The seismic $55bn deal to take EA private will change the shape of the games business dramatically.
And there are a lot of opinions out there about it. Many are negative, as we covered yesterday, with several industry watchers voicing their concerns over job cuts, the level of debt being taken on by EA and the financial constraints that could follow.
There are also plentiful moral concerns around one of gaming’s most important and influential companies being effectively owned by a country with a poor human rights record.
Nonetheless, we dug deeper to get more views on this deal overnight, ranging from an anonymous EA source through to an investment banker. There’s also some speculation on where Scopely might play a role in all this, and industry takes on that $20bn debt load.
The bullish insider view
One EA source we spoke to was incredibly positive on the deal. They suggested that without the caution and conservatism that comes with constantly having to hit 90 day revenue and profitability targets, EA could finally invest more in riskier long term projects and fulfil its latent potential in mobile.
They even suggested that projects like the cancelled Black Panther game would have been given more time and investment to get right, had the Saudi deal happened sooner. Where previously projects like Black Panther were under incredible pressure and afforded very strict budgets and timelines, private ownership and funding could have allowed teams like Cliffhanger Games more time to get their projects right.
The insider also namechecked the likes of Dream Games, Playrix and Mihoyo, private companies able to spend big money on user acquisition over the long term without having to worry about reporting financials every three months. EA mobile could now potentially compete in the UA space properly, if given the right funding to do so by its new owners.
The Scopely connection
Some context: Savvy Games Group, which is also owned by Saudi Arabia’s Public Investment Fund, bought Scopely for $4.9bn in April 2023. With that new Savvy funding, Scopely then acquired Niantic’s game portfolio, including crown jewel Pokémon Go, in March for $3.5bn.
Scopely’s expertise as a longtime mobile-first game publisher is beyond question. It has also gained a reputation as one of the companies most adept at maximising margins by pushing players out to more dynamic, personalised webshops to buy IAPs, dodging Apple and Google’s 30% in the process.
Scopely is also a company that understands the UA investment required to launch a successful mobile game. In the past, Scopely has claimed it has spent over $1bn marketing Monopoly Go. Add all of that together and you’ve got an ideal stablemate for EA’s mobile portfolio.
The current head of EA Mobile is also an ex-Scopely executive. Jose ‘Pepe’ Cantos is currently VP and group general manager of EA Mobile, but prior to his time at EA, Cantos worked closely with Scopely’s bosses Javier Ferreira and Walter Driver during a three-year stint at the publisher from 2015-2018.
By all accounts, Savvy has been very hands-off with Scopely to date, too, giving the US firm plenty of freedom (and funding) to keep investing in Monopoly Go. So it seems unlikely that PIF will exert much pressure on EA at this stage.
The investment banker view
Drakestar Partners’ Michael Metzger agrees that EA’s new owner “won’t get very involved in the near term”.
“High profitability and cash flows will continue to be very important, considering that the deal is financed with $20B in debt, and EA needs to serve that debt with over $1B in interest moving forward,” Metzger told us.
“PIF is interested in both games and sports, and this deal aligns well with PIFs allocation to invest $38B in games. Mobile is still the largest segment within gaming, and EA will likely continue to invest in mobile titles outside of the sports franchises.”
That $20bn debt load
There’s some debate over this one. Many industry watchers across social media, including Bloomberg journalist Jason Schreier, believe that servicing this huge debt will inevitably mean EA must now dramatically cut costs (read: staff) and monetise its games much more aggressively.
The counter view seems best summed up by Gossamer Consulting’s Eris Kress, who, responding to Schreier’s post on LinkedIn, said that EA’s current cash flow is more than enough to cover the debt, and while job losses are perhaps inevitable, the Saudi PIF will now always be able to pump money into EA where needed.
A separate report from the Financial Times also suggests that AI will play a large role in reducing costs at EA in the future. Those cost savings are speculative at this stage, but as a private company EA will be less constrained if it does need to make dramatic organisational changes.
Future M&A
The last three major game publisher/developer deals EA struck – for Glu, Codemasters and Playdemic – have left fingers burned at EA. They have ranged from solid (Playdemic) through to poor (Codemasters) and disastrous (Glu). So it’s perhaps no surprise EA hasn’t been shopping since. There’s now a good chance that, given the PIF’s practically limitless funds, EA could go shopping again.
There’s precedent here, of course: after the PIF-backed Savvy Games Group acquired Scopely, the Monopoly Go maker then bought Niantic’s game portfolio for $3.5bn two years later.
Next steps
The $55bn deal is still subject to board approval, but is expected to be completed by Q1 FY27. After that point, EA’s common stock will no longer be listed on any public market. Andrew Wilson is expected to remain as CEO.
The Financial Times reports that regulatory approval won’t be an issue due to the involvement of Trump’s son-in-law, Jared Kushner. An FT source said: “What regulator is going to say no to the president’s son-in-law?”
