EA $55 Billion Deal Might Bring Massive Layoffs Between AI Pivot and $20 Billion of Debt

Just days after the rumors surfaced, Electronic Arts (EA) has confirmed that it is being acquired in a massive $55 billion leveraged buyout, making it the largest buyout in history and the second-biggest deal in gaming, following Microsoft’s $69 billion acquisition of Activision Blizzard. The consortium of investors leading the acquisition includes Saudi Arabia’s Public Investment Fund (PIF), Silver Lake - a U.S.-based global private equity firm - and Affinity Partners, an investment firm founded in 2021 by Jared Kushner, son-in-law of current U.S. President Donald Trump.

While the deal initially stunned the industry due to its size, concerns are rapidly mounting that it will result in massive layoffs across EA.

A report from the Financial Times suggests that the consortium intends to lean heavily on artificial intelligence to slash EA’s operating costs. This strategy could impact not only development staff but also acting and voice talent, with AI tools potentially replacing or reducing the need for human input in areas ranging from coding and asset generation to voiceovers.

The implications are significant: studios that already operate on thin margins, or have struggled to deliver commercial success, could face deeper cuts. One example is BioWare, which has endured layoffs in recent years and has fewer than 100 employees remaining. With Dragon Age: The Veilguard failing to deliver the financial hit EA hoped for, industry observers fear BioWare could be among the studios targeted for cost-cutting despite hopes that its next Mass Effect entry will revive its fortunes.

The financing structure of the deal adds another layer of concern. According to Bloomberg, $20 billion of debt will fund the acquisition, sourced by JPMorgan Chase & Co. This is the largest debt commitment ever recorded for a buyout.

Bloomberg’s Jason Schreier, writing in a LinkedIn post, noted:

“That will mean a significant amount of cost-cutting. I would expect mass layoffs, more aggressive monetization, and many other measures. The interest alone could amount to hundreds of millions of dollars per year. For context: this is nearly four times as much debt as the Toys R Us LBO, and I think everyone knows how that went.”

The sheer scale of the debt suggests EA may have little choice but to pursue aggressive cuts in order to service interest payments, which could exceed hundreds of millions annually.

The magnitude of this deal has sparked widespread commentary. Joost van Dreunen, co-founder and former CEO of SuperData, wrote in his SuperJoost Playlist Substack that PIF already owned around 10% of EA’s stock before the deal, making their participation less burdensome. He highlighted PIF’s strategy of “throwing staggering amounts of money at establishing market dominance,” backed by virtually limitless resources.

Van Dreunen also noted that as a private company, EA would now be somewhat insulated from quarterly earnings pressure, giving the new owners the flexibility to prioritize long-term growth. However, this depends on the alignment of the consortium. While PIF may be willing to play the long game, Silver Lake and Affinity Partners may push for quicker returns, creating potential internal friction over strategy.

The $55 billion acquisition of Electronic Arts is unprecedented, not only as the biggest leveraged buyout on record, surpassing the $48.4 billion buyout of TXU Energy in 2007, but also as a critical inflection point for the gaming industry. On paper, the deal places EA under powerful financial backers with the resources to support its long-term ambitions. But the realities of the $20 billion debt burden and the consortium’s reliance on AI-driven cost-cutting have sparked deep anxiety among employees and fans alike.

For many, the parallels to Toys R Us’ infamous leveraged buyout - crippled by unsustainable debt - are difficult to ignore. Unless managed carefully, EA’s future may rest not on its gaming legacy, but on financial engineering and the balancing act between innovation and austerity.

Do you think EA can navigate its future under heavy debt and AI-driven restructuring, or will this deal risk the downfall of one of gaming’s most iconic publishers?