CHICAGO, Illinois — Video game giant Electronic Arts (EA) officially has new owners as the California-based maker of popular titles like “Battlefield” and “The Sims” announced on Tuesday that it closed the $55-billion sale of its business to Saudi Arabia’s Public Investment Fund (PIF), investment firm Silver Lake Partners and Affinity Partners.
Affinity Partners is run by United States President Donald Trump’s son-in-law Jared Kushner.
The acquisition’s price tag is the largest-ever for a buyout funded by private equity. And wider shifts to the gaming world could be on the way now that the deal is complete.
In a statement, CEO Andrew Wilson said EA and its new owners would “invest boldly, accelerate innovation and build the next generation of games and experiences for the hundreds of millions of players and fans who inspire us every day.”
Turqi Alnowaiser, deputy governor and head of international investments at PIF — which already held a minority stake in EA for five years — also pledged to “invest heavily in EA’s growth,” including through the use of artificial intelligence (AI) in game development.
Some analysts have noted that going private could potentially grant EA more freedom in developing and distributing future games outside pressures of the public market. But others point to the $20 billion in debt financing the deal took on — which could result in sizable layoffs and other cost-cutting measures.
And many eyes are on Saudi Arabia’s PIF and Kushner’s Affinity Partners. Critics are wary about what this new ownership could mean for EA games down the road.
“With this deal, Saudi Arabia and Jared Kushner just bought access to 700 million players worldwide,” UK-based campaign #BlockTheEADeal wrote in an online petition that previously called on regulators to challenge the buyout.
“With the increased use of AI in the creative sector and video games, the potential for data misuse by a Foreign Sovereignty is high and poses significant international security risks.”
In a Tuesday statement, Kushner maintained that EA had “created stories, characters and communities that have become part of everyday life for hundreds of millions of people” and that Affinity was “excited to support the company as it continues to reach new audiences.”
Meanwhile, organizations like Amnesty International and Human Rights Watch have also been highly critical of Saudi Arabia’s overall investments in sports and esports — with some accusing the nation of “sportswashing” to distract international attention from human rights abuses.
PIF has increasingly upped its gaming investments over the years. Beyond EA, the sovereign fund is also a minority investor in fellow gaming giant Nintendo and has a large esports portfolio, including competitive gaming platforms like ESL FACEIT. EA’s “Madden L” and “EA Sports FC” (formerly FIFA) will now also fall under that umbrella.
Now that the transaction is complete, EA stockholders will receive $210 in cash per share. And the company’s stock is no longer trading on the public market. ap
NEW YORK — Disney reported better-than-expected profits on Wednesday, citing a strong performance in its theme park business amid lingering worries about macroeconomic weakness.
While Disney executives acknowledged weakness at theme parks in Shanghai and Hong Kong, the company’s press release described Walt Disney World in Florida as having enjoyed a “standout quarter,” adding that forward bookings at the US theme park “remain robust.”
Disney also reported solid results in its streaming business, where it pointed to less “churn” from customers coming and going. The company has begun weighing a complementary offering that could be built around advertising sales.
Overall profits were above analyst expectations, lifting shares.
Disney’s third-quarter profits came in at $2.6 billion, about half the level compared with the year-ago period, which was boosted by a large one-time tax benefit.
Revenues rose 6.8 percent to $25.2 billion, a bit under analyst forecasts.
“Demand is strong across domestic parks and cruises,” said Chief Financial Officer Hugh Johnston.
Johnston said the company is “not immune” to effects from higher fuel prices, pointing to a “weaker consumer” at Asian parks. He reiterated that the ongoing US-Iran war in the Middle East had no impact on plans for a major new park in Abu Dhabi.
While attendance at US parks rose 3 percent, Disney acknowledged a slowdown in the number of international visitors to its US venues.
TikTok tie-up
Disney scored higher revenues in its entertainment business behind growth in streaming subscriptions.
Chief Executive Josh D’Amaro said on an earnings conference call that the company was exploring a free streaming product for consumers, viewing the option as “way to expand our reach to a customer segment that’s more price sensitive.”
While Netflix does not offer a free service, the streaming giant in October 2022 began offering a lower-priced ad-supported option, later attributing the offering with a boost in subscription counts.
While the company praised the box office performance of “Toy Story 5” and “The Devil Wears Prada 2,” it saw “Star Wars: The Mandalorian and Grogu” underperform.
However, Disney cited upside in theme park attendance and retail products built around the franchises.
In its sports division, Disney saw a bigger operating profit decline than it previously forecast due to four-game sweeps in the NBA basketball playoffs. Results were also dented due to higher sports rights costs.
A note from Briefing.com said the results showed improved profitability in its streaming business, concluding that Disney’s “major earnings drivers are improving simultaneously.”
In parallel with the earnings, Disney announced a new venture with TikTok that will allow fans and creators to use Disney content to make short videos that will be broadcast on both TikTok and Disney’s streaming platform.
Disney said in a statement it will make available Marvel, Star Wars and other content comprising “memorable scenes and moments from Disney movies and shows.”
The agreement will “pilot in the US in the coming months with the intention of other markets to follow.”
Shares of Disney rose 1.9 percent shortly after midday. afp
