Electronic Arts is laying off 5% of its workforce, or around 670 of the company’s employees. EA had around 13,400 employees at the end of March last year. according to a regulatory filing. It was said at the time that 65 percent of these employees were based outside the USA. Notification of affected employees “has already begun and will be largely completed by the beginning of next quarter.” EA CEO Andrew Wilson wrote in a note to employees Published Wednesday.
Wilson also said that EA is “moving away from developing future licensed IP that we do not believe will be successful in our changing industry.” Instead, it will focus on “owned intellectual property, sports and massive online communities.”
“We are also at the forefront of an accelerating industry transformation where gamer needs and motivations have changed significantly,” Wilson wrote. “Fans are increasingly engaging with the biggest IPs and looking to us for richer experiences where they can play, watch, create content and forge deeper connections. Our industry is at the forefront of entertainment and in today’s dynamic environment, we are evolving the way we work and evolving our business.”
No specific games were mentioned in Wilson’s note, although EA is currently developing several games based on licensed properties such as: reported on the third Star Wars Jedi game, along with Marvel’s Black Panther and Iron Man. EA announced in 2022 that Respawn was developing three separate Star Wars games, one of them Star Wars Jedi: Survivor. The other two were unannounced; One of these games, a first-person action game, was canceled. according to Video Games Chronicle. “As we’ve looked at Respawn’s portfolio over the past few months, it’s become clear that the games our players are most excited about are Jedi and Respawn’s rich library of private labels,” said Laura Miele, entertainment host and technology at EA, in a statement to the publication.
The cuts come nearly a year after EA laid off around 700 employees, or 6% of its staff, in March 2023. At the beginning of February this year The company also laid off “a small number of employees” earlier this week when operations were suspended EA Sports MLB Tap Sports And F1 mobile racing. (Those layoffs may be included in the 670 figure announced Wednesday.) These games are believed to be part of the company’s plan to “suspend” several games, as Wilson noted in the letter to employees.
EA expects to spend $125 million to $165 million on these layoffs and other cost-cutting measures. The reduction in office space will cost about $50 million to $60 million, while $35 million to $45 million is expected to be used for “costs related to licensor obligations.” This emerges from a securities document filed on Wednesday. EA said it will spend $40 million to $55 million on employee severance pay, adding to the $170 million to $200 million it spent last year on its restructuring cost-cutting plan. (EA last year expected that actions related to these costs would be completed by September 30, 2023. This time it is expected to be completed by December 31, 2024.)
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Image: Respawn Entertainment/Electronic Arts via Polygon
End of January, EA has released its latest financial results There, the company said it earned $7.6 billion in the last 12 months ending December 31, 2023. Of this, EA generated gross profit of $5.8 billion. EA reported that its net bookings were up 1% year over year – part of that is tied to its live services success, where the company earned a “record $1.712 billion,” up 3% from last year last year. “Over the last twelve months, live services accounted for 73% of our business,” EA wrote. In particular, EA called out EA Sports FC for “exceeded expectations”.
“I understand that this will create uncertainty and be challenging for many who have worked with so much dedication and passion and made important contributions to our company,” Wilson said in the letter, adding that the company is doing its best to help affected workers find one. new roles or ways to transition to other projects.” “While not every team will be affected, this is the most difficult part of these changes and we have thoroughly evaluated all options to limit the impact on our teams.”
Unfortunately, EA is not alone in the worrying trend of increasing layoffs in the video game industry. On Tuesday, Sony Interactive Entertainment announced that it is laying off 900 employees, or 8% of its staff. All affected were Insomniac Games, Naughty Dog, Guerrilla Games and Sony’s technology, creative and support departments. This week alone, people have been laid off from studios like Deck Nine Games, Supermassive Games and esports company ESL; Production also stopped at the Good Factory because it ran out of financing.
About 8,000 people were laid off in the first two months of the year, representing a worrying trend that will quickly extend beyond 2023, where around 11,000 people were laid off, per industry tracker. Why are these layoffs happening? A post-pandemic downturn is part of it, but not the whole story, which includes rising interest rates on loans, the rising costs of producing games and a shift in the video game industry’s business models. A key mistake that was not taken into account is that leadership expected the commitment built during the pandemic to continue and grow; Executives have recklessly expanded their companies without a realistic long-term plan.
