Video game developer Electronic Arts (EA) has agreed to the largest leveraged buyout in history, selling itself to a group of private investors for $55 billion.
How can this record-breaking sale of the world’s largest video game manufacturer help validate the increasing demand for in real life (IRL) experiences, particularly in sports?
The group of private investors includes Saudi Arabia’s Public Investment Fund (PIF) and private equity firm Silver Lake. Both the PIF and Silver Lake have invested billions of dollars in high-profile sports ventures. For example, Silver Lake led a similar take-private transaction when it acquired Endeavor.
The PIF and Silver Lake clearly believe that people will be spending an increasing amount of time playing video games, especially among younger demographics. PIF has earmarked $38 billion for games and sees interactive entertainment as both a form of “soft power” and a long-term monetization opportunity.
Yet, Silver Lake’s comments about EA transaction should serve as an indicator for potential a boon to IRL sports experiences. The firm “believes AI will lead to an explosion of leisure time, fueling growing spending on sports and entertainment.”
Playing video games, however, will not be the only way people spend their increased “leisure time”. As Cory Weinberg of The Information explains when analyzing the PIF and Silver Lake’s EA investment strategy, “Another way to look at it is that people will be starved for any kind of live-action entertainment if they get hooked on feeds of AI-generated videos.”
Sports are well positioned to take advantage of people “starved for live-action entertainment” in many ways. Most notably, it is very difficult to replicate the excitement of live sports competitions and human athletes with virtual experiences and athletes. Fans want to attend games to see their favorite players, athletes, and teams in person, as demonstrated by rising attendance in leagues such as MLB and WNBA.
Additionally, sports properties and rights holders can provide live-action entertainment options outside of game days or competitions. Sports-anchored, mixed-use districts (SMDs) can become catalysts that encourage team fans, local communities, and visitors to live, work, play, and shop—defining new IRL experiences.
The large-scale increase in demand for IRL experiences is a major reason why sports properties and rights holders are investing $100+ billion in SMDs. One key question remains: What kinds of IRL experiences will best maximize foot traffic, dwell time, tourism, and spending?
ROAR works with clients to help answer this question by providing decision-makers with insights based on actual fan behaviors. More specifically, we can analyze multiple datasets to determine where targeted audiences—such as fans, local communities, and tourists—make purchases, consume content, and spend their time in both the physical and digital worlds.
Having a deeper understanding of these audience behaviors should help with the planning, development, financing, and execution of SMDs. In particular, decision-makers can use these insights to build sports-anchored venues and IRL experiences that better resonate with their target audiences.
The EA take-private transaction is likely—and perhaps counterintuitively—an indicator of growing demand for IRL experiences centered around sports and entertainment. Using data-driven, strategic thinking that incorporates fan behaviors will best position sports leaders to take advantage of this opportunity.