Battlefield

Why does Saudi Arabia want to make games? What will the largest leveraged buyout in history mean for EA and its employees? How will the consequences of the new $55 billion deal ripple out across the rest of the video game industry? I reached out to some analysts to get their take on the sale and what it tells us about the state of gaming now, and where it’s headed. Here’s what they said.

A “soft-power” play

“This is the second-largest deal in games history—$50 billion for a mature publisher whose growth engine has stalled,” Joost van Dreunen, a professor at NYU’s Stern School of Business and author of SuperJoost Playlist, wrote in an email to Kotaku. “It shows how sovereign capital, not just Big Tech, is now dictating who controls cultural IP. It also highlights how public-market fatigue with slow-growth publishers is pushing them toward privatization.”

Saudi Arabia’s Crown Prince Mohammed bin Salman has mandated $38 billion be invested in turning the country into a gaming powerhouse, with sizable chunks of that already being spent on buying up mobile game makers, taking over esports, and acquiring equity in major gaming companies (it already owns 10 percent of EA going into the sale). While other private equity partners are part of the sale, Bloomberg reports that the majority of the funding comes from Saudi Arabia’s Public Investment Fund.

In the latest edition of his newsletter, van Dreunen points to the illogic of the the deal’s financial math, which values EA much more highly than its current cash flow would suggest it should be for a leveraged buyout in which $20 billion is financed through debt. He argues the deal underpins Saudi Arabia’s willingness to overpay for U.S. cultural IP, as well as Wall Street’s loss of interest in legacy gaming businesses whose growth potential has stalled out in recent years. “At the center sits the irrational financial logic that tells you it’s about power, prestige, and staking Saudi Arabia’s claim in American entertainment,” he writes.

Gaming continues to consolidate in search of growth

The conventional wisdom was that amid the post-pandemic flurry of market consolidation, EA would merge with someone sooner or later. It reportedly engaged in acquisition talks with Apple and others back in 2022, with a potential deal to to merge with NBCUniversal eventually falling apart over price. Pundits have called on Disney to buy the publisher of Madden and FIFA (now EA Sports FC) for decades. “We couldn’t be in a stronger position as a standalone company,” EA CEO Andrew Wilson said back in 2022.

What’s changed since then? EA hasn’t has a new runaway success story since Apex Legends, which shadow-dropped back in 2019 and stumbled last year amid declining interest. EA Sports FC, Madden, and now College Football are the core games sustaining the publisher, but it’s unclear where they go from here. Battlefield is taking on Call of Duty again for the first time in years, but it’s an expensive live-service gambit at a time when few new multiplayer games seem to be able to stick for any length of time.

“EA’s mobile games business has traditionally underperformed and should be a much larger part of its overall business,” Piers Harding-Roll, Games Research Director at Ampere Analysis, told Kotaku in an email. “This alignment could help transform EA’s mobile business. EA’s revenue growth in recent years has been benign, so the opportunity to drive growth and build out a long-term strategy by bringing together a cross-section of expertise is attractive to both parties.”

The publishers attempts to adapt its hit franchises into mobile games have either been canceled (Battlefield), quickly closed down (Apex Legends), or struggled to bring in boatloads of money (Madden). “The deal creates opportunities for Saudi Arabia to strengthen its console & PC presence, and provides EA with an opportunity for synergy with [Saudi-owned mobile developer] Scopely for ongoing mobile expansion, now that both are under the PIF,” Daniel Ahmad, Director of Research and Insights at Niko Partners, told Kotaku in an email.

Leveraged buyouts are a recipe for pain

Big private-equity deals involving lots of debt often bring with them sharp cuts. Business analysts will call this “right-sizing” or “rationalizing the business,” but what it means is people paid a fraction of their CEO’s salary get fired. EA currently has roughly 15,000 employees, a number many industry watchers expect to decline. “Leveraged buyouts deposit a large amount of long-term debt on the company being acquired and an additional $20 billion of debt will need to be serviced through cutting costs and building more margin from existing businesses to generate more free cash flow,” Harding-Roll said.

There’s been a lot of debate on whether going private will free the company up to invest in franchises long-term rather than invest almost exclusively in games that deliver predictable quarterly returns. Could a lack of shareholder pressure yield more single-player blockbusters, or provide EA with enough runway to give the next Mass Effect as much time in development as it needs? Or will the debt crunch incentivize EA to lop off anything that’s not generating revenue and retreat even further into annualized sequels?

“EA’s empire is heavy on sports and sprawling studios, so some ‘right-sizing’ is inevitable—expect a sharper split between the sports division and everything else, some studio consolidation, and likely relocation of certain functions to Saudi Arabia,” van Dreunen told Kotaku. “Being private could also tilt its content strategy back toward longer-cycle franchises rather than quarter-to-quarter live-ops churn. Battlefield gets a cushion, but there will be trims and a sports-versus-everything-else carve-out.”

Unconventional players in uncharted waters

Video games are a notoriously chaotic business, mergers are inherently unpredictable, and a sovereign wealth fund has never owned one of the biggest gaming publishers in the world before (following Activision’s sale to Microsoft, EA is the biggest non-platform, non-Chinese company in gaming by revenue). While it’s reasonable to explain the deal by pointing to Saudi Arabia’s global PR blitz and synergies in sports and mobile gaming, it’s also reasonable to think it’s way too early to tell how this will shake out, especially when you throw a $20 billion loan into the mix.

“I can’t say I know what it all means yet, or what this deal will result in when it comes to EA’s games and studios,” Mat Piscatella, Circana’s Director of Gaming Research, told Kotaku. “I’d hazard to even attempt to speculate at this point. Of course, leveraged buyouts have a certain history that generally hasn’t been great for the acquired companies, but I do not know if that will be the case here given the parties involved.”

“It’s very much about aligning gaming and esports alongside entertainment and sports as key diversification pillars for the Saudi economy,” Ahmad added. “The deal also begs the question of what will come in the future regarding mergers and acquisitions for the global games industry, given the ongoing consolidation trend, and the ability for smaller companies to break through to walk among the giants.”

While more layoffs may be a grim inevitability, the analysts Kotaku spoke with didn’t predict any seismic shifts in the immediate aftermath of the deal, set to close next summer. “I don’t expect any significant changes to the upcoming slate of games over the next couple of years,” Harding-Roll said. “The biggest opportunities remain growth of the Battlefield franchise, growth of the EA Sports FC franchise during the World Cup 2026 and bigger exposure to mobile gaming.”

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