The Biggest Leveraged Buyout Ever

EA Games, publisher of Battlefield, Apex Legends, The Sims, Fifa and every other sports game you’ve ever played recently agreed to be acquired for US$55 billion, the second largest industry buyout ever. It sits behind the Activision Blizzard buyout Microsoft made in 2022 for 75.4 billion. Where it does hold a record though is for its investors going out on a limb to make it the biggest leveraged buyout in private equity history.

It seems immediately obvious why Microsoft would snaffle up Activision Blizzard. They need fodder for their new Xbox Game Pass ecosystem they’re building for themselves. If you want to be the Netflix of games you need easy access to Call of Duty. EA on the other hand, is on much more interesting turf.

Suffice to say Investors are going to be looking for some returns on their investment quick smart. Gamers have been generally worried that this LBO will quickly strip EA for parts, squeeze it for all its worth, and then leave the company a broken husk of what it once way. According to researchers at California Polytechnic State University around 20% of large companies that get picked up in an LBO are bankrupt after 10 years as opposed to the 2% in the control group.

More research from the Private Equity Stakeholder Project and the Center for Popular Democracy which sound like the most thinktanky names I’ve ever heard suggests that Private Equity firms were responsible for 1.3 million lost jobs.

That’s the bad news, Wall Street has been optimistic though. One of the buyers, the Savvy Games Group PIF, already held a 9.9% stake in the company. Saudi Arabia’s Public Investment Fund has been snaffling up shares in gaming for a while now, having a portfolio including the likes of Take-Two, Nexon, Capcom, and Nintendo. Oh yeah you remember Pokemon Go? They’ve got a piece of that too. In 2022 Crown Prince Mohammed bin Salman made building a local gaming industry part of its Vision 2030 diversification plan.

In their Intro Savvy Games Group says it is “committed to driving long-term growth and innovation in the games and esports industry through strategic acquisitions, investments, and commercial ventures. With its strategic vision centered on achieving leadership status in the games industry by 2030, Savvy has been growing rapidly since being established, with ESL FACEIT Group, the world’s #1 esports company, and Scopely, the #1 mobile games company in the United States, under its portfolio.”

Quickly asset flipping and stripping EA and co for parts would be counterproductive to offramping your economy from its over-reliance on oil. Their younger population also has a big representation of gamers, between 67% and 89%, with 48% of Saudi women also identifying as gamers, all demographically similar to here in New Zealand.
The esports scene has also been inextricably drawn to Saudi Arabia with their crowning achievement being their planned hosting of the 2027 Olympic Esports Game. Kiwis with E-sports event organisation experience have recently been over there advising on this.

In recent years New Zealand’s own game dev industry has been under threat from foreign headhunting. Our gaming Industries pre-tax income for the 2024/2025 financial year reached NZ$759.57 million, an impressive 38.6% increase over the previous year’s NZ$548 million. 95% of that profit was from overseas, making our gaming industry a key export driven industry. Australia has been looking to take a slice out of it by offering tax incentives. In 2023 studios were reporting that these incentives had stymied local developers from finding talent, as it brain drained across the ditch. In response the New Zealand Government introduced the Game Development Sector Rebate to curb the poaching of studios, which has reportedly had a positive impact in retaining local investment.

No matter where you are in the world, everyone’s trying to gain a foothold in this growing industry one way or the other. Is there room enough for us all?

Battlefield 6 is a return to form

EA has been needing a win and Battlefield 6 looks like it’s taken up the cause by being the Battlefield 3/4 successor we’ve all been waiting for.

Battlefield 6 hit all-time highs for franchise sales during the first three days of launch, selling over 7 million copies and counting. Thanks to the series’ passionate community, the game had over 172 million matches played online and accumulated over 15 million hours watched on streaming services during the 3-day weekend as well as earning the most concurrent players for Battlefield ever.

So is it good? Yeah it’s good.