The End of Electronic Arts is at Hand | The Ancient Gaming Noob
The deal is done. Capital management, unfettered capitalism, and political corruption has won again. Electronic Arts has been acquired by the Saudis in a completely economically non-viable deal that saddles the company with a huge amount of debt that will be used as a boat anchor to sink the remains of the organization once the vultures pick off the best bits.
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It is, once again, the victory of greed over any attempt to actually make products or provide a service. The business of America isn’t business, it is destructive wealth extraction where making the line go up, and making sure the rich get richer, are the only goals. The board, executive management, and major stockholders will walk away well compensated while employees, vendors, customers, and state and local governments will end up paying the consequences.
I mean, Activision Blizzard being acquired by Microsoft was a super anti-competitive drug induced "hold my beer" fever dream cooked up by Phil Spencer that even now CEO Satya Nadella is trying to pretend was somehow completed without informing him of the details. But at least there was the pretense of wanting to run the company, of seeing it as a valuable asset.
I mean, it was a lie. XBox Games is currently being torn apart, a topic I’ll get to tomorrow with another bullet points post. But Microsoft at least kept a straight face through the deal, even if it should have never been allowed due to it 100% being bad for consumers.
But in the face of that the EA deal the new owner group isn’t even trying to put up a facade of a business plan to preserve the company. That Saudis have, from day one, stood there with the bone saw in hand and told us that they were going to cut the company up like it was Jamal Khashoggi in their embassy in Ankara.
I wrote a whole post about this back in October when the deal was signed, and little has changed since then save the details. I think they have nailed to the debt to be hung on the company at $18 billion, a bit less than the $20 billion, which is a bit like being to swim the English Channel with 180Kg of lead strapped to you rather that 200Kg. It is an improvement, but you’re still going to drown.
So I won’t repeat my reminiscences as to what Electronic Arts was back in the day and how a series of incompetent leaders, John Riccitiello being the worst of the boobs on that list, living proof that being rich means your pals will give you jobs that you’re totally unqualified for over and over, made EA a name of scorn. (My October post is linked below if you’re interested.)
The company has been mostly shit for the last 20 years. Now it will be nothing at all.
The only question is who will get the spoils once the dismemberment begins, and what bits will be worth saving and what will go down the garbage disposal.
I suspect that the EA Sports stuff will find a new home. That has been a staple for the company, even if they lost the FIFA contract. But maybe the new company will be corrupt enough to work a deal to get that back. FIFA is probably looking for some new bribes as their latest attempted cash grab was too much for even the press to pretend was cool. And Netflix has already shut down the studio that made their awful FIFA branded replacement.
Maybe the Maxis/Sims brand is still worth something? Or the Need for Speed brand? EA is sitting on the bones of a lot of companies and franchises that could have some salvage value. Anybody want to put in a bid for Kesmai and Air Warrior?
Over on the side there is Broadsword, a company of murky origin, with its actual ownership stake obscured, which runs Ultima Online, Dark Age of Camelot, and Star Wars: The Old Republic.
My working theory around Broadsword is that it was created to get those three titles off of EA’s books and turn them into licensing revenue, which improves margins by keeping all the expenses elsewhere. So they are probably safe for now.
However, Broadsword is a tenant farmer. They do not, in any way, OWN any of the three titles they manage. SWTOR is complicated because it is a Star Wars license, and Disney will… man, I can’t even say they care with a straight face given how relentlessly they have tried to cash in on that IP. But Disney will want to keep...