Electronic Arts before buyout: Are the golden EA years suddenly over?

Electronic Arts – a name that stands for passion, inventiveness, and fairness towards its players. But the days of the free-spirited US publisher could soon be a thing of the past. Should the 55 billion deal announced on Monday go through, EA would suddenly find itself under the thumb of private equity. Then a different wind would blow! Idealism could suddenly be replaced by calculation and commerce. In the worst-case scenario, the pixel poets from Redwood would be unrecognizable. A few concrete fears of what the future of EA could look like in this case:

A commentary by Daniel Herbig

Daniel Herbig reports on video games, consumer electronics, and other gadgets for heise online.

• Layoffs and studio closures: As part of the takeover, EA will be saddled with a debt mountain of 20 billion US dollars. To pay it off, the company will have to make tough savings. This means that EA will probably have to cut jobs. This could even affect studios that have just been acquired. In the worst-case scenario, interesting projects that don't get off the ground quickly enough could be mercilessly scrapped and entire studios closed down—in case of doubt, before they even launch their first game on the market.
• Focus on core business: The investment companies are likely to be targeting the cash cows “EA FC,” “Madden,” and “The Sims” in particular. Studios working on other games are likely to have a difficult time. In the worst-case scenario, it is conceivable that even renowned studios such as Bioware could be driven to the wall and plundered. An EA led by private equity could then even force role-playing game developers from Bioware to work on virtual football boots for “EA FC,” for example.
• Loot boxes in “EA FC”: EA's football game series is still going strong even after the name change, with many young players playing online. To make more money from this human capital, EA could introduce loot boxes into the online mode. The loot boxes have shown in mobile games that they can generate huge sales. This could also work for “EA FC” on PC and console, especially as the main target group of the sports game is young and naive. All the better if the loot boxes are upgraded with a Pay2Win element: EA could, for example, pack virtual football tables for the online mode into the loot boxes. Whoever buys more of them would then have more talented players on the pitch and a correspondingly higher chance of winning. If you built a marketing machine around it with soccer stars and YouTubers who proudly present their lootbox wages to their young viewers, it could develop into a billion-dollar business. Incidentally, there would be no need to fear German regulators: loot boxes only count as simulated gambling, not real gambling.
• “Sims 4” is milked: Another long-running hit from EA is the game series “The Sims.” Because “The Sims 4” has no multiplayer mode and cannot be “won” at all, it would not make much progress with the sale of Pay2Win loot boxes. EA's private equity overlords could instead rely on a DLC model, in which small additional items are regularly offered for a lot of money. A few pieces of Ikea furniture for the entrance area or a bit of make-up for 5 euros, a season package for 40 euros—there would be almost no limits to the imagination. If enough of these mini-packages are sold, the total cost of all Sims 4 DLCs could even rise into the four-digit range in the worst-case scenario.

Of course, EA fans don't even want to imagine such a thing. But it is important to deal with such horror scenarios at an early stage. Nevertheless, these are just mind games. Maybe it won't be quite so bad. The fact that EA CEO Andrew Wilson remains in office could be an indication that the investor consortium may not want to change too much.

EA fans can still hope that the proposed deal will not even go through and that the likeable games company from Redwood will ultimately remain independent. It is, of course, quite possible that the Trump administration will block the takeover, in which Trump's son-in-law Jared Kushner's company is heavily involved.

(dahe)