EA Lays Off 200 Workers From Online Games Unit
Video game publisher Electronic Arts Inc. on Tuesday laid off more than 200 employees, or about a third of the work force of its money-losing online subsidiary, EA.com.
The move comes under pressure from shareholders to show the fruits of EA’s $300-million investment in EA.com, an online games channel the company hopes will attract paying subscribers.
“I view this as a positive,” said Felicia Kantor, vice president of Lehman Bros. in New York.”EA.com needs to break even. It’s pulling cash out of the core business.”
Kantor said EA.com reported combined operating losses of $204 million over its last two fiscal years--$54 million in 1999 and $150 million in 2000. This year, Kantor projects that EA.com will lose another $125 million from operations.
The Redwood City, Calif.-based video game publisher declined to comment on the layoffs, which came two days before the company is scheduled to announce its fiscal second-quarter earnings. But in an internal memo sent to employees, EA President and Chief Operating Officer John Riccitiello wrote, “In order to match our schedule for profitability, we need to focus on the projects we believe have the greatest revenue potential.”
One of those projects had been “Majestic,” an online conspiracy game that launched this summer and attracted just 13,500 paying subscribers, far fewer than the company had hoped. The company is now betting on “The Sims Online” to be its next big title, but that game is not expected to debut until next year.
