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Electronic Arts is laying off 5% of its workforce, amounting to about 670 people, further showcasing just how difficult the once-thriving video game business has become.
The staff reduction is just one part of several moves by EA to trim costs, with the company also paring back on some real estate holdings and “moving away from development of future licensed IP that we do not believe will be successful in our changing industry,” CEO Andrew Wilson said in a memo to staff.
The shifts are happening as EA continues a multiyear transition from simply a producer of physical video game discs to a live digital services business. To that end, Wilson also referenced “an accelerating industry transformation where player needs and motivations have changed significantly.”
The company has made some meaningful progress on this transition, and EA stock has risen by about 25% over the last year. But the road ahead remains choppy in what remains a highly saturated gaming market. The overall restructuring is projected to cost between $125 million and $165 million, according to a company filing with the U.S. Securities and Exchange Commission, including $40 million to $55 million in employee-related costs such as severance. The latest round of cuts follows a slightly larger batch of layoffs by EA in early 2023.
‘Doubling Down’ on Sports
Wilson identified sports as a key area where the more streamlined version of EA intends to “double down on our biggest opportunities.” But there, too, lie several trip-wires for the company.
After years of anticipation, EA intends to release a revived version of its college football game franchise this summer. But the $600 per-player compensation offer to athletes has sparked accusations of being below industry standards for the still-emerging name, image, and likeness era—perhaps limiting the level of intellectual property the game will ultimately feature.
The company’s flagship Madden NFL remains one of the industry’s leading sellers. But more than 30 years of annual releases has sparked complaints of the game growing creatively stale. EA also made a bold move nearly two years ago to separate from FIFA and produce its own soccer game, EA Sports FC. Reviews of that title were solid, and early consumer reception was strong, but the company is still attempting to build up that franchise in a video game business that remains in a post-pandemic slump.
To that end, EA’s ongoing issues are also thematically similar to a run of layoffs of other video game companies including Sony, Microsoft, and Tencent’s Riot Games.
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