This morning, Electronic Arts (EA) made headlines with its announcement to enter a substantial agreement to be acquired by a consortium of private equity firms in a deal valued at $55 billion. This acquisition marks the largest leveraged buyout on record and is expected to have profound implications on the finance industry, as well as the gaming market.
Despite the financial intricacies that may not concern all gamers, the implications of this shift are significant. Industry analysts informed Ars Technica that the transition to private ownership will likely transform EA from its well-known public persona, impacting the types of games produced by the gaming giant.
A $20 Billion Burden
A key distinction between publicly and privately-owned EA is the new financial burden it will face, stemming from approximately $20 billion in debt acquired through JP Morgan Chase to facilitate the buyout. Analyst Michael Pachter from Wedbush Morgan estimates that servicing this debt could demand close to $1 billion annually once the deal is finalized.
While this payment schedule is feasible given EA’s reported $5.92 billion in gross profit for the 2025 fiscal year, the obligation to repay this debt may influence company operations and strategic direction.
“To manage such significant debt levels, it’s likely that resources will need to be reallocated, potentially resulting in layoffs, studio closures, and divestitures of intellectual property,” noted Michael Futter, an analyst from F-Squared.
David Cole from DFC Intelligence expressed similar concerns, suggesting that the new debt load may lead to an even more conservative EA, which could prioritize live service games, annual sports titles, and microtransactions, as these are considered stable and profitable revenue streams.
Given the stakes, studios not linked to EA’s consistently lucrative franchises—particularly sports games, Battlefield, and The Sims—face the greatest risk of workforce reductions or divestiture under this new ownership structure. This outlook raises apprehensions for teams like BioWare (known for Mass Effect and Dragon Age), Codemasters (F1, Dirt), and Respawn (Apex Legends, Star Wars Jedi).
“The company is likely to be divided into core strategic assets and those that require more oversight,” stated Joost van Dreunen, CEO of Aldora. Cole concurred that “spinning off smaller divisions” could be part of the strategic plan moving forward.
However, Futter questioned whether larger studios like BioWare would find suitable buyers given their recent performance struggles. “I’m uncertain who would be willing to take a chance on a significant investment like BioWare, given its recent history,” he remarked. Should these studios remain unsold, significant layoffs might be employed to streamline operations.
“Managing $20 billion in debt inherently leads to cost-cutting measures,” Futter elaborated. “For companies of EA’s scale, personnel are often viewed as a budget item to be minimized.”
Breaking Free from Quarterly Expectations
On the upside, transitioning to private ownership may liberate EA from the pressures of Wall Street that accompany public companies. The relentless need to meet quarterly earnings projections often pushes these companies toward short-term profitability at the expense of more sustainable, long-term projects.
Van Dreunen indicated that the shift could “alter the incentive structure” for EA, moving away from optimizing predictable revenue streams associated with sports games and live services. Instead, the new-private EA might focus on cultivating its products, allowing for more creativity and longer development cycles.
While it’s unlikely that microtransactions will be abandoned altogether, the new EA could be inclined to explore long-term strategies such as “subscription bundling and innovative projects that do not require immediate profit,” van Dreunen suggested.
Cole agreed, noting that the game publisher’s transition to private ownership could afford them the opportunity to make “long-term strategic bets that do not yield immediate returns.” Pachter highlighted that a private EA could explore different approaches that may take years to materialize.
Despite this potential for creative freedom, Futter expressed concerns that the focus on profitability might shift from shareholder returns to merely keeping the company solvent amidst substantial debt. “Public companies often prioritize shareholder value over employee welfare, and now that burden may be transferred to managing the company under the weight of debt,” he commented.
Saudi Influence in the Acquisition
A significant factor in this buyout is the involvement of the Saudi Public Investment Fund, which already holds around a 10% stake in EA along with interests in various other gaming entities. Daniel Ahmad from Niko Partners emphasized that this acquisition aligns with Saudi Arabia’s broader strategy to enhance its entertainment and esports sectors as part of economic diversification efforts.
Research from Niko supports the idea that EA’s sports games could be particularly appealing to Saudi interests; a significant number of gamers in the Middle East favor the sports genre, with 33% of PC players and 44% of console players listing it as their top choice. This aligns well with Saudi Arabia’s investments in the esports market, as noted by Cole.
However, the infusion of Saudi capital into a major U.S. game publisher has raised concerns regarding potential regulatory scrutiny from the U.S. government, particularly around data privacy issues. Cole articulated that the gaming industry could present challenges related to consumer data management, suggesting that the deal will attract ongoing governmental examination.
The Saudi regime’s rigid stance on certain social issues may also influence the future content of EA games. Futter warned that signs of censorship could appear, such as the retraction of LGBTQIA-friendly materials in franchises like The Sims, serving as an early indicator of potential content-related interference.
According to van Dreunen, Saudi Arabia’s investment is more about enhancing its cultural influence, potentially leading to the relocation of some operational aspects to Riyadh and a stronger focus on cultural relevance in EA’s offerings. With substantial backing from Saudi investors, the urgency to deliver quarterly profits may lessen, while the expectation to ensure cultural impact intensifies.
Ultimately, whether the private equity partners or Saudi stakeholders intervene in EA’s day-to-day management remains uncertain. Futter expressed hope that the private equity firms would allow company leadership to operate autonomously, as they possess the necessary expertise. However, he cautioned that leveraged buyouts carry inherent risks, often favoring the interests of the private equity firms over long-term company health.
