Electronic Arts to expand cutbacks
Video game giant Electronic Arts Inc., facing a weakening economy and disappointing sales in North America and Europe, said Friday that it would slash 1,000 jobs, or about 10% of its workforce, and close at least nine of its 50 facilities.
The moves, which are expected to save $120 million a year, are an expansion of cutbacks announced just two months ago by the publisher of the Madden NFL football franchise, the Sims and other titles.
Electronic Arts would not identify the facilities it intends to close other than its Black Box Studio in Vancouver, Canada, which created the Need for Speed and Skate titles.
It is unclear how the company’s California operations, with offices in Redwood City, Playa Vista, Westwood and Emeryville, will be affected.
“It is going to impact every division of the company in every part of the world,” said Electronic Arts spokesman Jeff Brown, adding that further details may be disclosed in the first week of February, when the company reports its fiscal third-quarter results.
The world’s largest game publisher said this month that it would be forced to trim costs, cancel some game projects and make deeper cuts than the 6% workforce reduction it announced in October.
Electronic Arts said Friday that it expected to take one-time charges of $55 million to $65 million over several quarters for the job cuts and facility closures.
“EA, and indeed the entire industry, needs to rationalize their product lineups,” Todd Mitchell, a New York-based analyst with Kaufman Bros, told the Associated Press. “There are just too many games. Not every publisher needs to be in every genre.”
Investors reacted positively to the news Friday. Electronic Arts’ shares climbed 63 cents, or 3.8%, to $17.39.
Until recently, the video game industry was considered immune to economic downturns.
But in this recession, retailers have grown more cautious about the number of titles they stock, concentrating on top sellers. That’s affecting even major game publishers like Electronic Arts.
EA had only a single title, Left 4 Dead, among the top 10 games for November, market researcher NPD Group said.