I keep seeing people ask why Saudi Arabia borrowed money to buy EA when it could afford to pay cash. This is basic corporate finance. I bought a car earlier this year. I could have paid cash, but I financed it through Toyota. Why? Because I expected to earn more on the cash I kept invested than the loan cost me. The same principle applies to EA. PIF can afford the acquisition. That doesn't mean tying up another $18 billion in cash is the optimal use of its capital. Borrowing preserves capital for other investments. Corporate interest expense also provides tax advantages, subject to deduction limits. Saudi Arabia can afford to pay cash. However, the expected return on keeping that capital invested exceeds the after-tax cost and risk of the debt. That's why companies with enormous cash reserves still borrow money. John Riccitiello himself used this strategy many times, both at EA and at Unity.

AI wave is inevitable regardless of what happens with individual products

you must follow the full orthodoxy! no dissent may be permitted.

This is correct, but I want to address this dumb point I see about PE and debt. I dunno who sold the idiots replying on comments to me this tune about PE and debt killing Bioware, but PIF (Saudi sovereign fund) owns 93.4% of EA. That is not PE. If you think that is PE you are a moron and/or a Canadian lawmaker. There is debt. Their owners can pay off that debt instantly if they wanted to. This is just basic financing stuff. PE did not kill Bioware. Nor did Saudi Arabia. Bioware killed Bioware for making games that were going to be losses.

Tim's making a really important point here and I think people fundamentally misunderstand it. Let's paint a scenario. You are an indie developer and you want to make a game. Traditional game development will take you 1 year and cost you $200,000 in outsourcing costs to buy art, animation, and additional programming resources. AI assisted game development will take you 3 months and cost you $50,000 in credits + some additional resources. In a good scenario your game could make $200,000 and break even, but in many scenarios you mortgage your house and no one sees your game and you are out your savings. Now, with the anti-AI mania, Valve is forcing real economic harm on you because you get the equivalent of hate mobs at your door for your choice of tooling. Your economic viability is harmed because Valve chooses to put a label on you that generates negative attention. It makes your economics worse. Anti-AI proponents will point out that this proves their hate campaigns work. The appeal is not to them, because they are morons, but to developers to stand up to Valve and say remove these labels so that we can have livelihoods. And Valve makes money of you either way. Stand up for your rights, devs!

It is very interesting the extent to which when they want to claim sportswashing, it's Saudi Arabia buying EA, but when they want to bash PE, it's a PE fund buying EA and not a sovereign fund. This is Schrodinger's acquisition in games media. Either way they want to hand wave that the studio, if it made money, would be kept alive. But this fact is conveniently ignored.

Note that I do not believe a $500m budget was authorized. I am sure Gears of War was authorized, originally, at a substantially smaller budget. But once you are $200m in and the game is no where close to ready, do you cancel it? Never make another GoW again? What happens is the game fails a greenlight and time passes, and as time passes burn increases, and the budget goes higher not because it was authorized but because it cannot go back in time and fix itself. Your money is a sunk cost. I did a thread on this a few months back for anyone interested: xitter.cf/JNavok/status/20754083…

I did not see this attitude among Japanese game devs when working at Square Enix.

Accurate. If Bioware gamers made a difference in EA pockets Bioware would still be open!

Is the definition of passion "subsidize money losing businesses"? Art can be done with passion because it's solo artists being paid by rich patrons. Studios require lots of people with salaries, this requires investment, investment requires returns. You can have games driven by passion, it's called indies and it thrives on Steam.

Tim Sweeney says sky blue, receives backlash from pro-steam bot accounts.

I appreciate Fran's POV here. I think many of us who spent the last 40 years playing games think of the industry as it was the 90s and early 2010s. That industry moved on, we didn't. The kids are playing Steal an Egg on Roblox. There are 935,000 concurrents on it at this moment. There have been 9.1bn plays since it launched in July. roblox.com/games/10777807077… The various Egg games on Roblox this year combined will have made more money than Veilguard in its lifetime. This is the kids' industry now, we are just old people nostalgic for the days of rock and roll.