Electronic Arts, which recently completed its transition to private ownership under the control of the Saudi Arabian Sovereign Fund, is already preparing a large-scale cost-cutting program. Reportedly, the publisher intends to save about $700 million annually, which could lead to a new wave of mass layoffs.
According to sources, EA raised $18 billion in debt to finance the deal, while another $36 billion is secured by private investments. This level of debt significantly exceeds that of many other gaming companies, forcing management to look for ways to accelerate cost reduction.
According to information published by well-known journalist and insider Jason Schreier, the company has already informed debt investors about plans to cut expenses by $700 million annually. Of this amount, $170 million is expected to be achieved through so-called "organizational efficiencies", which typically imply business restructuring and staff reductions.
Schreier notes that EA's financial performance is about $1.5 billion per year, which is sufficient to service interest payments on the debt. However, management aims to reduce the debt burden as quickly as possible, and therefore expects to achieve this through large-scale savings.
Analysts do not rule out that the company may take more radical measures in the future. Possible scenarios include the sale of individual studios and game franchises, abandoning less profitable series, and concentrating resources on the most lucrative projects, primarily sports games.
After the privatization is completed, all shareholders, including many company employees, will receive $210 per share. Nevertheless, concerns are already being raised among players that the new ownership structure and the need to repay large debts could negatively impact EA's creative strategy, forcing the publisher to focus more on commercially safe projects at the expense of experimental games.