Game Theory: EA

Electronic Arts (EA) is being taken private by Saudi Arabia’s Public Investment Fund (PIF), Silver Lake and Affinity Partners (together the Consortium), in a $55bn all-cash take private. The deal is being financed with around $20bn of debt underwritten by JPMorgan, making it the largest leverage buyout in history.

So much for gaming being a “waste of time”, mum… I should have studied video games and not law.

If you’ve never heard of EA before, you’ll recognise its titles: The Sims, EA Sports FC (formerly FIFA), Need for Speed and more. 
If you don’t recognise the games, there’s a good chance your credit card, or someone close to you, has funded the joy.

I still remember my first EA game: FIFA 97 on my Sega Mega Drive. I couldn’t get enough of my pixelated heroes. I’ve been hooked ever since.

And it’s not just me, there are ~3.4 billion gamers globally - nearly half the human race - and a disproportionate share of the growth is coming from the Middle East, where Saudi already has one of the highest gaming rates in the world. This is important, because people talk about the “growth of gaming” as if it’s a product story. It isn’t. It’s a demographics story.

The Consortium’s detailed motivations won’t appear until the proxy is filed, but the thesis is already in the early filings. Silver Lake spelled it out: EA is “anchored by its premier sports franchise… with strong and scaling free cash flow.” Not hypothetical upside, recurring, model-able cash. Sports IP is akin to an annuity. The closest thing gaming has to regulated utility-style income: loyalty monetised through ritual. You don’t age out of your club. You inherit it.

This is why the headlines calling this a “gaming + AI growth deal” miss the mark. There is growth here - but not the kind public markets price. It isn’t top-line growth from selling more units. It is audience growth from the demographic wave, especially in MENA, where the next 20 years of gamer expansion will be concentrated. AI has the potential to allow for margin expansion - time will tell how that pans out.

There is another layer that rarely appears in Western analysis, but you understand it immediately if you grew up in the region or are affected by it. An entire generation of Arab kids spent the 2000s playing Western shooters set in “foreign” deserts, where the nameless enemies being mowed down looked suspiciously like them. When you don’t own the IP, you don’t own the mirror; you inherit someone else’s reflection. For Saudi, a young country where ~70% of the population is under 35, gaming isn’t just consumer entertainment - it is cultural authorship. The right to appear in the story as a subject, not scenery.

Perhaps this is also why PIF is taking the largest swing financially. Silver Lake plays the IRR window. PIF plays the civilisation window. Different capital = different clock. To a sovereign, the risk isn’t “overexposure to a gaming asset.” The risk is allowing the next generation’s cultural interface to be manufactured exclusively offshore. In that framing, not owning the IP is the bigger risk.

And this acquisition is not an isolated move - it sits on top of a portfolio. PIF already owns meaningful stakes in Nintendo. It backed the studio behind Pokémon Go. EA locks in the missing layer. Nintendo captured childhood. Pokémon Go captured behaviour in the physical world. EA captures ritual in the sporting world. Stack them together and you don’t just own games - you own continuity of attention.

✍️ Note to self: Gotta catch em all