Electronic Arts and its new owners may be facing a small—or perhaps not so small—problem.

In the latest weekly newsletter from Alinea Analytics, analyst Rhys Elliott raised the subject of the $55 billion acquisition of Electronic Arts. He highlighted the $20 billion in debt that others have already cited as a possible driver behind impending layoffs at the company. IP and/or studio sales may also be on the table. BioWare is clearly the prime candidate, but Elliott also mentioned Motive—currently developing the single-player Iron Man game and assisting on Battlefield 6—as another studio that could be divested.

“$20 billion in debt is a ticking time bomb. While Electronic Arts’ cash flow ($2–$2.5 billion) can help service the debt, $20 billion in junk-rated (single-B) obligations still casts a long shadow. In the world of leveraged buyouts, this kind of debt often means ‘efficiencies,’ which is PR-speak for mass layoffs and cuts. Expect layoffs and departures—likely deep ones. Many cuts will happen outside the money-making sports titles (but nothing will be safe from efficiency measures). Anything non-service or slow-building will hit the chopping block first.

IP sales and studio divestitures are on the table. Many cost-cutters will ask, ‘Why keep a $200 million RPG team when FIFA cards print cash?’ Single-player studios like BioWare (Mass Effect) and Motive (Iron Man) are the most at risk. BioWare was arguably already in management’s crosshairs before the buyout. Add the studio’s LGBTQI+-friendly culture and its themes around human rights, and that could spell trouble,” Elliott wrote.

The analysis then turned to the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund. Like many observers, Elliott believes PIF’s move for Electronic Arts is chiefly an attempt to diversify its portfolio over the long term—transitioning away from oil while trying to deflect attention from the country’s ongoing human-rights concerns.

This acquisition would be the latest in a long string of games-industry investments, including stakes in Nexon, Take-Two, Capcom, Nintendo, and Embracer Group. PIF also acquired Scopely, which in turn purchased Niantic’s gaming division.

Source: WCCFTech | Alinea Analytics (Substack)