Quick overview

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Electronic Arts’ historic $55 billion leveraged buyout by Saudi Arabia’s sovereign wealth fund and two other firms marks a significant milestone in the video game industry as companies seek ways to leverage intellectual property through media crossovers.

The video game industry is currently experiencing a post-pandemic slowdown as consumers cut back on spending due to rising costs. This forces businesses and executives to find new ways to capitalize on valuable intellectual property.

One strategy includes using television and other media forms. Silver Lake, the Public Investment Fund (PIF) of Saudi Arabia, and Jared Kushner’s Affinity Partners will acquire properties such as “Battlefield,” “Apex Legends,” and “The Sims” through the sale of EA. “While in previous decades, such adaptations, like 2005’s “Doom” or 2009’s “Street Fighter: The Legend of Chun-Li,” often received negative reviews and underperformed at the box office, recent developments show other companies successfully turning popular video games into film and television franchises.

EA announced plans to work with Amazon’s MGM Studios on a movie based on its simulation role-playing game “The Sims.’ According to Raymond James analysts, “the direction of travel is clear in the longer term, and the value of high-end video gaming IP is only increasing as players continue to focus engagement on fewer, more popular franchises and games.”

PIF’s gaming division, Savvy Games Group, has made major investments in or acquisitions of other video game companies, including agreements to open more movie theaters in the kingdom and a stake in the Japanese animation company Toei Co., as well as investments in Take-Two Interactive and Nintendo.

It has also made significant bets on expanding other entertainment industries.
“Entertainment assets with notable roles in popular culture have attracted more attention from the PIF.” I anticipate that they will shift focus from print media towards digital media, along with traditional film and TV delivery methods like linear television and movie theaters.