Electronic Arts has announced a new stage of its business restructuring. It will involve mass layoffs and a reorganization of its gaming portfolio with more focus on its own IPs and live services.
What happened?
- According to a SEC filing, the new restructuring plan approved on February 27 will affect 5% of Electronic Arts’ workforce, or around 670 employees.
- In addition, the company will also review its portfolio and reduce its real estate footprint.
- The main goal is to drive “durable growth, strong cash-flow, and stockholder returns.”
- Electronic Arts expects to spend between $125 million to $165 million on the new stage of its business restructuring. Severance pay and other employee-related costs will account for $40-55 million of the total.
- The restructuring is expected to be complete by December 31, 2024.
- “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,” EA CEO Andrew Wilson said in a blog post. “Our primary goal is to provide team members with opportunities to find new roles and paths to transition onto other projects. Where that’s not possible, we will support and work with each colleague with the utmost attention, care, and respect.”
- This is the second round of layoffs in the past 12 months, as the company decided to lay off nearly 800 people last March as part of its plans to cut costs in areas that don’t contribute to its long-term growth strategy.
- In June 2023, EA also split its business into two organizations, EA Entertainment and EA Sports, while also making some changes to its leadership.
Moving away from licensed IPs to focus on its own game franchises
- Wilson explained that Electronic Arts will be moving away from making games based on third-party IPs “that we do not believe will be successful in our changing industry.”
- Instead, the company will focus on its own brands, sports games, and massive online communities.
- “The reality of a creative business is that market conditions and players’ needs are always changing,” Laura Miele, president of EA Entertainment and Technology, said in a statement. “We’re seeing a rapid player shift toward large open-world games, massive communities, and live services.”
- As an EA representative told GamesIndustry.biz, production on the previously announced Black Panther and Iron Man games will continue. Respawn Entertainment will also develop the next Jedi Survivor title.
- However, some projects based on licensed IPs will be shut down, including an untitled Star Wars FPS from Respawn. According to previous reports, the studio was working on a Mandalorian shooter.
- EA will continue to grow the Battlefield franchise, led by Vince Zampella and Byron Beede. DICE will remain the main developer, but there will be some changes related to supporting teams.
- The company decided to close Ridgeline Games following the departure of its head Marcus Lehto, an industry veteran and co-creator of the Halo franchise. Some of its members will join Ripple Effect, which is also working on content for Battlefield, and Criterion will oversee single-player content for the series.
- Electronic Arts is now also thinning its mobile portfolio, including the recent shutdowns of Kim Kardashian Hollywood, The Lord of the Rings: Heroes of Middle-earth, F1 Mobile, and Tap Sports Baseball. The publisher plans to focus on the remaining titles to accelerate its growth in this area.