Quote:Electronic Arts Zaps Workforce
Mary Jane Irwin, 12.19.08, 12:40 PM EST
The video game maker will eliminate 1,000 jobs and close a development studio.
Electronic Arts is demonstrating that the videogames industry is not, as all believe, recession proof. After warning earlier this month that its sales next year would fall below expectations, Electronic Arts announced new details of its plans to reduce headcount and close studios.
Due to weaker-than-expected sales of its titles during the holiday shopping season, EA is increasing its layoffs to 10.0% of its worldwide workforce, eliminating 1,000 jobs; this is an expansion on its plan to reduce headcount by 6%, first announced in October. EA's shares rose 4.3%, or 72 cents, to $17.48 on Friday morning.
The company is also closing or consolidating nine of its offices. The team at the Vancouver, British Columbia-based Black Box, which was most recently responsible for the racing title “Need for Speed: Undercover” and the Wii skateboarding game “Skate It” will be moved into a nearby facility in Burnaby. Riccitiello called out the poor performance of “Need for Speed” in particular during a briefing earlier this month.
Black Box's move, said EA spokesperson Jeff Brown, was not punitive. And despite EA's decision to reduce the number of titles it has in production, it will still be making "Need for Speed." Stopping production, Brown said, "would be like Porsche discontinuing the 911." EA will be refocusing its efforts on producing only hit games, but it will still "be committed to taking creative risks and investing in new games."
The Redwood City, Calif.-based company has busily tried to reinvent itself as an innovative and creative company ever since John S. Riccitiellotook the reins (again) in 2007. So far the new mantra has not quite taken with the company or the market.
Electronic Arts expects the reductions to save it $120.0 million annually. In the near-term, the restructuring will cost between $55.0 million and $65.0 million. The plan will go into effect March 31, at the end of its fiscal year.
On Dec. 9, Electronic Arts announced it would miss its year-end guidance of $5.0 billion to $5.3 billion in revenues due to weaker than expected sales. Currently analysts estimated its fiscal year revenues would ring in at $4.7 billion, according to consensus compiled by Thompson Reuters.
You know, I don't think Electronic Arts could possibly do anything to make me hate them any more than I already do. Screw these guys.
I love how the author of the article blames EA's woes on the recession. Maybe the problem isn't the recession at all, but EA's failure to put out a genuinely unique and interesting game this year. Every time they get their hands on a decent game, they manage to screw it up.
Spore is a perfect example. Sure, it wasn't as good as it was hyped to be, but I was planning on buying a copy anyway. Then I found out about the draconian DRM they were bundling with it, and I opted to buy something else instead. Suck it, EA.
Mirror's Edge is another example of a classic EA faux pas. They take a really unique gameplay concept and shoot it in the head by mating it with a muddled story, crappy combat, and a mu-huh-huch too short game length. If they would have play-tested the title and spent more time and resources on level design instead of advertising, this game could have been another Portal (which I think it was desperately trying to replicate).
Outside of those examples, just about everything else put out by EA is yet-another-rehash. Yet another Need for Speed, yet another Madden, blah blah blah. I understand these are "safe" investments that will yield guaranteed returns, but I think gamers (including myself) are getting awfully darned tired of playing
Shoot the Gun to Kill the Nazis IV: The Shootening or
Someplace Tycoon VII: Build More Crap.
In short, EA needs to reward innovation if they want to remain competitive. Otherwise, their stock will continue to tank, and they'll end up spinning off some of the developers they've been buying up over the last decade (which would be a very, very good thing).
I'll get off my soap box now.
-b0b
(...wonders what Briney thinks of all of this.)