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EA Announces 1500 Layoffs
CEO Riccitiello says that job cuts are "essential to transforming our company" as losses widen.
With its Q2 fiscal report, which records increased losses, the publisher announced that it would be laying off 1500 jobs and closing several facilities. 1300 will be included as part of a restructuring plan. The majority of action will be completed by March 31 2010.
The losses join the 1110 announced in February this year and the 600 announced in October last year.
EA says that the aim is to make annual cost savings of at least US$100 million, and is expecting restructuring charges of between US$130m to US$150m.
During a conference call to investors, chief financial officer Eric Brown said that game development would take the brunt of the reductions, with 900 positions being removed, with 500 losses in publishing and 100 in corporate.
"Laying off employees and closing facilities is never pleasant," said Riccitiello in a prepared statement. "We have a lot of compassion for those impacted – but these cuts are essential for transforming our company."
According to Gamesindustry.biz, Riccitiello suggested during the investors call that around 12 of its unannounced projects have been cancelled, saying that anything that that couldn't measure up to the profit of EA's core sports titles and The Sims "got cut from our title slate from this point going forward".
He added that though the first 'bold' step to achieving this change was cost reduction, the second was to develop investment in direct digital distribution, a move already put into place by EA's confirmation of its purchase of Facebook game maker Playfish yesterday.
"Five years ago, we estimated that digital was less than 10 per cent of the global industry," he said. "Today, we estimate digital is 35 per cent of the total. Our sense is that the various digital businesses will grow at 20 per cent or higher this year and for the next several years."
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Part of the blame here goes to the people buying the same old cookie cutter games instead of trying the new original IPs that EA was making, I guess that's why Activision is doing so well, they will soon make the 12th or so version of Guitar Hero and people will keep buying them.
I never thought I will be defending EA but they really took a risk for innovation and paid the consequences, I just hope people won't start complaining when they go buy the gazillion Madden version and cry that there is nothing new to play and that EA lacks originality.
I don't typically buy cookie cutter crap. I'm always looking for new IPs to play. The thing that kills me about these big companies is that they're profitable, but not making as much as they forecasted, expected, or wanted. Then they start freaking out and proclaiming that they sky is falling. Typically, most of the management structure is left untouched, as are their bonuses, stock options, etc.
Making games is no longer about making games, it's all about making money and keeping the majority of it in management's hands. The developers are always the first to get cut, and they don't get golden parachutes.
I agree with both @Poffle and @Alex_V, it'll be such a shame for them to stop innovating. In my eyes they'd really turned things around and became exciting again. It's sad to see so many more people lose jobs.
They must be scratching their heads. They sold tons more games when they just released shitty rehash after rehash. Now they make really good games and they have to lay off 1500 people. Let's just hope they don't go back to 15 Fifa games a year.
From a gamer's perspective, it's a sad announcement. Presumably the titles that have been culled will be those I would have been most interested in - Mirror's Edge or Deadspace sequels for example.
Now that sounds like the EA of old. "Let's kill the innovative new titles, fire all of the talented developers and designers, and rehash the cookie cutter crap that sells year in & year out." Maybe if they hadn't pissed away $300m on an overvalued "social gaming" company they wouldn't suddenly need to cut $100m from their budget.
When you don't get to control the total direction of your company, you need to do what you can to be most profitable, not most innovative. The cookie cutter crap is selling to SOMEONE, which is why they kept doing it. And why do they keep doing it? The are a publicly traded company that answers to shareholders, not gamers. Yes, the acquisition of Playfish, a company in existence for less than 3 years (congrats Kristian!), for $200M with additional bonus up to an additional $100M allows EA to instantly reach 150 million players. Overnight.
It is in this that EA can market to, inform and build new revenue channels.
Apparently the innovative titles didn't translate into sales, no matter how great and originals those games were just look at Dead Space or Mirrors Edge.
The $300 million investment was planned long ago and even if they haven't use that money I doubt the result would have been different. The projects have been canceled cause the original new games didn't sold well enough to recoup costs so that's why the canceled more new original and innovative games, because the "innovative" games didn't do well. There is more blame here in the consumer who in the end voted with their wallets for more cookie cutter games rather than original and fresh new videogame ideas.
Such a shame cause I did vote with my money for new IPs like Dead Space.