While you might think that a $55 billion sale would lead to a positive, cash-filled future for Electronic Arts, one industry expert has offered a worrying warning for the future of the development giant that could affect some of your favorite games.
A major bombshell dropped within the games industry on Monday morning, as news of Electronic Arts' (EA) official sale and move to the private market went public to the tune of $55,000,000.
The developer behind games like EA FC, The Sims, and Mass Effect agreed to be taken over in a leveraged buyout by Saudi Arabia's Public Investment Fund (PIF), alongside two private equity firms.
This made it the biggest recorded leveraged buyout in history, and while studio acquisitions aren't a rarity in the gaming world these days, the nature of this particular sale could lead to some unpopular measures in the near future according to one industry expert.
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Bloomberg's Jason Schreier has offered his own insight on what the deal could mean through a number of posts on Bluesky, directing the 'understandable' fears surrounding the Saudi and Kushner involvement in the deal to a different focus.
He highlighted that the deal "likely means some *aggressive* cost cutting is ahead for EA in the coming months and years," adding that the biggest immediate impact of the leveraged buyout is that EA is "on the hook for $20 billion in debt."
This is due to the leveraged nature of the sale, where the buyers have used EA's assets as collateral for a large portion of the purchase price, effectively causing EA to be in debt and pay for the sale itself through revenue it generates in the future.
"This could mean mass layoffs, more aggressive monetization, and other big cost-cutting measures," Schreier adds, projecting a dark cloud over the future of EA.
The company has already gone through significant redundancies over this year affecting hundreds of staff members, and it's highly likely that more job losses will arrive sooner rather than later.
While going private does remove the pressure of earning reports and appeasing investors, the significant amount of debt could see some of the less financially successful games be put on the chopping block, which is worrying news for fans of Bioware games and the upcoming Mass Effect game, as Dragon Age's last entry likely underperformed from a sales perspective.
Additionally, expect monetization and microtransaction efforts to ramp up, especially in titles where these models have already proven successful. Many EA FC fans have complained that its popular Ultimate Team mode is becoming increasingly 'pay to win', but this could still get worse.