Mass layoffs may be in EA’s near future after leveraged buyout raises company debt by $18 billion

Private investors, including Saudi Arabia’s Public Investment Fund, private equity fund Silver Lake, and Affinity Partners completed a leveraged buyout of Electronic Arts, which means the company’s debt has significantly increased. EA will take on $18 billion in debt, resulting in about $1.8 billion of interest to be paid annually. In order to make interest payments and ensure profit, serious budget cuts will have to be made. Unfortunately, this usually means employee layoffs.

According to Jason Schreier, a reporter for Bloomberg, cost-cutting will be EA’s primary focus after the buyout. EA has told investors that it intends to reduce annual costs by $700 million. A large portion of this will be “organizational efficiencies”, which amount to $170 million. Schreier believes that “organizational efficiencies” refers to layoffs. This is a high number, so there is no doubt that hundreds — maybe thousands — of workers will be affected by it.

EA has been pushing its employees to use artificial intelligence, claiming it would boost productivity. However, many observers believe that this is a pretext to allow EA to make budget cuts and reduce costs. Now, with major layoffs on the horizon, this might become a necessity rather than a suggestion. AI has been an increasingly common theme in the world of video games, even though many fans continue to disapprove and openly share their negative views on it. Still, when cutting costs is a major part of the annual budget, there might not be much of a choice.

If true, many EA employees will lose their jobs to fund this buyout. Additionally, many fans believe that in the future they will also be affected, whether that’s through the introduction of in-game ads or the addition of more monetization methods, a practice that EA is already infamous for.

Many fans and streamers voiced their opinion on this buyout and attempted to boycott EA games and platforms to make their displeased voices heard, but it didn’t work. If any of these rumors turn out to be true, gamers will be outraged and might abandon the company and its games altogether.