Jacob Navok

CEO & Emmy-Award Winner, Genvid. Previously 社長付 (President's Office) at Square Enix Holdings.

[Jacob Navok @JNavok]

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.

[Jacob Navok @JNavok]

@JJusticeEnt yes

[Jacob Navok @JNavok]

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.

[Daniel Friedman @DanFriedman81]

It wasn’t private equity that killed BioWare. It wasn’t capitalism. “Dragon Age: The Veilguard” lost about $200 million.

There is no economic system and no conceivable owner who keeps a video game studio that loses that much money operating.

[Jacob Navok @JNavok]

@Marky_X_ yep

[Jacob Navok @JNavok]

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.

[Jacob Navok @JNavok]

@meridianindex yes

[Jacob Navok @JNavok]

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.

[Jacob Navok @JNavok]

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.

[Jacob Navok @JNavok]

@ControlKruse @Kelly36492008 @CetazeonPockets @nvrknowsbest_ it is the point of the OP, so anyone responding differently did not bother to understand the OP. this is not a thread for consumers, it is a call to arms to developers.

[Jacob Navok @JNavok]

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!

[Tim Sweeney @TimSweeneyEpic]

@Filmbot There is a real economic cost to Valve’s foray into forced political disclosures. Besides taking 30%, they’re also taking a potentially even larger fraction of developers’ revenue and livelihood by undermining their business with these AI hate campaigns.

[Jacob Navok @JNavok]

@geniusnamethfc2 @TheKeyOfAnarkh the classic anti-AI argument

[Jacob Navok @JNavok]

@Madziorno why do you hate devs bro?

[Jacob Navok @JNavok]

@Born2beSlicker @SkywardRaven @nvrknowsbest_ @ScottyDontTwit because you didn't read the OP and decided to argue an irrelevant strawman

[Jacob Navok @JNavok]

@katsuu_shi we will be doing that very soon!

[Jacob Navok @JNavok]

@Gpryu They could have bought EA at half the valuation and Bioware would still be shut down for making losses.

[Jacob Navok @JNavok]

@FortKenmei because they are dumb

[Jacob Navok @JNavok]

@TanknDessertLvr @bee_fumo in a thread about devs, read thread, learn

[Jacob Navok @JNavok]

@Ghostlore_game examples!

[Jacob Navok @JNavok]

@CetazeonPockets @SkywardRaven @nvrknowsbest_ @Born2beSlicker @ScottyDontTwit oh yes reverse engineering is very relevant here, nice strawman

[Jacob Navok @JNavok]

AI wave is inevitable regardless of what happens with individual products

[Scyan @ScyanYT]

FUTURE OF GAMING DEPENDS ON FORTNITE x DISNEY🔴

Epic Games has become the biggest most aggressive user of AI in gaming industry. As Disney mode will heavily use AI to be generated, even down to art or core systems.

Which means:
🔴IF IT FAILS:
There will probably be a major push back on extreme use of AI in building video games, and studios will focus on traditional ways of game creation again

🔴IF IT SUCCEEDS:
Epic Games including every other gaming studio will use this mode as an example to push AI onto every games creation as far as it is possible.

So future of how games are made truly depends on how well Disney x Fortnite goes...

[Jacob Navok @JNavok]

@Ashsh178545 I can handle it just fine, I give no fucks. It's devs that suffer for Valve's position.

[Jacob Navok @JNavok]

@BrandonTheBard they were never owed any money thus no money was taken from their pocket.