EA already planning to cut $700M in costs under new ownership

EA has now completed its transition into a private company, and according to new reporting, the next phase will involve major cost‑cutting as the publisher becomes the vehicle for paying off billions in debt accrued during the buyout.

Bloomberg’s Jason Schreier reports that EA’s new owners have taken on roughly $18 billion in debt to fund the acquisition, requiring around $1.8 billion per year just to cover interest payments. As a result, EA is preparing significant cuts across the business, with plans to reduce annual costs by $700 million, including $170 million attributed to “organisational efficiencies”, according to Schreier’s reporting.

This follows EA’s confirmation last week that the merger would close in early August, ending the company’s time as a publicly traded entity. In our earlier coverage, we noted that once the deal closed, EA would be leveraged to pay off the debt taken on by its new ownership group. At the time, we also highlighted the uncertainty around what this financial structure might mean for EA’s future games.

Former BioWare staff have already proclaimed difficulties in getting projects greenlit, but even Mass Effect may not be enough to bring in the sort of money EA is going to need moving forward. The likely end result is that EA will lean heavier on microtransaction-heavy multiplayer games.

KitGuru Says: $700M in cut costs could just be the beginning. As we've seen over the past few years at companies like Microsoft, Amazon, Ubisoft and Embracer Group, these cost-cutting efforts and gradual divestments tend to go on in waves.

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