EA recently announced that it is being acquired for around $55 billion due to its massive debt. The publisher has remained independent for a considerable time. However, with this acquisition, Take-Two takes the throne as the largest independent studio.
This acquisition has raised many eyebrows and continues to stir controversy. The main concern isn’t that the company is going private, but why it’s going private. The main reason is the debt, and some more information regarding that has come to light, which reveals that aggressive cost-cutting and layoffs are expected at EA.
EA’s $20 Billion Debt Is Expected To Be Rated Single-B
Electronic Arts is in massive debt, and Bloomberg reveals that this isn’t a normal type of debt. Bloomberg is a highly reliable publication that has a solid track record of providing correct information in the gaming industry, even if it is a leak or a rumor.
The publication highlights that the $20 billion debt that EA has is expected to be rated a single-B. For those not in the know, a debt being rated single-B means a high credit risk that the company may struggle to pay. Debt with this rating usually carries a significantly higher interest rate. As a result, the newly private EA will be responsible for servicing this costly debt.
My colleagues at Bloomberg report that the $20 billion debt in the EA deal is expected to be rated single-B — meaning it is considered a “junk” loan, or one that is high-risk and speculative, typically offering high interest rates. Which the new EA will have to pay
– Jason Schreier
Bloomberg highlights this part as the most concerning, as it could have some severe consequences.
Aggressive Cost-Cutting Is Expected
Bloomberg also reveals that due to this $20 billion in aggressive cost-cutting will likely happen in the coming months and years. Many focused on Saudi Arabia and Kushner’s involvement in the deal, but as per the publication, they are overlooking the bigger picture.
Jason Schreier of Bloomberg explains that with the new EA having to shoulder $20 billion in debt, mass layoffs, more aggressive monetization, and other significant cost-cutting measures are likely to happen.
The far bigger immediate impact will come from the new private EA being on the hook for $20 billion in debt. That could mean mass layoffs, more aggressive monetization, and other big cost-cutting measures
– Jason Schreier
Over the past two years, excessive cost-cutting has primarily impacted jobs. This year alone, Microsoft has laid off around 15,000 employees. Some reports even suggested that the move was to shift focus more toward AI.
The staff at EA is also worried about the future, as revealed by Insider Gaming. The publication reveals that employees at BioWare are worried about the studio’s future. That is because EA previously attempted to sell BioWare following Dragon Age: The Veilguard’s release.
The report from Insider Gaming reveals that employees are already fearing the worst.
I’ve been doing it since last year, but I’m making sure I have a portfolio ready and feelers out for other jobs
Current Employee At BioWare
Right now, BioWare is working on Mass Effect 5, and it entered pre-production earlier this year.
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Obaid Ur Rehman is a lifelong gaming enthusiast with a deep passion for writing about video games. While he enjoys all genres, he specializes in RPGs and Soulslike titles. After tackling some of the toughest bosses, he often unwinds with a cozy game to relax. Outside of gaming, Obaid enjoys watching anime, bingeing TV series, or staying active at the gym.
