Recession forces video games publisher Electronic Arts to cut 1,000 jobs

20 December 2008

The ongoing recession seems to have hit even the video games industry, a sector often considered somewhat immune to the pressures of economic slowdowns.

Electronic Arts, the second biggest and publisher of video games announced yesterday that it would expand the scope of its previously announced job cuts by laying off 1000 people or 10 per cent of its workforce and close at least nine studios and publishing locations in a restructuring plan to save cost.

This restructuring move comes after the Redwood City-based EA announced in October a reduction of 6 per cent of its workforce due to the $310 million quarterly loss. The company now hopes to save around $120 million in annual costs, after incurring charges of $55 to $65 million as a result of severance packages and other reorganisation-related expenses.

EA also said it plans to reduce its product line by removing many unspecified games, as it focuses on its more profitable hit games and may consolidate its Black Box Studio facility in Vancouver, British Columbia, which is working on a new title, Skate 2, by moving its Black Box development teams and associated game franchises to the nearby state-of-the-art facility at EA studio location in Burnaby, British Columbia.

''We're going to be spending more on fewer titles,'' said Electronic Arts spokesman Jeff Brown. The current losses are attributed to slow holiday sales and global economic pressures.

Analysts feel that the company has depended too much on the underperformed games, such as Mirror's Edge, Dead Space, and Need for Speed Undercover and its relentless pursuit in acquiring its rival Take-Two Interactive earlier this year.