Electronic Arts (EA) has officially been sold for $55 billion (£41 billion) to a consortium of private investors from Saudi Arabia.
The buyers include Newcastle United owners Saudi Arabia’s Public Investment Fund (PIF), Silver Lake, and Jared Kushner’s Affinity Partners. This could be the turning point for the company, as this acquisition could help the game developers develop games that don’t feel like a copy-and-paste game every year.
The sale makes EA a private company, meaning it will no longer be traded on a stock exchange and all of its public shares will be bought up by the investors. It has been reported as the largest leveraged buyout (LBO) ever, in which a company is bought mostly with borrowed money.
As one of the largest gaming companies in the world, the sale is the biggest the industry has ever seen, but this comes with a lot of issues that can change the direction of EA in the future. This isn’t the first billion-pound purchase the PIF has made in the gaming industry, and this only adds to their long list of sportswashing allegations from Saudi- based consortium groups.
EA says it will continue operating as normal under the current management structure led by Andrew Wilson, CEO of EA, and the team would still carry on developing some of the biggest franchises, including EA SPORTS FC, Battlefield, The Sims, UFC and the next Mass Effect.
The consortium has sought support from investment bankers JPMorgan to borrow around $20bn. The huge debts may result in debt offset, which includes staff redundancies and an aggressive stance towards in-game monetisation (micro-transactions) – this is something that EA has been good at with their EA FC Ultimate Team mode.
With GTA 6 coming out this November, it looks like EA needs a new strategy and an injection of resources that can allow them to develop a game similar to GTA 6. There are a lot of gamers who have suggested that they will not play EA FC because it is the same every year.