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EA Laying Off 600 As Revenue, Losses Rise, Citing Weakening Retail
EA Laying Off 600 As Revenue, Losses Rise, Citing Weakening Retail Exclusive
October 31, 2008 | By Leigh Alexander

October 31, 2008 | By Leigh Alexander
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    25 comments
More: Console/PC, Exclusive



Electronic Arts' fiscal second quarter saw revenues rise -- but losses widened considerably, and wary of weakening retail, the company is laying off employees.

Madden NFL 09, Spore, Mercenaries 2, NCAA Football 09, Tiger Woods PGA Tour 09 and Warhammer Online's strong launches, alongside continued strength for Rock Band, drove EA's overall revenues to $864 million, a 33% boost over last year's $650 million -- but losses reached $310 million, as compared to $195 million last year.

The major publisher's cost reduction plan includes a reduction of its work force of about 6 percent, approximately 600 employees. Through the layoffs, the publisher hopes to gain pre-tax savings of $50 million.

"Considering the slow down at retail we’ve seen in October, we are cautious in the short term," said EA CEO John Riccitiello in the company's results statement.

As for the layoffs, "It’s a global reduction, not just focused on one studio or one location," EA spokesperson Mariam Sughayer told Gamasutra today, explaining that the affected employees were informed this week.

"The decisions that impact people's jobs are always extremely tough, but all the people affected will be treated appropriately and respectfully, with the appropriate severance package based on their time at the company and other mitigating factors."

"While we had good progress in growing revenue and increasing product quality, we have an ongoing imperative to manage our cost structure," Sughayer says. Also included in the cost-cutting initiatives will be a reduction in hiring and the closure of open positions, Sughayer adds.

The company still feels positively about its holiday pipeline, which Sughayer says is "extremely robust." And Madden NFL 09 has sold 4.5 million copies, Spore has sold 2 million, and Warhammer Online sold 1.2 million copies during the quarter ended September 30th.

EA also again highlighted a quality boost for EA Sports titles, noting a 4 point year-over-year increase in aggregated Metacritic scores on both Xbox 360 and PlayStation 3.

Riccitiello concluded his official statement by noting: "Longer term, we are very bullish on the game sector overall and on EA in particular. The industry is growing double-digits on the strength of three new game consoles and increases in the number of homes with broadband internet connections," he continued.

"EA is well-positioned to benefit from these technology drivers due to the strength of our creative studios and our broad collection of game properties -- from The Sims to Spore and Madden NFL to Warhammer Online."

[UPDATE: Tying in with Sughayer's comments that the reduction is 'global', some of the studios that have been affected by layoffs today, according to Gamasutra's sources, include Electronic Arts Los Angeles and Pandemic.]


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Comments


Alan Rimkeit
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This is what happens when a studio gets swallowed by EA. I bet if many of these studios were still independent that layoffs would not be an issue.

John Butkus
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Ouch...EALA just got kicked in the stomach with Tiberium being canceled, and now this. I hope everyone affected lands on their feet.

F. Taloots Marghezeeeele
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Alan:



That is such BS. You honestly think one of the recently acquired studios like mythic (whose game isn't doing all that hot) would be upset over losing their job becuz their game isn't performing that well -- eve tho EA still gave them a $250 M payday?? Get real. Money doesn't grow on trees, it has to be earned... and EA isn't earning any money at the moment, they are bleeding.

Terrie Denman
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No lolcats John? I'm disappointed in you ;)

Trace o'Connor
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Alan, I, must respectfully disagree as well. There's hardly an industry that remains unaffected by the current downturn in the global economy, particularly in the United States. We're all hoping that video games will eventually win out as film and entertainment did in the 30s and 70s, bad economic times when people craved the distraction of entertainment. We may yet see some small, independent studios close let alone force layoffs before times get better. Smaller studios may carry the reputation of being more appreciative of work-life balance, nicer, if you will -- that doesn't make them immune to financial hardship. I'm really bummed at the layoff news from EA -- but I'm glad it's not (yet) accompanied by news of whole studios closing. It certainly could be much worse, and there's a ways to go before the end of the year.

John Palamarchuk
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How many real developers (artists/designers/programmers/animators/audio) were laid off vs HR/marketing/finance/producers/management?

Alan Rimkeit
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I did not say ALL the studios would not have layoffs. I said MOST. Who can deny this is the effect of being swallows by a huge company like EA? I am sure Ubisoft and Activision have done similar things. It is just that EA is the most famous for it.



I also hope that the people who got laid off land on their feet. It is a tough time to be unemployed.

Mac Senour
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@ John P



I love how Producers aren't listed as "real developers" in your comment.

Victor Mercieca
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removed...

Jason Seabaugh
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Those "others", the HR/marketing/finance/producers/management are all also a part of those companies. When we get hit all disciplines get hit, not just the explicitly creative ones.

Victor Mercieca
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more removed... no reason given

Richard Keil
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Does not surprise me. EAs degrading commitment to quality is backlashing. I have a seasonal ticket at the EA support, I can name you hundreds of problems they manage to produce between me giving them money (heh, that always works) to me getting a key and actually spending time playing x.

Carl Trett
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@ F. Taloots Marghezeeeele



"Money doesn't grow on trees, it has to be earned... and EA isn't earning any money at the moment, they are bleeding."



I'm sorry no disrespect intended, but the article stated that revenue was up 214 million and losses up by 115. Sounds like a positive gain to me. Perhaps their are other factors I'm missing though. /shrug



If they still have a positive PnL, this move just seems to have been made to shore up share holder confidence that EA is still a business with business minded objectives. Can't really fault them for that.



Just hope this hasn't hurt too many people. Crappy time of year to get laid off. Or maybe a perfect time if you're getting a fair severance and want some extra family time this fall/winter.

Anthony Charles
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These job cuts are probably pre-emptive and meant to give the company a cushion if video games are hard hit in the 4th quarter. It's not gonna be known how bad video games will suffer, if at all, until the christmas shopping season is in full swing. It should be interesting to see how the industry has evolved. If the economic situation is very bad I imagine the new mainstream products like Wii and Guitar Hero won't sell as well as otherwise, but the more hardcore stuff on PS3 and X-Box won't be effected as much. Altho the PS3's price point would be a problem in a good economy and in a bad it might be a deal breaker.

Paul Lazenby
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This is simply EA using the the events of the last 30 days in our economy as an excuse to shed weight in light of a couple of years of mistakes on their end. Ubisoft is hiring, so was Activision. Does this same economy not affect them?

Brighton gardiner
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@Marghezeeeele



Mythic has been apart of EA for quite some time now. And Warhammer online is doing very well.



So I am a little lost as to where you are getting these assertions as to the otherwise.

Maurício Gomes
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Hey EA, can you please give us DSI (now EA Canada), Origin (now... defunct >.

Simon Carless
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Hey folks, please TRY to use your real names and assume the moral responsibilities associated with that. We won't be checking everybody, but 'Joe The Plumber', we're pretty sure you're not Joe The Plumber, so I'm afraid your posts are no longer.

Maurício Gomes
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Erm my post went boom >.< Anyway, I asked Westwood back too, so I can apply to work on them :) (I will not apply to work in EA >.

zoder rieh
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Someone should make a game about the game industry. Where you start out right out of college with student loans, a bright face from a small town, and get a job as an intern working on some superfluous project or sequence of simple tasks. You work hard to impress your team, all the while trying to make rent. You get an entry level job on a new IP, the job of your dreams, and start making enough money so that you can live comfortably in your one bedroom apartment. Your project is canceled because it's deemed not profitable, and you're shifted to work on something that is demeaning to your ideals. You have to make rent and support yourself and really have no choice, you don't even have a shipped title since games take at least 2-3 years to make.



(continued)

zoder rieh
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You look for other jobs but cannot find anything and so you begin to drink the koolaid and convince yourself the project you're on is not demeaning and try to force yourself to like it. You feel proud of what you accomplish, and the project begins to crunch into long hours. During this there is a wave of layoffs but luckily you're part of the crunch crew and are unaffected. You release the mediocre game after barely maintaining your health and it sells well because there's fighting in it which goes great with the predominately repressed angry male audience. You go on to make the sequel right away but there's something wrong with the team. Everyone's turned on each other during the crunch and are plotting against or to leave the company. The team is deemed unhealthy and there is a re-org to try to keep the people in the company. You are shifted over to another mediocre title, this time a new IP. You try to convince yourself it's different because it's new and once again go into crunch. Your health points start to decrease rapidly. You have saved enough income to move into a better living arrangement but you're never there since you're always at work. Another round of layoffs happen, but once again you're not affected because you're in the crunching group. You release the mediocre new IP, and it's the rage because there's fighting involved which goes over well with the predominately repressed angry male audience. Your health has deteriorated and you take a well deserved vacation.



(continued)

zoder rieh
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On your vacation you meet a (girl/guy) who lives near you and start to date. At work you start on the sequel to the new IP, and things go on as usual, the people on the team have all turned on each other during the crunch but this time the company wants to keep the team together because of the success of the new IP. You are now serious with your (girl/guy) and can not crunch as you used to. You get engaged to the (girl/guy). The sequal goes full swing only everyone on the team completely dispises each other and you start to bring a lot of stress into the relationship. You are torn whether or not to crunch or take care of your relationship. Because of your inablity to keep focus and work hard you, another round of layoffs come and this time you are it. (Guys) Your engagement goes sour due to your untimely layoff during an economic downturn, since your future prospects are dim. (Girls) Your fiance also loses his job due to the economic downturn and your forced to live with his parents.

zoder rieh
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You go and join the people laid off and you start your own company to work on a game that respects your ideals and you work a perfect 8 hour day. Your game is done and you release it expecting grand fan-fair and respect from the world. It sells miserably and has a luke-warm critical reception because it's too "niche". Your company is in debt now and in order to manage you take a job on the 3rd sequel of the new IP that you previously worked on. You are now almost 50 years of age, do not own a house, and are now crunching due to a inflexible schedule from your publisher. Your health points deteriorate and you are eventually forced out of the company you helped to build. The recession has made inflation destroy the savings you had in the bank and you are once again struggling to make rent.

agostino priarolo
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Interesting story, Zoder. Well, I'd prefer to do that instead to continuing struggling here in the outer rim of the galaxy working nights in hotels to make a living. But I'm pretty sure that at that point, with that game experience, with a little public relations I'd be able to grab a job more gratifying and have a brighter future.



By the way I wanted to say:



Electronic Arts spent $40 millions in the cancelled game Tiberium.

Autodesk bought Softimage for $35 millions.



EA "is" a management problem. They should fire those hundreds managers not the artists. The talent pool is everything you need to survive.



EA problems have nothing to do with recession:



They revenues got a 33% boost over last year. Expenses and costs, unless you tell me that they were all increased by electricity and gas costs lol, are a management problem.



I love you Bioware Hire me (psss...without telling to ea...:P)(advertising)

Tawna Evans
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lol Zoder. There should be soap opera games based on real life personal dramas. Soap operas are pretty popular on TV, so there's a chance that soap opera games might sell, too.


none
 
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