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EA's new owners are making "a huge bet" on generative AI cost-cutting to help repay a $20 billion loan, claims report

https://discuss.online/post/27977771

EA's new owners are making "a huge bet" on generative AI cost-cutting to help repay a $20 billion loan, claims report - Discuss Online

The buyers are committing $36 billion of their own equity (briefly and inexpertly, “equity” is the value of your assets after you deduct anything you owe), including the value of the PIF’s existing investments in EA. They’re making up the rest of the total thanks to a $20 billion loan from JPMorgan Chase Bank. How will they manage that massive debt? According to the Financial Times, who cite unnamed insiders, they’re gambling on the deployment of generative AI tools as a gigantic cost-saving measure. “The investors are betting that AI-based cost cuts will significantly boost EA’s profits in the coming years, people involved in the transaction told the Financial Times,” the paper wrote (paywall) in their own coverage of the story. The FT elsewhere commented that the acquisition “is a huge bet that artificial intelligence can significantly cut EA’s operating costs, allowing the equity consortium to manage a large debt load on a company that historically carried limited net debt.”

Sep 30 at 1:04pmWeb
Show threadDarkcoffeeSep 30
Might as well consider EA dead.
Show threadwhyNotSquirrelSep 30
Good?
Show threadordnance_qf_17_pounderSep 30
On paper EA being dead is good, but I’d like it to be dead and without parasites making money off of the corpse.
Show threadrustyfishSep 30
As long as someone buys the rights to…half a billion video game franchises EA is sitting on, yes. It is good.
Show threadfossilesqueSep 30
It’s a zombie, you’re gonna have to try harder.
Show threadwebghost0101Sep 30
It’s been a rotting corpse for a while now.
Show threadsamus12345Sep 30

1982:

Show threaddb0Sep 30
Well, they’re fucked then
Show threadGrandwolf319Sep 30
EA can always keep printing money by putting out the same sport games every year, how the fuck did they get into $36 billion debt? I’m not even mad, that’s impressive.
Show threadSSUPIIOct 1
As someone who understands the differences between soccer games I can tell anyone who actually gives a fuck about soccer game quality and is not gacha addicted will confirm current FIFA/FC is utterly shit. They are probably paying billions in some many teams and players licensing while everything has miniscule improvements or even removing stuff (like Volta game mode). Every year EA is reporting lesser and lesser profits from the FC series, and doesn’t help that after the first weeks the yearly games start rotting in store shelves while asking 60+ Euro. They make money from the whales spending salaries on player card packs on FUT, and they are quite angry too. Konami is down the corner gaining more and more revenue and users yearly from the FC refugees (not that f2p eFootball is good either).
Show threadHorreCSep 30
Not that I bought their games to start, but I can hope this drives others to stop buying their games all just to say fuck you to some of the investors in this.
Show threadpulsewidthSep 30

EA’s output of middling products filled with aggressive microstransactions is about to be bolstered with… heavy use of AI slop?

I’m looking forward to watching this bankruptcy speedrun.

Show threadAllNewTypeFaceSep 30
Also, a bet on consumers being willing to pay AAA prices for slop
Show threadMohamedMoneySep 30
Don’t they do that already?
Show threaddjsoren19Sep 30
They already do, the only difference is now the slop will be made by AI instead of underpaid developers in Romania.
Show threadDiplomjodlerSep 30
What a fantastic plan. Nothing could possibly go wrong.
Show threadFrezikSep 30
Stay the course, this will go great.
Show threadManjushriSep 30
This has got to be some form of vulture capitalism. They will sell off all the IP and physical property, either directly or by spinning off divisions into new companies to sell off. Then sell off any other pieces of the company that they can, and finally they’ll take all that income as bonuses for the new owners and leave the remains of EA with nothing but debt and no option other than to file for bankruptcy. Same thing that was done to companies like Toys-R-Us but on a larger scale.
Show threadThe3representsSep 30
That was exactly my thought. Extract cash for the owners through massive cuts, gut the company and discard the husk. Classic leveraged buy out scheme.
Show threadmnemonicmonkeysSep 30
Thing is, could they even get enough from selling the IP to cover the purchase?
Show threadManjushriSep 30
Probably not and they have no intention to. They will give themselves bonuses and stock dividends that will eat up all the income from selling the IP (and everything else) and then leave the company with nothing but debt forcing it to declare bankruptcy.
Show threadbob_omb_battlefieldOct 1
Don’t they need to get at least $36 billion from that for it to be worth it?
Show threadmnemonicmonkeysOct 1

No shit. My question is whether there’s enough value in EA’s IP get more than their investment money out of doing that.

If the IP isn’t worth enough, they can’t get their money back, no matter what method they use to extract it

Show threadCyberSeekerSep 30
Vibe coding is one thing, but I am curious about the state of using of AI tools to reduce the cost of generating 3D assets and textures. I assume they are introducing this into Ignite and their other build tools, for more rapid prototyping if nothing else.
Show threadRandom DentSep 30
My first thought was they’ll probably use it to generate endless slop assets for The Sims, since people seem to pick up whatever they put out for that.
Show threadHackworthSep 30

For 3D model generation, I’ve played with Hunyuan3D, Tripo and Trellis. The models they make are impressive, but not production-usable. You’ll spend enough time cleaning them up that you may as well make them the old fashioned way.

Most of the benefits of generative image models are already baked into Photoshop. While helpful, not something that’s going to give them a competitive advantage.

Show threadFiveMacsSep 30
good, let them fail more.
Show threadRandom DentSep 30
Just sitting here playing the long game, waiting for EA to finally implode and get sold off for parts so we can finally get a new Command & Conquer.
Show threadEdanGreySep 30
Well now, I’d already basically given up on EA, glad I made the right choice
Show threadheavySep 30
Hope their IP gets sold to other companies. Would love to see another wing commander in my lifetime.
Show threadSkyezOpenSep 30
I have good news and bad news on that front. The good news is that the original wing commander dev is making a spiritual successor to the game. The bad news is that it’s star citizen.
Show threadkboy101222Sep 30
Fuckin oof
Show threadharrys_balzacOct 1
For a brief moment, I had hope. Then, poof, it was gone.
Show threadVoroxpeteOct 1

Technically, the Wing Commander successor is Squadron 42. Star Citizen is a Freelancer successor.

I understand if this brings you little comfort.

Show threadharrys_balzacOct 1
More comfort than before. Thank you, kind internet stranger.
Show threadTwinTitansSep 30
They’re also betting on people buying this crap. Hopefully they don’t.
Show threadsamus12345Sep 30
Kind of a strange bet to make when AI use has been going down in large companies lately. Hope EA goes down.
Show threadFedizenSep 30
They’re over leveraged on AI so they’re trying to create markets for it, lol. Jesus christ this economy is a ponzi scheme
Show threadNoiseSep 30

Hahaha sure, let them do that.

I always hated them anyway. Good riddance.

Show threadJhexSep 30
I can’t wait for this “investment” to go so down the drain for them…
Show threadUnderpantsWeevilSep 30

A lot of what this means is a pivot to the highest yield games. So… more GACHA and other lootbox style gaming. Cheaper assets, more redundancy in levels, shorter and cheaper cut scenes, etc.

But this is normal operating procedure in a bust-out style business model. EA’s going to be boiled down and stripped just like so many prior studios, from THQ to Bioware.

Show threadVitoRoblesSep 30
Can’t wait to watch EA scrape by with Gacha games while SE Asia game companies destroy them with their Gacha games.
Show threadUnderpantsWeevilSep 30
Oh, that’s not going to be a problem. We’re just going to firewall off all the SE Asian companies with tariffs and sanctions.
Show threadPycoraxSep 30
What SE Asia companies have any success with gacha? Most of them are Japanese, Korean and China.
Show threadBlameTheAntifaSep 30
Whoops.
Experienced software developers assumed AI would save them a chunk of time. But in one experiment, their tasks took 20% longer

As more workers use AI, a new study adds to growing evidence the tech doesn’t always deliver on promises of boosted productivity.

Fortune
Show threadOwlSep 30
EAAI
Show threadScottSep 30
EA Sports It’s in the slop
Show threadmsageOct 1
Has been for many years
Show threadFrezikSep 30
This is a very longwinded way to say “EA will die in a few years”.
Show threadVitoRoblesSep 30
“I don’t care who wins. I just want EA to lose.” Star Wars guy
Show threadCryptagionismisogynistSep 30
This, they destroyed the art of US video games because it was promoting bad values like gay marriage in The Sims
Show threadLadyAutumnSep 30

This is assuming people will pay money to play AI slop. These companies continue to vastly overestimate the value of AI produced content. It might be passable on like, bags of candy, maybe even occasionally passable on like free webcomics. And low quality website design. Maybe some simple cash grab mobile games that get taken down after a couple weeks due to the obvious scams.

But paid video games? Which theyre already charging absurd prices for? No. This bubble will burst and companies that continue producing actual games will come out ahead. Companies that are foolishly going all in on entirely unproven technology will crumble.

Show threaddjsoren19Sep 30
I mean… you’re talking about the company that makes billions of dollars a year on FIFA games, which are already only one step removed from AI slop. I don’t seriously think EA’s customer base will care; the quality of the games made by EA is already low enough that I don’t believe the use of AI will move the needle. And honestly, will anyone care if it’s AI updating the rosters and title to FIFA 26? I guess I feel bad for the working devs putting food on their table, but is that the job that want?
Show threadLadyAutumnSep 30
I really do genuinely believe that AI content is a substantial drop in quality even from minimal effort content. They’d better invest their time moving to a subscription model. And evidently, whatever theyre currently doing isnt working or they wouldnt be in this situation in the first place. So, id say, firing everyone and moving to AI based content is unlikely to save them and I would believe likely to make their situation much worse.
Show threadGlytchOct 1
Don’t they not make FIFA anymore because they didn’t want to pay for the license?
Show threaddjsoren19Oct 1
FIFA 2026 just came out four days ago, so I’m pretty sure they still make it.
Show threadGlytchOct 1
You mean EA Sports FC 26? Which has been stripped of FIFA branding?
Show threaddjsoren19Oct 1
Oh I see, you were just being pedantic for no reason.
Show threadGlytchOct 1
No I was being pedantic because that’s how licensing works and the game “FIFA 26” does not exist.
Show threadCryptagionismisogynistSep 30
It’s probably AI videos games made by AI for AI.