A MARTÍNEZ, HOST:
The video game company behind Madden NFL and the Sims says it's going private in a deal worth $55 billion. Electronic Arts agreed to a buyout by a group of investors that includes Saudi Arabia's Public Investment Fund and Affinity Partners. That's an investment company founded by Jared Kushner, President Trump's son-in-law. If the deal is finalized, it'll be the largest buyout of a publicly traded company in an industry that generated about $187 billion in revenue last year. Now, to find out more about the deal, we're joined now by Dan Primack. He's a business editor at Axios. So, Dan, what's the significance of this deal to the video game industry?
DAN PRIMACK: It's one of the largest deals ever in the video game industry. It's also the largest private equity deal ever, and it happens to be in gaming. You know, for video games, the popular narrative is that the industry has been struggling. And that's partially because the games that kind of I grew up with, you know, the console-based games have kind of fallen out of favor a bit. That's a lot of what EA does. Think things like Madden. But it's been transitioning into digital games, places like Roblox. And even EA has a lot of what it calls live programming, where really what you're doing is you're interacting online.
MARTÍNEZ: Yeah. So you mentioned the struggles. I mean, EA has already had several rounds of layoffs. So how might this deal change the type of games that EA makes or even how it does business?
PRIMACK: Well, for starters, it gives it new owners, and it gets to be private. No longer is it going to have to deal with quarterly earnings. Lots of companies like being private. They don't have kind of scrutiny of Wall Street. I would think that's kind of the biggest thing here. And you're going to get new management, most likely. When you have a large leveraged buyout like this, it is relatively unusual that existing management gets to stick around.
MARTÍNEZ: Now, this is definitely not Saudi Arabia's first venture into video games. The kingdom hosted the second annual Esports World Cup this past summer. Why the Saudi interest in video games and esports?
PRIMACK: Two reasons. One, economic diversification, right? The kingdom is largely dependent on oil. It has been trying to get into other industries. And as you say, it's done a lot in gaming. And this is actually its second major gaming acquisition. It bought something called Scopely a couple of years ago. Smaller deal, but still multibillion dollars. The other reason is arguably reputational. There's lots of talk about how Saudi Arabia tries to sportswash its reputation, buying into live physical sports, golf, etc. Video game is just another piece of that, right? When you play a video game, the content is coming straight to you, either to your phone or to your TV. This is a way for the Saudis to kind of get onto those screens.
MARTÍNEZ: What message would they want to get out?
PRIMACK: That we do not know. You know, it may be as simple as we're not a bad place, right? You know, kind of making themselves seem more normal, more part of the ordinary discourse. And it kind of feels like that, right? If you're playing a video game, particularly one you love - and something the EA is known for particularly is its sports games. Its soccer games.
MARTÍNEZ: Yeah.
PRIMACK: Its college football games, Madden, which are these games that people buy year after year. And they just iterate slightly. They're familiar. They kind of look like they've looked for 10 to 15, 20 years. Saudi Arabia is now kind of, or could, now be in the background of those games just, you know, sitting on billboards inside the games.
MARTÍNEZ: I mentioned that one of the investors is President Trump's son-in-law, Jared Kushner. Any chance that this deal might encounter government resistance in the United States?
PRIMACK: It's possible. I think it's fairly unlikely. There won't be any antitrust issues, which, for example, is something that Microsoft faced when it bought Activision Blizzard a couple years ago, which is another giant gaming company. The place it could run into some issue is what they call CFIUS, which is the Committee on Foreign Investment in the United States, which is specifically concerned with national security issues.
MARTÍNEZ: OK.
PRIMACK: You would think that that probably wouldn't matter here because Saudi Arabia and the Trump administration have a tight relationship.
MARTÍNEZ: Dan Primack, business editor with Axios. Dan, thanks.
PRIMACK: Thank you.
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