Let's hear your thoughts on the EA buyout.

Here are some of my thoughts on the buyout in no particular order.

For now - while the deal is still being finalized.

It's a good day to own EA stock. All of the institutional investors will get paid out quite handsomely.

If I worked at EA right now, I would be updating my resume. After any acquisition, there's often layoffs that ensue. With this acquisition financed in part (~40%) by new debt, those costs are going to be cut sooner than later.

If I was hiring right now, I would direct my recruiters to any EA workers in my contact list. I suspect there's going to be a lot of them looking for new opportunities soon.

The Elephant in the Room - $20 billion in debt

$20 billion in debt is no joke, especially because they have to pay interest on that debt. The federal interest rate is ~4.5% right now, which means that a loan of $20 billion would be requiring at minimum of $900 million per year in interest payments alone. EA had a net income of $1.27 billion in 2024, so another $900 million in interest payments would wipe out most of their net income. A bad year could put them into the red just from the interest payments alone. In order to get themselves to a good place again, they're going to need either really big increased income (unlikely), or they're going to cut some pretty huge chunks of their workforce to save enough cash to start paying back that debt.

This means they're going to push heavily to cut costs in order to give themselves more breathing room. This means a few things - monetization efforts will increase, they'll look to do more with less (hardware, software, headcount, etc.), but the biggest thing is that big layoffs will ensue. If we go with the envelope math of $10,000 per month per person (combined salary, benefits, taxes, etc.), cutting a thousand jobs is $120 million per year in savings.

This will likely take the form of either studio closures or even studio sales. Underperforming or far-off projects will likely be cancelled or possibly sold to buyers if there is any interest. If they can manage sales to some companies with money, so much the better for their ledger. EA hasn't done this in the past, being the one doing the acquisitions rather than selling, but new owners mean new leaders and new direction.

Longer Term Consequences

There's also some concern given that video game development specifically tends to lean much more politically liberal, and having owners like the Saudis and their appointees will lean significantly more conservative in direction. Politics shows up in video games to varying degrees - some franchises much moreso than others. Due to the change in direction, there is the distinct possibility that EA will no longer publish titles that push certain political boundaries. Only time will tell, it's hard to read the tea leaves on this one.

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20.05.2025 [🤔]

MASSIVE BAG O’WOOL!