EA says it will lay off a further 4 percent of its workforce as it either consolidates or closes down "at least nine" of its studios. Including the company's recently-announced headcount reduction, this brings the company's planned layoffs to 10 percent of its total -- 1,000 employees.
EA's Vancouver-based Black Box studio is the only one specifically referenced in the company's announcement. Black Box, developer of the Need For Speed franchise and Skate series, will see its teams and projects moved to EA's nearby Burnaby, British Columbia studio.
The company declined to provide any details on the further planned closures and consolidations. It says that the consolidation and headcount reduction will save it $120 million annually, but will incur restructuring charges of $55-65 million over the next several quarters.
The plans announced today expand upon the restructuring initiatives EA announced at the end of October, when the company said it would lay off 600 employees, or six percent of its total. Sources believed at the time that the affected studios included Electronic Arts Los Angeles and Pandemic, as EA said it was effecting "a global reduction, not just focused on one studio or one location."
EA recently said its key titles underperformed in the latter part of this year, and as such, alongside the uncertain economic environment, it would need to reduce its financial estimates -- and its title portfolio -- into the new year. It also recently abandoned its plans to open a third location in Vancouver.
"EA is implementing a plan to narrow its product portfolio to focus on hit games with higher margin opportunities," said the company in a statement.
"The company remains committed to taking creative risks, investing in new games, leading the industry in the growing mobile and online businesses, and delivering high-quality games to consumers."
[UPDATE: Jeff Brown, vice president of corporate communications at Electronic Arts, clarifies the company's restructuring timeline: "This is not effective immediately," he says. "This is a process that's going to take place over the next three months, and straight into our next fiscal year on April 1."
Brown declined to comment further on the specifics of the planned consolidations or closures.]
If EA did more external development and less acquisitions it wouldn't be in the sad shape it is now. The magic that makes a game a success can't always be controlled or predicted. If a game does well, don't buy the company. Publish a few sequels and move on when the sales slump, then you won't be left holding the bag. This business model is what keeps Hollywood making movies even in these hard times.
Man, so many lay offs these days. Is it just me or is the industry in a real bad? Is it bad all over? I recently graduated from an art college and was looking to try to get a job working for a company that makes video games. Frankly, this situation scares the crap out of me. Someone could create several new companies off of the amount of people that Midway, EA, and the like have laid off. What a major bummer.
At this point with EA Partners, EA seems to be putting more emphasis on external development than it has in a long time, and it's probably the consistently strongest slate of external development among all the major publishers.
That will be a crummy April 1st joke. "The layoffs are over, it's April 1st!..... just kidding April Fools, now get your stuff and leave. Specially you Chad."
Alan, I share your fears also. But my suggestion would be to try and redirect your focus to films if the game industry continues shrinking in opportunities as veterans will be taking lower paying or entry level jobs just to keep working. New startups are not going to happen in meaningful quatities when banks are scared to lend out funds.
Maybe the industry needs to *ahem* march up to Congress and ask for a bailout.
Bryan, I think you have a good point here. I don't think this shrinkage is all bad though. When you look at it from the industry perspective. There has been an over abundance of people looking for jobs with only average skills. Now the people looking to break into the industry can either give up, or find a related job while making games independantly in their spare time. When things pick up again the people who are serious about making games will be much more skilled, and the people who were just adding to the pile of resumes will be out of the way. Its kind of a harsh way to look at it, but it could be the beginning of a change for the better for the industry as a whole.
At this point with EA Partners, EA seems to be putting more emphasis on external development than it has in a long time, and it's probably the consistently strongest slate of external development among all the major publishers.
No bonuses or stock options for EA Execs in 2008?
Maybe the industry needs to *ahem* march up to Congress and ask for a bailout.