{"id":184111,"date":"2025-10-02T03:33:09","date_gmt":"2025-10-02T03:33:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/184111\/"},"modified":"2025-10-02T03:33:09","modified_gmt":"2025-10-02T03:33:09","slug":"junk-ratings-risky-ai-bets-and-developer-fears","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/184111\/","title":{"rendered":"Junk Ratings, Risky AI Bets, And Developer Fears"},"content":{"rendered":"

We\u2019re two days out from EA\u2019s announcement that it would sell to Saudia Arabia and private equity<\/a> for $55 billion, and as the dust settles, concerns continue to mount. Some inside the company are worried about possible cuts, layoffs, and censorship coming down the road, and the logistics of the deal don\u2019t necessarily do much to reassure them. Downgraded credit ratings, rumors of ramped-up AI initiatives, and relative radio silence from the executives and investors involved isn\u2019t helping.<\/p>\n

Earlier this week, Bloomberg reported<\/a> that S&P Global Ratings plans to lower EA\u2019s credit rating to \u201cjunk status\u201d once the leveraged buyout deal is completed sometime next year. It\u2019s currently \u201cBBB+\u201d but would fall into the \u201cnon-investment grade\u201d or \u201cspeculative\u201d territory once saddled with the $20 billion loan required to pay off all of the Battlefield 6 publisher\u2019s existing shareholders at a 25-percent premium. Moody\u2019s Ratings announced it is planning a similar reappraisal<\/a>. And the more context we get around the financing of the deal, the worse it looks.<\/p>\n

\u201cJPMorgan made the commitment through its leveraged-finance arm, not its private credit strategy, and the biggest U.S. bank is expected to share the risk with rival firms to create a global syndicate of underwriters, according to people familiar with the deal,\u201d Bloomberg reported yesterday. \u201cThe debt\u2014 expected to be rated in the single-B range\u2014is set to be sold through high-yield bonds and leveraged loans in a cross-border, dual-currency transaction, said the people, who asked not to be identified discussing confidential details.\u201d Smells like high-interest-rate debt<\/a>.<\/p>\n

BioWare on the chopping block <\/p>\n

Some analysts who spoke to Kotaku<\/a> have suggested that going private could free EA from the whims of a stock market based around quarterly earnings reports, but it could also be that being saddled with a ton of debt completely reshapes the decades-old gaming company as we know it. EA has an infamous reputation for buying up acclaimed studios with big creative ambitions and eventually gutting them when they fail to live up to the earnings potential of the loot-box machines fueling Madden and EA Sports FC.<\/p>\n

Respawn Entertainment recently faced multiple rounds of layoffs and saw multiple projects canceled, including a prototype for a long-awaited return to the world of Titanfall. BioWare has suffered even worse. Following a tumultuous development cycle for Dragon Age: The Veilguard due to shifting schedules and live-service goals, the RPG powerhouse is back to being a one-game studio (Mass Effect) and a shell of its former self. Insider Gaming now reports<\/a> that EA was at one point looking to possibly sell off its $775 million acquisition from back in 2007. At least some developers there are just as worried about a future under Saudi ownership. They told Insider Gaming that it feels like only a matter of time before BioWare is downsized further.<\/p>\n

\u201cFor the studios that have more of a track record, especially a track record that maybe doesn\u2019t line up with your own political views\u2026you\u2019re going to look at that studio and wonder how you make them fit into your new structure,\u201d former BioWare project director Mark Darrah said in a new YouTube video<\/a>. \u201cIt\u2019s hard to imagine that you have BioWare pivot from having very progressive messaging to having the reverse because it\u2019s what the government wants. It\u2019s hard to imagine that the public perception of a game that comes out of BioWare, even if you do do that, isn\u2019t apocalyptically bad.\u201d<\/p>\n

Pivoting away from human rights <\/p>\n

In an FAQ directed at employees<\/a>, one of the only pieces of communication EA has released since the deal was announced, the company claims, \u201cThere will be no immediate changes to your job, team, or daily work, as a result of this transaction.\u201d Amid concerns about the abysmal human rights record of Saudi Arabia, where same-sex relationships are outlawed, EA has stopped short of reaffirming its long-standing commitment to inclusivity, which included asserting \u201cTrans Rights Are Human Rights<\/a>\u201d as some US states pushed anti-LGBTQ+ legislation in 2022.<\/p>\n

\u201cAndrew Wilson basically said \u2018f you\u2019 to all women and LGTBQ employees at EA with this deal,\u201d one current EA employee told Game File this week<\/a>. \u201cIt just shows how many people have been collateral this past year for executives to make out rich. Nothing feels great. And we know, when the deal closes, it\u2019s going to get worse before it gets better, if better is even possible.\u201d A separate employee, also speaking anonymously, reiterated those concerns to Kotaku.\u00a0\u201cMembers of the Pride Employee Working Group are currently being very vocal about our concerns for our future,\u201d they told me. \u201cWe\u2019re worried LGBTQ content will be deprioritized or cut entirely and that LGBTQ and especially trans employees will be on the chopping block. Few of us feel heard right now.\u201d<\/p>\n

There\u2019s also concerns about what the new ownership arrangement will mean for EA\u2019s ongoing push around generative AI. It was a big part of the company\u2019s pitch at its 2024 Investor Day<\/a>. At the time, CEO Andrew Wilson said AI was \u201cthe very core of our business\u201d and \u201cnot merely a buzzword,\u201d claiming there were over 100 \u201cnovel AI projects\u201d the publisher was experimenting with to improve how it made games. These lofty promises have reemerged in light of the Saudi deal.<\/p>\n

Banking on an AI revolution that may never arrive <\/p>\n

Reporting on the sale earlier this week, the Financial Times wrote,<\/a> \u201cinvestors are betting that AI-based cost cuts will significantly boost EA\u2019s profits in coming years,\u201d according to people involved in the transaction. It continued, \u201cThe deal is a huge bet that artificial intelligence can significantly cut EA\u2019s operating costs, allowing the equity consortium to manage a large debt load on a company that historically carried limited net debt.\u201d<\/p>\n

Some employees Kotaku has spoken with say EA has continued beating the drum of AI over the last 12 months, but with varying degrees of urgency. While developers are encouraged to experiment with AI tools as much as they can, none reported being forced to implement them directly into their workflows. At the same time, AI is being incorporated into customer service management, something the company behind microtransaction-fueled sports franchises does a lot of. Where some players might have been routed to humans for help with things like Terms of Service violation reviews in the past, their complaints may no be routed first to AI agents instead.<\/p>\n

The Saudi deal is the second-biggest gaming merger ever. The first, Microsoft\u2019s purchase of Activision Blizzard, faced a surprising and prolonged level of scrutiny among regulators in the U.S. and abroad, including an entire lawsuit by the Federal Trade Commission. That was under the Biden Administration, however, which made anti-trust enforcement a priority for the federal government. Under the pay-to-play and pay-to-win mechanics of the current Trump Administration, EA\u2019s sale to private equity and a foreign government isn\u2019t expected to hit so many roadblocks, especially with the president\u2019s son-in-law, Jared Kushner, as one of the buyers.<\/p>\n

\u201cKushner has a personal relationship and he has deep ties in Saudi Arabia. He is very comfortable operating in the Middle East. It created a basis of trust,\u201d one source told the Financial Times<\/a>.\u00a0\u201cWe are in a regulatory environment that is welcoming of [Saudi Arabia]. We are not in what was the previous regime,\u201d said another. And according to a third: \u201cWhat regulator is going to say no to the president\u2019s son-in-law?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"We\u2019re two days out from EA\u2019s announcement that it would sell to Saudia Arabia and private equity for…\n","protected":false},"author":2,"featured_media":184112,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,117734,9375,14640,105],"class_list":{"0":"post-184111","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-bioware","14":"tag-ea","15":"tag-saudi-arabia","16":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=184111"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/184112"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=184111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=184111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=184111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}