EA Announces More Cuts And Closures

[Andy Chalk]

EA Announces More Cuts And Closures

Electronic Arts [http://www.ea.com] has revealed new details about its restructuring and consolidation plan, which will now see ten percent of its workforce laid off and numerous studio closures in the coming months.

EA announced at the end of October that it would lay off six percent [http://www.escapistmagazine.com/news/view/87130-Electronic-Arts-Faces-Losses-Layoffs] of its workers after taking a $310 million loss in the second fiscal quarter of the year, and also committed to hiring new employees in "low-cost locations" outside the U.S. The moves were designed to save the company $50 million per year, but EA has apparently decided that those moves don't go far enough.

In a statement, the company announced that it now intends to lay off ten percent of its workers, which will leave roughly 1000 people without jobs. The plan will see at least nine studios and "publishing locations" shut down, including the Vancouver-based rumors [http://www.eablackbox.com/] about the studio's impending closure that have been circulating for the past two weeks. EA Black Box operations will be consolidated at the EA Canada studio in Burnaby, British Columbia; other closures will be announced in the coming weeks and months. EA said the majority of the layoffs and closures will be completed by March 31, 2009.

The plan is now expecting to save the company $120 million per year, although it will face restructuring charges of $55-65 million over the next "several quarters." "EA is implementing a plan to narrow its product portfolio to focus on hit games with higher margin opportunities," the statement said. "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."

It's an unfortunate development but one that's been a long time coming, and I wouldn't be surprised to see even more cuts announced early in the new year. It's impossible not to feel badly for those affected by the layoffs and closures (or at least it should be) but the prospect of an EA that doesn't suck is awfully appealing. Will this be the beginning of a real turnaround at EA, or just another step in another long, inexorable slide into irrelevance?


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[Brokkr]

Just another gaming company that has been hit by the downturn.

 

[ElArabDeMagnifico]

These people will find work elsewhere, I still say burn the other 90% to the ground.

I hate to say it but they need to start over. They got too unstable and now it'll collapse, and we'll have to build from the ground up.

 

[Nimbus]

As far as I can see, the number of game devs hasn't changed, but the level of evil has taken a significant drop. Hopefully this is a turn back to the golden days of gaming.

 

[J-Man]

Oh thank god, I frickin' hate EA. Hopefully Valve will profit from reduced competition.

 

[HobbesMkii]

Do layoffs often result in turnarounds for a company's fortune? This article seems to feel that such things will result not only in a reversal for EA's monetary woes, but also for the quality of product.

I'm no expert but it seems to me that cutting corners to make things profitable is a recipe for EVEN more suck games (because now they won't be able to afford writers AND voice-actors).

 

[Nimbus]

Brainwave! If EA goes bankrupt, it will have to sell it's IPs dirt cheap! Just an example here, but Petroglyph could buy the C&C franchise.

 

[Jared Rea]

Bai bai EA. *waves happily*

These people will find work elsewhere, I still say burn the other 90% to the ground.

Oh thank god, I frickin' hate EA. Hopefully Valve will profit from reduced competition.

There are hundreds of people out there (including good friends of mine) who are being laid off right before the most stressful Holiday season, during the most depressing of economic times, after working endlessly throughout the year and all you can say is, "Thank god! I sure do hate copyright protection!"

That's extremely disgusting and way out of touch with the reality of the situation.

 

[loremazd]

Man, you guys need to grow up and get jobs.

 

[Anarchemitis]

...My cousin is going to be out of work..
He went to university for 5 years to get in to a place like that.

 

[m_jim]

Does anyone other than me find it really scary that the company that makes Madden, which sells MILLIONS per year, is somehow losing money? Plus, they are going to be outsourcing jobs, which will only serve to worsen the economic crisis. This is scary.

 

[John Funk]

Bai bai EA. *waves happily*

These people will find work elsewhere, I still say burn the other 90% to the ground.

Oh thank god, I frickin' hate EA. Hopefully Valve will profit from reduced competition.

There are hundreds of people out there (including good friends of mine) who are being laid off right before the most stressful Holiday season, during the most depressing of economic times, after working endlessly throughout the year and all you can say is, "Thank god! I sure do hate copyright protection!"

That's extremely disgusting and way out of touch with the reality of the situation.

Agreed.

That about sums it up.

 

[J-Man]

Bai bai EA. *waves happily*

These people will find work elsewhere, I still say burn the other 90% to the ground.

Oh thank god, I frickin' hate EA. Hopefully Valve will profit from reduced competition.

There are hundreds of people out there (including good friends of mine) who are being laid off right before the most stressful Holiday season, during the most depressing of economic times, after working endlessly throughout the year and all you can say is, "Thank god! I sure do hate copyright protection!"

That's extremely disgusting and way out of touch with the reality of the situation.

The reality of the situation is that EA certainly does have enough money to keep their people on, but they're a horrible company that only cares about profit, and hopefully other companies (such as Valve) that actually care about both employees and the quality of their products over profit will benefit from this, as they may well hire some of the 1000 people being laid off.

 

[loremazd]

Valve cares about profit just as much as every other business. Without profit you cannot make products at all.

 

[Jared Rea]

The reality of the situation is that EA certainly does have enough money to keep their people on

Do they? Sure, but it's not like they could operate in the long-run at the rate they're going. You don't seem to realize why EA is in this mess: putting all their eggs in the HD basket (the cost of which to develop, per game, is ridiculous), spending so much in an attempt to acquire Take-Two Interactive, investing heavily in original properties, diminished returns and of course, the near collapse of a global economy. Some of these factors were within their control, some weren't.

You can look at their profits that, while low, are still impressive, and say that they can still afford to keep these people on, but when your stock price is at a near seven year low and the majority of your investors are losing all confidence in your company, you have to completely change the way you do business. This is part of the "New EA" that everyone keeps talking about. It's genuinely difficult to feel anything but sorry for the folks at EA, especially since they have such a phenomenal CEO in Riccitiello trying to turn everything -- especially quality of product -- around for the company.

but they're a horrible company that only cares about profit

Just like every other company in existence. You can't claim one company is holier than another because if you're not in business for profit, you're not in business at all. This line of thinking is extremely naive.

Your clinging to Valve is also troubling. They'll profit due to reduced competition? You do realize that they're (a) partnered with EA in their console efforts and without them, there would have been no Orange Box or L4D on consoles and (b) EA, in return, has brought all their PC products to Steam, bringing the two even closer together for mutual benefits. Your views on this entire situation are extremely backwards.

 

[John Funk]

Bai bai EA. *waves happily*

These people will find work elsewhere, I still say burn the other 90% to the ground.

Oh thank god, I frickin' hate EA. Hopefully Valve will profit from reduced competition.

There are hundreds of people out there (including good friends of mine) who are being laid off right before the most stressful Holiday season, during the most depressing of economic times, after working endlessly throughout the year and all you can say is, "Thank god! I sure do hate copyright protection!"

That's extremely disgusting and way out of touch with the reality of the situation.

The reality of the situation is that EA certainly does have enough money to keep their people on, but they're a horrible company that only cares about profit, and hopefully other companies (such as Valve) that actually care about both employees and the quality of their products over profit will benefit from this, as they may well hire some of the 1000 people being laid off.

I like Valve and their products as much as anybody, but let's not fool ourselves into thinking that this is a white-knight-and-black-knight situation. Companies are companies, and if you somehow believe that the staff at EA somehow doesn't care about their coworkers and friends as much as everybody at Valve does, well, I've got a bridge to sell you in China.

I will readily admit to being a Blizzard fan if not a fanboy, and while I think they *have* shown a willingness to prize quality over the financial bottom line, they're still a company, they still have families that need feeding, and they still need to make money. That's true for Blizzard, that's true for Valve, and that's true for EA.

 

[Jumplion]

Agreed.

That about sums it up.

Damnit, you beat me to the punch.

EA has surprisingly tossed out some new, interesting IPs lately (Dead Space and Mirror's edge being the more prominent ones).What the hell is going on with this world?

I don't particularly hate EA, since I'm a console gamer I don't get most of the DRM issues they give people, but I do feel sorry for the people who lost their jobs.

Ah well. I agree with everything Jared has said basically.