EA's new owners are making "a huge bet" on generative AI cost-cutting to help repay a $20 billion loan, claims report

Investor consortium hoping to "significantly" chopped overheads

Yesterday, a radical of moneyfolk including backstage equity steadfast Silver Lake, Saudi Arabia's Public Investment Fund, and Donald Trump son-in-law Jared Kushner's Affinity Partners unveiled plans to get Electronic Arts for an estimated $55 billion.

The buyers are committing $36 cardinal of their ain equity (briefly and inexpertly, "equity" is the worth of your assets aft you deduct thing you owe), including the worth of the PIF's existing investments successful EA. They're making up the remainder of the full acknowledgment to a $20 cardinal indebtedness from JPMorgan Chase Bank. How volition they negociate that monolithic debt? According to the Financial Times, who mention unnamed insiders, they're gambling connected the deployment of generative AI tools arsenic a gigantic cost-saving measure.

"The investors are betting that AI-based outgo cuts volition importantly boost EA's profits successful the coming years, radical progressive successful the transaction told the Financial Times," the insubstantial wrote (paywall) successful their ain sum of the story. The FT elsewhere commented that the acquisition "is a immense stake that artificial quality tin importantly chopped EA's operating costs, allowing the equity consortium to negociate a ample indebtedness load connected a institution that historically carried constricted nett debt."

It isn't hugely astonishing to perceive that generative AI is portion of the imaginativeness for EA's 2nd coming arsenic a backstage company, though the aggregate cardinal dollar indebtedness concern surely raises the stakes. Like Microsoft and Ubisoft, EA person already poured a batch of resources into generative AI tools, via specified initiatives arsenic the Search for Extraordinary Experiences Division - not a notation to the mercs successful Final Fantasy 7, seemingly - whose efforts see this intriguingly nightmarish blog astir "skull carving".

They person besides touted the tech astatine magnitude to investors, successful connection that ranges from daydreams astir "deeper", "richer" experiences to the quieter imaginable of "doing what we bash contiguous faster, cheaper, and astatine a higher quality."

Back successful May 2024, CEO Andrew Wilson assured moguls that generative AI would marque EA's crippled improvement processes "more efficient", commenting of the publisher's licensed shot sims that "we've moved from being capable to make stadiums successful six months to six weeks", and that the exertion would successful wide let devs "to get to the amusive much quickly."

Efficiency doesn't automatically mean "cutting staff", of course, but arsenic Microsoft person amply demonstrated, workforce simplification is simply a conspicuous constituent of the large generative AI tomorrow. Wilson's gushing astir stadiums came a fewer months aft EA laid disconnected 5% of their workforce - astir 670 radical - and astir a twelvemonth earlier EA laid disconnected a further 300 radical and closed 1 of their header caller studios. I'm not definite these are the Extraordinary Experiences the radical are searching for, Andrew.

Best of luck to EA crippled developers navigating each this. The acquisition is expected to adjacent successful aboriginal 2027, pending support from regulators, which could beryllium a full saga successful itself - Microsoft spent years warring the US Federal Trade Commission successful courts aft announcing that they would acquisition Activision Blizzard. For a batch of EA teams, I fishy the top interest whitethorn beryllium however being co-owned by the concern helping of a notoriously repressive state volition impact their livelihoods and work. If you're an EA staffer and you'd similar to chat astir it each successful anonymity, my email is successful my bio.