While some gamers hold the notion of Electronic Arts being a thousand-acre cash cow ranch (and an controversial one at that – the company recently won a dubious online competition where they were voted the “Worst Company in America“), it appears as though the behemoth publisher/developer isn’t immune to the financial despair gripping so many in the current economy.
According to Startup Grind, multiple sources within Electronic Arts have confirmed that the company is preparing to layoff between 500-1000 employees, which would comprise 5-11% of their entire workforce. EA was originally sharpening the axe for April 9th, claims the site, but will instead proceed with the layoffs in the very near future — possibly later this week.
Oddly enough, two of EA’s flagship titles are alleged key underpinnings in their need for the cuts.
Startup Grind reports that while Battlefield 3 sold an estimated 13 million units (around $30 per unit goes to the publisher), over $30 million was squandered on a not-so-fruitful post facto marketing campaign. A similar strategy was employed for Star Wars: The Old Republic, which has sold around 3 million units. However, subscriptions for the well-reviewed MMO are already tailing off. When taken in conjunction with a $750 million Pop-Cap acquisition last July and CFO Eric Brown’s departure in February, what started out as a strong fiscal year ended with a gut punch.
Despite the financial predicament, however, EA is refuting claims of an impending large-scale layoff. They’ve outright denied any cutbacks to MCV, attributing the speculation to an abundance of new digital development projects.
“There are no lay-offs as such, we always have projects growing and morphing. At any given time there are new people coming in and others leaving. EA is growing and hiring and building teams to support the growing demand for digital games and services.”
But the “growing and morphing” process isn’t completely free of casualties according to Industry Gamers. The website received a statement from an EA spokesperson saying that its Vancouver Studio, home to EA Canada (NHL, FIFA, The Sims) and EA Black Box (Need for Speed), would unfortunately be slashing an unspecified number of employees.
“EA in Vancouver is transforming its studio to align with EA’s transformation to high-growth digital formats, including online, social gaming and free-to-play…”
“As the BC studio makes this transformation, a small number of employees are being impacted while most others are being retrained, redeployed and rolling-on to new projects.”
Both comments failed to address the accusations that EA was crippled by reckless financial indiscretion — and that CEO John Riccitello was in the hot seat after his five-year tenure has seen the company’s stock price plummet from $61 to $16; if anything, they suggest a paradigm shift towards a digital-centric future. There’s no question that EA hauled in a massive amount of revenue last year via the contentious-but-profitable online pass and their download service, Origin. If more cuts need to be made, layoffs in Vancouver could be just the start as other studios undergo similar transformations.
Follow me on Twitter @Brian_Sipple