What this shows quite clearly is that petrostates have too much money and power. Its astonishing how many crucial sectors of the American economy have significant Gulf investment; and may soon be completely controlled by them.
The only rational way I see out of this is to move to Renewable energy and eliminate the worlds dependence on fossil fuels.
It's the move to renewables that's causing this. In a steady state industry, the majority of your revenue goes into investing in the next generation of infrastructure. Dying industries get a temporary injection of profit as your future investments decrease faster than your decline in cashflows.
Additionally, there's an incentive to invest this windfall profit into unrelated industries to diversify in preparation for the end of your primary revenue stream.
So will this make EA less evil or more?
They have shepherded so many great IPs, but also have been on the forefront of sleaze practices. There has to be plenty of money just squeezing those IPs or using the talent in making new things, but I have the feeling that we are going to see more of the same thing with super micro transactions.
Taking an entity private is expensive and typically only done if you intend to change the direction the entity is heading in a way that shareholders won't accept.
Accelerating EAs enshittification seems like it wouldn't require taking them private.
Rather it seems like the investors intend for a change in direction. What that is remains to be seen, but I read this as hopeful, not harmful.
Can someone explain to me how a public company can go private and there’s no fear of outcry from the shareholders in said company? Like companies do all these evil things to please shareholders but wouldn’t many shareholders of a public company be against the transition back to private?
They generally pay a premium to the stock price before the transaction is announced, which means shareholders get more than the market value of their investment, which they can immediately roll into other investments. Usually people don't mind getting paid extra.
They are also shielded from any losses. The stock price is meant to reflect the market consensus on the net present value of all time-discounted future cashflows. If you feel the stock will certainly gain in the future, you should purchase the stock now and if enough people believe that, the stock now will reflect the future gain.
It would be nice to have more diversity in models of ownership and profit-sharing widely used in the market. Like Meta's split between voting shares and non-voting shares which lets them keep control of the company but let shareholders participate in the economic gains. There could be other models, like what if any single person could only own X shares and voting shares were only allowed to be bought by/on behalf of individuals not companies. Maybe models of ownership where the executives don't have a fiduciary responsibility to maximize profit and instead have more latitude on how they choose to run it.
You could just eliminate the regulations on who can and cannot be an accredited investor. It's a bit paternalistic to tell people what they can and cannot spend their money on in the first place tbh
True. Average people are sophisticated enough to understand complex financial instruments designed to scam them by an army of lawyers and MBAs trained at the finest financial institutions and law schools.
How does having a net worth of $1M or an annual income of over $200K inure you to being scammed by complex financial instruments?
Also, we already let people engage in sports gambling (which is guaranteed to result in a net loss) and cryptocurrency speculation, (which is a zero sum game). I'd rather give people more options to invest in financial instruments that at least in theory have the potential to be positive sum, since we're not going to ban either of the other two any time soon.
I happen to be a shareholder in EA as part of a diversified portfolio. Not that my vote matters but I'll definitely be taking PE money. +20% in one day is nothing to sneeze at.
From the other comments about EA's games, it's not like EA is that special of a company. There's always going to be some other company (not necessarily an AAA-games maker) worth putting your capital in and end up doing as well as what the hypothetical EA could do if it were not taken private. (Obviously finding such market-outperformer isn't easy but by the same argument I'm not convinced that EA would be obviously that outperformer either.)
This is just your gambling addiction showing itself. There may not be any potential gains in value after the transaction. In fact, most take privates result in massive up front losses for the new owners.
And anyways, shareholders are paid a premium on today’s stock price (which theoretically reflects the current value of future profits, or at least the market’s view on it) in order to compensate for the exact loss you mention.
Exactly. There is usually a vote and then there is a premium price paid for the stock over market value.
It happened to a company I held stock in. Years later there was a litigation started with some shareholders contesting the vote process and the results.
With public companies more or less the only thing that shareholders can complain about in terms of the company being taken private is if the price is unfair (in which case they can sue). Otherwise the only thing that the entity buying needs is the consent of the board and a majority shareholder vote, whether by buying a controlling share themselves on the open market or by negotiating with them. Usually the private buyer offers a price higher than the current public market cap to incentivize the shareholders to vote for a sale.
(And yes, this means that in practice there is a compelled sale of some fraction of the stock at whatever price the majority agrees to)
If you're a shareholder, you can vote "no" to selling with your shares. Generally, selling a public company requires the majority of the shares to vote "yes" in order to force the minority shareholders to go along with the sale. Usually the share price being offered represents a substantial uplift over the current trading price of the shares (and thus the value of the company). If the transaction unfairly hurts the financial value for minority shareholders they can sue to block the transaction (which does happen).
If they don’t like it they can vote it down or make a higher bid. This is why almost all buyouts come with a premium. If they choose as a group not to sell then the deal doesn’t get done. They elect a board to get the best deal for them.
One thing is fiduciary duty to the shareholders, another is “pleasing the shareholders” as you describe it. Pleasing the shareholders is necessary only when displeasing them means they will sell the stock when there is no buyer. If there is a buyer, the current shareholders are less relevant — as long as management cannot be accused of not fulfilling their fiduciary duty to them.
Immediate 20-30% jump in stock price if shareholders approve and can reinvest anywhere else. With a huge one day gain. In some cases, preferred shareholders get even sweeter deals.
If you’re an executive or board member with a tons of shares you make millions and can retire immediately (or at least after the transition you agree to is complete.)
"Immediate 20-30% jump in stock price" is not wrong, but it is clearer to say that for the acquisition to succeed, usually the acquirer must pay a 20-30% premium.
20-30% premium even over the fictional mark-to-market stock price. If all that were to hit the open market at once at any time, the price would plummet. I really question whether acquisition ROI is positive except in rare cases on a first order basis. Eliminating future compensation, securing a propaganda emitter, etc I can see (though not quite sure what the story would be in this case).
Right, of course. My point is that the acquisition premium is actually higher than the nominal premium.
The share price is for the current share supply. If the supply increases, then the price goes down.
There is also a confounding effect in the cases where shares have actually flooded the market, where the confounder is whatever the reason for flooding is. But even if you magically forced a mass sale with no negative event causing it, the price would still plummet due to the supply flood.
RIP for the days of each new version of a game having significant advances and not just a reskin/rehash/new story version of the same thing on nearly the same engine.
Thinking Commander Keen → Wolfenstein 3D → Doom → Quake kind of things.
(Sure there were always expansion packs or similar, but often done by other studios and more of a primitive DLC (Doom II, etc). But Warcraft → Warcraft 2 → Starcraft → Warcraft III was way more of a jump than the various Halos, say.)
Dead Space was an amazing Action/Horror trilogy that had a brief comeback two years ago with a remake of the first game that was superb but apparently underperformed sales wise. The studio that worked on that remake (EA Motive) is still around and working on projects so there’s still some hope of a Dead Space 2 Remake.
The second one didn't sell well as a result of being scheduled for release on top of a Call of Duty and a Battlefield.
Reportedly it was an effort to suppress Call of Duty sales but en effect basically sacrificed Titanfall. Respawn management were very, very unhappy about this.
It's a shame, it was a great game with a fantastic campaign. I have a few hundred hours in the multiplayer too.
Explains a lot of their moves. I'm still pissed at them canning the mobile baseball game (an MMO simulator with a rabid, engaged fan base) from their purchase of Glu.
What this shows quite clearly is that petrostates have too much money and power. Its astonishing how many crucial sectors of the American economy have significant Gulf investment; and may soon be completely controlled by them.
The only rational way I see out of this is to move to Renewable energy and eliminate the worlds dependence on fossil fuels.
It's the move to renewables that's causing this. In a steady state industry, the majority of your revenue goes into investing in the next generation of infrastructure. Dying industries get a temporary injection of profit as your future investments decrease faster than your decline in cashflows.
Additionally, there's an incentive to invest this windfall profit into unrelated industries to diversify in preparation for the end of your primary revenue stream.
_the worlds_ being the key term here, aren’t they probably fueling their own region (Africa, Middle East, South Asia)
So will this make EA less evil or more? They have shepherded so many great IPs, but also have been on the forefront of sleaze practices. There has to be plenty of money just squeezing those IPs or using the talent in making new things, but I have the feeling that we are going to see more of the same thing with super micro transactions.
I don’t think I have ever seen private equity actually improve a company. Have there been any examples?
i dont know what aspect of "improve" you meant, but dell's private equity take over is very profitable : https://www.forbes.com/sites/antoinegara/2021/04/18/how-wall...
Taking an entity private is expensive and typically only done if you intend to change the direction the entity is heading in a way that shareholders won't accept.
Accelerating EAs enshittification seems like it wouldn't require taking them private.
Rather it seems like the investors intend for a change in direction. What that is remains to be seen, but I read this as hopeful, not harmful.
> Accelerating EAs enshittification
Is that even possible? Granted, this question is purely hypothetical for me, since I’m not buying anything from them as it is, but still…
Maybe a miracle occurs and they actually change for the better? I’ll believe it when I see it.
Can someone explain to me how a public company can go private and there’s no fear of outcry from the shareholders in said company? Like companies do all these evil things to please shareholders but wouldn’t many shareholders of a public company be against the transition back to private?
They generally pay a premium to the stock price before the transaction is announced, which means shareholders get more than the market value of their investment, which they can immediately roll into other investments. Usually people don't mind getting paid extra.
Yes but they also lose any potential gains in value after the transaction.
Not being able to participate in a private company’s growth is something I find pretty annoying.
For myself but also for society.
They are also shielded from any losses. The stock price is meant to reflect the market consensus on the net present value of all time-discounted future cashflows. If you feel the stock will certainly gain in the future, you should purchase the stock now and if enough people believe that, the stock now will reflect the future gain.
It would be nice to have more diversity in models of ownership and profit-sharing widely used in the market. Like Meta's split between voting shares and non-voting shares which lets them keep control of the company but let shareholders participate in the economic gains. There could be other models, like what if any single person could only own X shares and voting shares were only allowed to be bought by/on behalf of individuals not companies. Maybe models of ownership where the executives don't have a fiduciary responsibility to maximize profit and instead have more latitude on how they choose to run it.
Another immediate consequence is that it's a forced/unplanned taxable event. Which may or may not be an inconvenience to someone's planning.
Yeah... But society doesn't really have this problem.
Plenty of ways to invest in private companies. You just need wealth and connections.
> You just need wealth and connections.
That’s exactly the problem I’m talking about. Public companies create more equality.
You could just eliminate the regulations on who can and cannot be an accredited investor. It's a bit paternalistic to tell people what they can and cannot spend their money on in the first place tbh
True. Average people are sophisticated enough to understand complex financial instruments designed to scam them by an army of lawyers and MBAs trained at the finest financial institutions and law schools.
How does having a net worth of $1M or an annual income of over $200K inure you to being scammed by complex financial instruments?
Also, we already let people engage in sports gambling (which is guaranteed to result in a net loss) and cryptocurrency speculation, (which is a zero sum game). I'd rather give people more options to invest in financial instruments that at least in theory have the potential to be positive sum, since we're not going to ban either of the other two any time soon.
> lose any potential gains in value after the transaction.
the premium paid over the market price takes that into account.
Only to a degree ofc. Otherwise, there would be absolutely no sense in buying up that company.
I happen to be a shareholder in EA as part of a diversified portfolio. Not that my vote matters but I'll definitely be taking PE money. +20% in one day is nothing to sneeze at.
From the other comments about EA's games, it's not like EA is that special of a company. There's always going to be some other company (not necessarily an AAA-games maker) worth putting your capital in and end up doing as well as what the hypothetical EA could do if it were not taken private. (Obviously finding such market-outperformer isn't easy but by the same argument I'm not convinced that EA would be obviously that outperformer either.)
> no sense in buying up that company.
if the new buyers think the old owners have a lower expectation of future earnings than them, then the buy makes sense.
Often the buying company brings synergies from their own company that unlocks extra value (in theory).
This is just your gambling addiction showing itself. There may not be any potential gains in value after the transaction. In fact, most take privates result in massive up front losses for the new owners.
And anyways, shareholders are paid a premium on today’s stock price (which theoretically reflects the current value of future profits, or at least the market’s view on it) in order to compensate for the exact loss you mention.
Exactly. There is usually a vote and then there is a premium price paid for the stock over market value.
It happened to a company I held stock in. Years later there was a litigation started with some shareholders contesting the vote process and the results.
With public companies more or less the only thing that shareholders can complain about in terms of the company being taken private is if the price is unfair (in which case they can sue). Otherwise the only thing that the entity buying needs is the consent of the board and a majority shareholder vote, whether by buying a controlling share themselves on the open market or by negotiating with them. Usually the private buyer offers a price higher than the current public market cap to incentivize the shareholders to vote for a sale.
(And yes, this means that in practice there is a compelled sale of some fraction of the stock at whatever price the majority agrees to)
> outcry from the shareholders
If you're a shareholder, you can vote "no" to selling with your shares. Generally, selling a public company requires the majority of the shares to vote "yes" in order to force the minority shareholders to go along with the sale. Usually the share price being offered represents a substantial uplift over the current trading price of the shares (and thus the value of the company). If the transaction unfairly hurts the financial value for minority shareholders they can sue to block the transaction (which does happen).
If they don’t like it they can vote it down or make a higher bid. This is why almost all buyouts come with a premium. If they choose as a group not to sell then the deal doesn’t get done. They elect a board to get the best deal for them.
the shareholders have to vote to accept the deal. if they don't like the deal, they can vote against it.
and then once the deal closes, they aren't shareholders anymore so the company's new owners don't have to care what they think.
One thing is fiduciary duty to the shareholders, another is “pleasing the shareholders” as you describe it. Pleasing the shareholders is necessary only when displeasing them means they will sell the stock when there is no buyer. If there is a buyer, the current shareholders are less relevant — as long as management cannot be accused of not fulfilling their fiduciary duty to them.
>sell the stock when there is no buyer
It's hard to imagine what you mean here: a holder of shares cannot sell them unless they find someone willing to buy.
https://www.investopedia.com/articles/stocks/08/public-compa...
Immediate 20-30% jump in stock price if shareholders approve and can reinvest anywhere else. With a huge one day gain. In some cases, preferred shareholders get even sweeter deals.
If you’re an executive or board member with a tons of shares you make millions and can retire immediately (or at least after the transition you agree to is complete.)
"Immediate 20-30% jump in stock price" is not wrong, but it is clearer to say that for the acquisition to succeed, usually the acquirer must pay a 20-30% premium.
20-30% premium even over the fictional mark-to-market stock price. If all that were to hit the open market at once at any time, the price would plummet. I really question whether acquisition ROI is positive except in rare cases on a first order basis. Eliminating future compensation, securing a propaganda emitter, etc I can see (though not quite sure what the story would be in this case).
>If all that were to hit the open market at once at any time, the price would plummet.
But the price doesn't plummet when an attempt to acquire a company is announced.
The price plummets when the holders of many shares want to sell. An attempted acquisition is the opposite of that situation.
Right, of course. My point is that the acquisition premium is actually higher than the nominal premium.
The share price is for the current share supply. If the supply increases, then the price goes down.
There is also a confounding effect in the cases where shares have actually flooded the market, where the confounder is whatever the reason for flooding is. But even if you magically forced a mass sale with no negative event causing it, the price would still plummet due to the supply flood.
Some EA IP I remember
Battlefield
Mass effect
Dragon age
Madden
The sims
Titanfall
Real ones remember C&C, Red Alert and Generals
(RIP Westwood Studios)
RIP for the days of each new version of a game having significant advances and not just a reskin/rehash/new story version of the same thing on nearly the same engine.
Thinking Commander Keen → Wolfenstein 3D → Doom → Quake kind of things.
(Sure there were always expansion packs or similar, but often done by other studios and more of a primitive DLC (Doom II, etc). But Warcraft → Warcraft 2 → Starcraft → Warcraft III was way more of a jump than the various Halos, say.)
I tried to play c&c few months back, I think EA gave it for free?
It has not aged well. But at the time was amazing.
Dead Space was an amazing Action/Horror trilogy that had a brief comeback two years ago with a remake of the first game that was superb but apparently underperformed sales wise. The studio that worked on that remake (EA Motive) is still around and working on projects so there’s still some hope of a Dead Space 2 Remake.
Seven Cities of Gold, Archon, Pinball Construction Set on an Atari 8-bit. Maybe EA was just the distributor though.
Titanfall 2 was fun. I don't get why they cancelled the third one.
The second one didn't sell well as a result of being scheduled for release on top of a Call of Duty and a Battlefield.
Reportedly it was an effort to suppress Call of Duty sales but en effect basically sacrificed Titanfall. Respawn management were very, very unhappy about this.
It's a shame, it was a great game with a fantastic campaign. I have a few hundred hours in the multiplayer too.
Why make something good when you can keep them in the battle royale mines?
I remember Bards Tale I to III
Home Alone 2
What about Bards Tale? That was a classic retro game not the 21st century remake.
How does a country go from 9/11 to "let's sell our ass to these guys" in under three decades?
Explains a lot of their moves. I'm still pissed at them canning the mobile baseball game (an MMO simulator with a rabid, engaged fan base) from their purchase of Glu.
If modern AAA gaming wasn't already enshittified enough, I'm confident private equity bankers will finish the job in short order.
The buyer is Jared Kushner? Ivanka Trump's husband?
With Saudi Arabian money apparently
[dead]
I mean what's the worst case scenario here, EA starts making even worse games? Maybe going private will give them the freedom to get more creative.
DraftKings integration so your kid can gamble away all your money!
can someone please buy ubisoft?
Some more earlier on one of the sources: https://news.ycombinator.com/item?id=45389733
[flagged]