Electronic Arts just announced that it is going to be acquired and taken private in a massive $55 billion deal led by an investor group composed of Saudi Arabia’s Public Investment Fund (PIF), Silver Lake, and Affinity Partners. The deal, expected to close in Q1 of EA’s 2027 fiscal year (which takes place from April 1st to June 30th, 2026), isn’t just a huge amount of money involving one of gaming’s largest publishers; it could have massive ramifications for the company, the types of games it invests in, and the people that make them.
The deal itself, a leveraged buyout, consists of about $36 billion in cash from Silver Lake, Affinity Partners, and PIF (which is rolling over its 9.9 percent equity stake it already has in EA), while JPMorgan Chase Bank will provide $20 billion of debt financing (“$18 billion of which is expected to be funded at close,” according to EA’s press release). That means that the newly private company will have to do a lot to justify the massive price tag.
“Leveraged buyouts leverage debt, which usually means more layoffs, smaller budgets for growth, and fewer risks,” Mona Ibrahim, former lead counsel at Epic Games, said on LinkedIn. “For an industry that thrives on invention, this seems problematic.”
There isn’t a direct comparison to this situation. As Circana analyst Mat Piscatella notes, “$20 billion of debt financing is a shockingly large number to have to service, while also transitioning from a public to private organization and all the implications that has on the people that work in it. We’ve obviously never seen anything like this at this scale in the industry before.” But we can look at what has happened to some of Microsoft’s big gaming acquisitions as a bit of a roadmap for what may happen with EA.
A few months after the completion of the $68.7 billion Activision Blizzard deal in October 2023, Microsoft laid off 1,900 staffers across Activision Blizzard and Xbox, and Blizzard’s president left the company. An in-development survival game was canceled — a notable decision given Blizzard’s past history of creating enduring, long-running franchises like Diablo and Warcraft. Microsoft has also shut down Arkane Austin and Tango Gameworks, which it picked up as part of its ZeniMax Media acquisition, and as part of a big company-wide layoff earlier this year, it cut staff at ZeniMax and Candy Crush maker King (which is under the umbrella of Activision Blizzard).
It also seems like that EA will continue to focus primarily on its most lucrative tentpole franchises, a direction the publisher has been headed toward for some time. You just need to look at its most recent earnings slides to see it. EA’s “core business” slide features six games with “massive online communities”: Apex Legends, Battlefield, EA Sports College Football, EA Sports FC, Madden, and The Sims. The slide also has a small mention of EA’s free-to-play Skate revival, which just launched in early access and is another attempt from EA to make a big multiplayer game.
Basically, EA’s major roadmap features a lot of sports, big shooters in Apex Legends and Battlefield 6, and additions to The Sims 4 (and a new Sims in development). There are also a few smaller games tossed in here and there (like some Star Wars games and a Plants vs. Zombies remaster) and a bunch of free-to-play games. For the most part, the scale of these titles continues to increase. Battlefield 6 is being developed by four of EA’s most notable studios in order to compete with Call of Duty, while the next Sims will be an ambitious shift for the franchise. In short: EA is putting more money into fewer games. And the buyout is likely to speed up this process even more.
This puts EA’s smaller games and underperforming franchises in a difficult position. After BioWare’s Dragon Age: The Veilguard did poorly enough that EA had to say so in a pre-earnings press release earlier this year, it wasn’t long before the beloved studio was hit with layoffs. The EA Originals label has had some hits with Split Fiction and It Takes Two, but other games, like Immortals of Aveum and Tales of Kenzera: Zau, weren’t nearly as successful, so the new EA might opt not to work on more Originals projects in the future. EA has already shown itself to be ruthless even with games that seemingly have a lot of potential: it canceled its Black Panther game earlier this year and shuttered the studio behind it, despite it being attached to a film franchise that earned more than $2 billion.
Once the deal closes, there could be other cost-cutting measures, including increased use of AI. “The investors are betting that AI-based cost cuts will significantly boost EA’s profits in the coming years,” according to the Financial Times, citing “people involved in the transaction.” EA CEO Andrew Wilson, who will continue to lead the company after the deal closes, has said that AI is at the “very core” of EA’s business. Given the history of some past big leveraged buyouts, EA may still have a turbulent future ahead, even if it makes big changes. Toys R Us and Hertz both filed for bankruptcies after major leveraged buyouts years earlier, as noted by Reuters.
We don’t know exactly what to expect from EA moving forward given the uniqueness of this situation. Wilson may have promised employees today that “the future we are building together is brighter than ever,” but history suggests that things might not be so sunny.
