Electronic Arts (EA), one of the world’s leading video game publishers, said on Wednesday that it would lay off 5% of its workforce, or about 670 employees, as part of a restructuring plan to cope with the challenges facing the industry. The company also said it would reduce its office space by 30% to reflect the shift to remote work and the need for more flexibility.
The restructuring plan is expected to cost EA between $125 million and $165 million in charges, mostly related to severance and other employee-related costs, as well as office space reductions. The company said the actions associated with the plan would be completed substantially by the end of the year.
EA CEO Andrew Wilson said in a letter to employees that the decision was not taken lightly and that the company had considered every option to limit the impact on its teams. He said the plan was aimed at aligning the company’s resources and capabilities with its long-term vision and strategy.
“While not every team will be impacted, this is the hardest part of these changes, and we have deeply considered every option to try and limit impacts to our teams,” Wilson wrote. “We are making these changes to ensure that we can continue to deliver amazing games and services to our players, while also investing in new opportunities and innovation for the future.”
EA faces a tough and competitive market amid high interest rates
The video game industry has been facing a tough and competitive market in recent years, as the demand for new and innovative games has increased, while the costs of development and marketing have also risen. The industry has also been affected by the high interest rates that have made borrowing more expensive and reduced the profitability of gaming companies.
EA, which is known for its popular franchises such as FIFA, Madden, The Sims, and Star Wars, has been struggling to grow its revenue and bookings in the past quarters, as some of its titles have underperformed or faced delays. The company had forecast fourth-quarter bookings below estimates in January, citing the impact of the COVID-19 pandemic and the launch of new consoles by Sony and Microsoft.
EA has also faced competition from other gaming giants such as Activision Blizzard, Take-Two Interactive, and Tencent, as well as from emerging players such as Epic Games, Roblox, and Unity. The company has been trying to diversify its portfolio and expand its presence in new markets and platforms, such as mobile, cloud, and subscription services.
EA aims to deliver more value and innovation to its players and stakeholders
Despite the challenges, EA said it remained confident in its ability to deliver more value and innovation to its players and stakeholders in the future. The company said it had a strong pipeline of games and services, as well as a robust balance sheet and cash flow. The company also said it would continue to pursue strategic opportunities and partnerships to enhance its growth and reach.
“We have a clear vision for the future of EA, and we are taking action to deliver on it,” Wilson said. “We have an incredible opportunity to create amazing new experiences for our players, to bring more players from more countries into our community, and to make a positive impact in the world through our games and our actions.”
The company said it would provide more details on its restructuring plan and its financial outlook in its upcoming earnings call on May 4.
