to do their thing" the result was anthem and the near bankruptcy of Bioware.

No. "managers" and investors ruined the game.

 

[urielejh]

You remember wrong.

You should really do some research on the tranwreck that was Anthem. The one thing EA mandates was they keep the flying mechanic. You know.....the one good thing that game had. EA was forced to pull the leashes and force them on a path because Bioware wandered for years unable to make crucial decisions or progress on the game. They were eternally convinced that their "BiOwArE mAgIc" could save the game and they didnt have to worry about the game not going anywhere.

Half a decade and all bioware could do was concept art and the E3 vertical slice. That's it. Bioware had free reign. EA didnt mandate anything until they saw that the company was content with burning tens of millions producing absolutely nothing, so they had to step in and force the devs to actually make a game and the studio's management was gutted and replaced with EA picks to ensure the game was actually done.

It's popular to bash on EA and all management because "management bad" but half that management are former devs. The devs are just as bad, sometimes worse. DICE did the same thing, to a lesser extent, with BF2042. The whole structure is rotten to the core and needs burnt down.

Are you paid by EA? Or, maybe, you don't have a life.

 

[Xenocea]

That 50 billion could've been used to help with those suffering from poverty in third world countries, established more schools, educations, hospitals and so on.

 

[GodisanAtheist]

Are you paid by EA? Or, maybe, you don't have a life.

-Bioware's internal problems have been very well documented by actual Bioware devs for a long time.

The general consensus was EA was remarkably hands off but Bioware management kept wanting to shoehorn in trends and lacked a clear vision for their games.

EA absolutely does push monetization to a unhealthy degree in its annual mtx-mill games, but there is definitely a significant amount of blame to be shared with some of their devs.

Bioware stands out because it went from being a solid RPG studio to a hollow shell of itself that got populated by ladder climbers who didn't understand Bioware 's customer base at all and just wanted to impress their C-Suite.

 

[Axeia]

That 50 billion could've been used to help with those suffering from poverty in third world countries, established more schools, educations, hospitals and so on.

It's not a donation to EA. It's a takeover.
That's like saying the money you spend on your car could have fed dozens of children


Like sure... But then you wouldn't have had a car and these investors wouldn't have EA. They actually want something in return for the money, not give it away to charity.