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EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

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Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#411

Post by Invictus0 »

mlinhares wrote: post #394
Invictus0 wrote: post #390

Earlier quoted context omitted.

Try to think clearly for a second. Why would there be a trillion dollar PE ecosystem if this always completely destroyed the company?

Because the goal is short term profit, not long term business success. It makes absolutely no difference if the company survives the process or not, what matters is that the PE firms extract their money from the process.

I think if you actually reflect on the matter you would realize that PE firms need to be able to sell the business in order to make money, and that they do in fact sell the business for a profit in the majority of cases. The extremely rare cases of yore where you could buy a business for less than the value of its assets and simply sell off the assets and leave the carcass for bankruptcy are long gone.

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#413

Post by manifoldgeo »

There's a recent book called "Plunder: Private Equity's Plan to Pillage America", and seeing this news makes me want to revisit it. The author outlines the usual tactics used by private equity firms to turn a functioning business into their own short-term profit factory, often driving the business into bankruptcy in the process. EA already has a reputation as a semi-broken company, but things can probably get a lot worse.

One method they use is the consolidation of a bunch of small, related businesses. For example, PE firms buy out all of the local veterinary offices in a tri-city area, cut costs, lay off the most qualified vets and replace with less-qualified ones, increase prices for services, and operate a local monopoly.

Clearly, that particular tactic is much harder to pull on the massive oligopoly that is the gaming industry, but it was the one that stuck with me from the book. There are more baffling ones like selling off all the company's real estate, making them rent it back at a much higher rate than their current mortgages (which may already have been paid off), and then filter revenues out of the company via "consulting fees" paid to themselves and their friends for this bad advice.

The book is a little bit repetitive, and some of the tactics are beyond my grasp, but I'm excited to make a personal bingo card of them and see which ones get used on EA as they drive it into the ground.

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#415

Post by [deleted] »

byronic wrote: post #131

Not referencing the Saudi Arabia portion here specifically but LBOs as documented in the book Barbarians at the Gate (covers Nabisco/RJR tobacco) gives me basically zero hope for the future of EA. EA was already rabid cost-cutters and RIF specialists, and they won the most hated company award for however many consecutive years for a reason. Giving them crushing debt to go along with their propensity to give large exe…

[deleted]

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#416

Post by xienze »

medstrom wrote: post #391
Sohcahtoa82 wrote: post #252

Earlier quoted context omitted.

> Video game players are hilariously, pitiably dramatic. I'm a gamer and I 100% agree with you. The simple fact is, AAA game prices have been stuck at $60-70 for 30 years . Despite $60 in 1995 being worth ~$127 today, games are still $60. They haven't kept up with inflation. Games are relatively cheap while development costs for AAA are ridiculously high. A typical SNES game had 10-30 people working on it and would h…

Are you sure you got your info right? I'd not be surprised if they've been stuck at $60 after adjusting for inflation, i.e. costing around $30 in 1995.

No, many games absolutely retailed for upwards of $60 in 1995 and earlier. Source: lived through it.

https://www.reddit.com/r/Switch/comments/1jr81yf/video_game_...

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#417

Post by Sohcahtoa82 »

medstrom wrote: post #391
Sohcahtoa82 wrote: post #252

Earlier quoted context omitted.

> Video game players are hilariously, pitiably dramatic. I'm a gamer and I 100% agree with you. The simple fact is, AAA game prices have been stuck at $60-70 for 30 years . Despite $60 in 1995 being worth ~$127 today, games are still $60. They haven't kept up with inflation. Games are relatively cheap while development costs for AAA are ridiculously high. A typical SNES game had 10-30 people working on it and would h…

Are you sure you got your info right? I'd not be surprised if they've been stuck at $60 after adjusting for inflation, i.e. costing around $30 in 1995.

100%. Easily verified by doing Google image searches for "SNES game ad". Most games were in the $50-70 range (Note that you'll see some images with prices up to $95, but that's Canadian dollars). It was only as the SNES generation was ending that you started seeing some games around $30-40.

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#418

Post by lightedman »

dehrmann wrote: post #347
WorldMaker wrote: post #311

Earlier quoted context omitted.

The debt buyers are the same people that created that debt (the people doing the LBO in the first place). They force the company they just bought to pay them loan terms they set for the privilege of buying the company they just bought. That's why LBOs are pretty much a corporate Ponzi scheme. It's just too bad it is a currently legal Ponzi scheme. It might be nice to have legislation to prevent it.

> The debt buyers are the same people that created that debt (the people doing the LBO in the first place) Sometimes, but not always. I did a quick search on who it is for EA, but didn't find anything. > They force the company they just bought to pay them loan terms they set for the privilege of buying the company they just bought. If the buyers are also the lenders, yes. > That's why LBOs are pretty much a corporate…

"It's not a Ponzi scheme because it's not multi-level and no one's left holding the bag."

Not multi-level YET. I've seen many companies undergo multiple LBOs, which only inflate things and leave someone holding an empty bag at the end. It can become one very, very quickly.

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#419

Post by fidotron »

elephanlemon wrote: post #388
fidotron wrote: post #299

Earlier quoted context omitted.

I spent time as a TD on both the dev and publishing sides - the perception all EA (the publisher) is doing is money and terms is very much mistaken. To take the case of Bioware, the SW:TOR launch was a notable disaster. There is no way in hell Bioware by themselves could have recovered from that, and it took a lot of "external" firefighting to get that under control. OTOH various decisions many people assume came fro…

If you had to guess, do you think that SWTOR would have released in the way it did had BioWare been an independent company? (Notably, incomplete and in many ways an uninteresting WoW clone.)

BioWare would have collapsed as an independent company long before SWTOR ever saw light of day.

They seemed to have failed to understand the scope of preparing to operate a game as a service after launching it until far too late into development, which in fairness was and remains a very common problem for people used to the "fire and forget" style of launches in the past, they just did it in a very high profile way which made all of the problems a hundred times worse.

One thing people overlook a lot is after this died down it was BioWare that bought a small mobile studio called KlickNation. KlickNation were a very interesting team because their expertise was how do you take a tiny audience and make absolutely unheard of amounts of money from them, to a degree that was unbelievable. This obviously appeals to game devs because if you can have 30k players and make the same amount of money as with 3M it saves you a whole lot of trouble.

I cannot really comment any more than that, such is life.

Re: EA Announces Agreement to be Acquired by PIF, Silver Lake, and Affinity Partners

#420

Post by anonymars »

anonymars wrote: post #227
gjsman-1000 wrote: post #194

Earlier quoted context omitted.

[flagged]

Why edit rather than reply?

> blunt and poorly thought through instrument.

And how would you describe, "completely breaking the ability to have a threaded discussion"?

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