EA's USD 55 Billion Buyout Spotlights Gaming IP Diversification
- tech360.tv
- Oct 3
- 3 min read
Electronic Arts’ record USD 55 billion leveraged buyout by Saudi Arabia’s sovereign wealth fund and two other firms marks a turning point for the video game industry. Companies are now looking to capitalise on intellectual property through media crossovers.
Silver Lake, Saudi Arabia’s Public Investment Fund, and Jared Kushner’s Affinity Partners are set to acquire EA. This gives them control of properties including “Battlefield,” “Apex Legends,” and “The Sims.”
The world’s largest entertainment industry, the video game market, is experiencing a post-pandemic downturn. Consumers are reining in spending due to higher prices, forcing companies to leverage successful intellectual property in new ways. One method involves adapting games into other media, such as film and television.
Other companies have recently found success translating popular video games into film and television franchises. This contrasts with past adaptations, like 2005’s “Doom” or 2009’s “Street Fighter: The Legend of Chun-Li,” which often received poor reviews and struggled at the box office.
Sony’s global hit television series “The Last of Us” in 2023 spurred Hollywood studios and gaming publishers to greenlight more film and TV adaptations. These include Amazon Prime’s “Fallout” series, a new season of Riot Games’ “Arcane,” and Warner Bros.’ “A Minecraft Movie.”
Sequels to Nintendo’s “Super Mario Bros” film and the “Mortal Kombat” movie are also underway. A Paramount Skydance production is expected to adapt “Call of Duty” for the big screen.
EA, which is preparing to launch “Battlefield 6,” announced plans last year to partner with Amazon’s MGM Studios. Their collaboration will produce a film based on EA’s simulation role-playing game, “The Sims.”
Raymond James analysts stated, “The direction of travel is clear in the longer term, and the value of high-end video gaming IP is only increasing as players continue to concentrate engagement among fewer, more popular franchises and games.”
The Public Investment Fund’s gaming arm, Savvy Games Group, has made major investments in other video game companies. These include Take-Two Interactive and Nintendo.
PIF has also invested significantly in other entertainment sectors. It signed deals to expand cinemas in the kingdom and acquired a stake in Japanese animation firm Toei Co.
Jon Wakelin, a partner at tech strategy consulting firm Altman Solon, noted, “The PIF has shown heightened interest in entertainment assets with prominent positions in popular culture. I would expect them to be more focused on digital media and less on print media, or traditional film and TV delivery models like linear television and movie theaters.”
Experts indicate that while paying hefty amounts for large intellectual property could benefit in the long run, high production and development costs pose a financial risk. This risk arises if the IP is not deployed appropriately.
For example, Swedish video game group Embracer acquired dozens of smaller studios over three to four years, expanding its game portfolio. However, poor critical reviews for major titles and cancelled projects affected the firm.
This ultimately led to a three-way split of Embracer last year. Joost van Dreunen, a games professor at NYU Stern School of Business, commented, “Consolidating IP during a down market has its short-term benefits, but more often than not, ends up running into inefficiencies and a devaluation.”
Electronic Arts is set to be acquired for USD 55 billion by Saudi Arabia’s Public Investment Fund, Silver Lake, and Affinity Partners.
The buyout highlights a growing industry trend of diversifying video game intellectual property into other media formats, such as film and television.
Recent successful adaptations like “The Last of Us” have spurred further interest in film and TV crossovers for popular gaming franchises.
Source: REUTERS
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