Electronic Arts buyout talk highlights video game struggles as growth slows

[NEW YORK] News that a consortium of investors plans to take video-game publisher Electronic Arts (EA) private highlights the state of affairs in the broader gaming industry, which has struggled in recent years to find new avenues of growth.

A group including Silver Lake Management and Saudi Arabia’s Public Investment Fund, which already owns 10 per cent of Electronic Arts, is said to be in talks to acquire the company in what could amount to one of the biggest leveraged buyouts of all time, Bloomberg has reported. The Wall Street Journal reported that a deal could value Electronic Arts at about US$50 billion.

Electronic Arts, known for popular games such as Battlefield and EA Sports FC, ranks among the largest video-game companies in the US, alongside Roblox, which is valued at almost US$94 billion, and Take-Two Interactive Software, publisher of the Grand Theft Auto series, which has a market capitalisation of US$47 billion.

A deal, which could be announced as soon as this week, would continue the trend of consolidation in the industry after Activision Blizzard, maker of the Call of Duty shooter games, was acquired by Microsoft two years ago and Zynga was acquired by Take-Two in 2022.

Some industry observers worry the move suggests EA executives are looking for an exit because of concerns about the future of the US$178 billion video-game industry. Growth has slowed significantly following a period of big spending on gaming throughout the 2010s and into 2020, when the Covid-19 pandemic boosted sales.

Since then, gamers have tended to stick with old favourites rather than purchasing new titles, which can cost up to US$80. Electronic Arts is scheduled to release Battlefield 6, the latest entry in the Redwood City, California-based company’s shooter game franchise, on Oct 10 and early buzz for the title has been strong.

Founded in 1982, Electronic Arts, is one of the world’s largest video-game publishers. It has developed several hit franchises, including Battlefield and The Sims, and also releases popular yearly sports games including Madden NFL. But in recent years it has introduced fewer titles, focusing instead on “live-service” games designed to generate recurring revenue, such as the popular online shooter Apex Legends, which was released in 2019 and is still updated regularly.

Rhys Elliott, a games analyst at MiDiA Research, wrote in January that “double-digit growth is a fantasy and the industry will only see slight growth going forward,” predicting a 2025 industry growth rate of about 4.6 per cent, aligned with inflation.

“The console market itself has matured and is no longer a growth one,” said Mat Piscatella, senior director at market research firm Circana. Many young players are sticking with older titles such as Fortnite, Minecraft and Roblox, “sometimes to the exclusion of just about everything else,” he said.

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Nicholas Lovell, an analyst and co-founder of the independent game maker Spilt Milk Studios, said Electronic Arts executives could see the US$50 billion price point as a “peak valuation, because an industry that goes from being valued on growth multiples to mature multiples sees its value fall even as profits grow.”

Electronic Arts generated nearly 75 per cent of fiscal 2025 sales from live-service revenue rather than new purchases. That sort of pattern may seem predictable and therefore more appealing for a leveraged buyout, which pays for itself in large part by saddling the company with debt, Lovell said.

“We’re moving away from an era of breaking new ideas to people settling into the same games, spending money over and over again,” he said.

The video-game industry swelled in 2020 as Covid lockdowns left people stuck at home with little to do but play games. Gaming companies made big investments – from acquisitions to heavy spending on development – hoping to see that growth continue. But many of those bets did not pan out, leading to a period of contraction and the shedding of tens of thousands of jobs.

“The future of the gaming industry itself is uncertain, and significant growth cannot be expected,” said Naoko Kino, chief executive officer of Kyos, a game development company in Tokyo. “The game business is, in a sense, a form of gambling, which makes it inherently unstable.”

Earlier this year, Electronic Arts cut hundreds of jobs, its third mass layoff since 2023. The company has also shut down studios and cancelled several projects, such as a game based on the Black Panther franchise.

EA was valued at US$42 billion before news of buyout talks surfaced on Friday (Sep 26), sending its shares up 15 per cent. The stock closed at US$193.35 on Friday, giving it a market value of US$48.4 billion. BLOOMBERG