Electronic Arts, occasional supplier of games to the Harry Potter franchise, is being sold for $55 billion dollars. About 9 billion galleons, 150 billion sickles, or 4 trillion knuts in the quirky currencies of J.K. Rowling’s magical world.
That makes the gaming company’s prospective purchase by Saudi Arabia’s Public Investment Fund the biggest leverage buyout in history.
PIF’s partners in the deal are Jarred Kushner’s Affinity Partners, and Silver Lake, specialists in leveraged buyouts of mature tech companies.
As The Telegraph reports, the purchase is also ‘highly significant for Wall Street because it sets a new record as the largest debt-fuelled takeover… Around $20bn of the $55bn price tag is coming via debt funding from JP Morgan.’
Besides Harry Potter games, EA also produce The Sims, Star Wars, and Medal of Honour, all major franchises. But does the PIF’s ambitious move stack-up?
If you know what a ‘battle pass’ is then you probably already have a good idea why the mega-deal makes sound commercial sense. If you don’t, here’s the bottom line: EA’s last revenue split (FY2025) was live services and in game extras (battle passes, season passes, cosmetics items, character enhancements, subscriptions) 73% of total revenue. Actual game sales, 27%.
Just like Hollywood movies, the games industry used to be a hit-or-miss business. From a fiscal perspective, in-game extras, sometimes called microtransactions – stuff players purchase whilst they are playing – have transformed that high-risk dynamic. They deliver recurring, predictable revenue.
As Drayton Partner Rob Seery points out, ‘EA is now a live services first company. That kind of business model is much more appealing to the J.P. Morgans of this world. As it produces consistently reliable returns.’
But, as always with the PIF, the strategy here is about more than just short-term revenue. Yes, the strategic acquisition of soft power plays a part. But something else, too – job creation.
‘As well as control over the EA gaming catalogue, PIF now has a seat at the table in one of the most profitable sectors of the entertainment industry,’ says the BBC. ‘There are some who believe such power could ultimately lead to Saudi Arabia having a key say in not only where games are made but where hardware like consoles and accessories are too.’
Saudi Arabia has a notably young national population, which is why youth employment and education are key pillars of its Vision 2030. This deal has the potential to create jobs in Riyadh and Jeddah.
A new console release on PS5 costs around sixty quid, these days. Or, as Harry himself, might say, ‘What!! 12 galleons? That’s a bit rich!’* So, they might be onto something.
*(Pound-Galleon conversion rate: 1G=£5. Based on J.K. Rowling’s own estimate)