EA Announces More Cuts And Closures

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Electronic Arts has revealed new details about its restructuring and consolidation plan, which will now see ten percent of its workforce laid off and numerous studio closures in the coming months.

EA announced at the end of October that it would lay off six percent of its workers after taking a $310 million loss in the second fiscal quarter of the year, and also committed to hiring new employees in “low-cost locations” outside the U.S. The moves were designed to save the company $50 million per year, but EA has apparently decided that those moves don’t go far enough.

In a statement, the company announced that it now intends to lay off ten percent of its workers, which will leave roughly 1000 people without jobs. The plan will see at least nine studios and “publishing locations” shut down, including the Vancouver-based EA Black Box, confirming rumors about the studio’s impending closure that have been circulating for the past two weeks. EA Black Box operations will be consolidated at the EA Canada studio in Burnaby, British Columbia; other closures will be announced in the coming weeks and months. EA said the majority of the layoffs and closures will be completed by March 31, 2009.

The plan is now expecting to save the company $120 million per year, although it will face restructuring charges of $55-65 million over the next “several quarters.” “EA is implementing a plan to narrow its product portfolio to focus on hit games with higher margin opportunities,” the statement said. “The company remains committed to taking creative risks, investing in new games, leading the industry in the growing mobile and online businesses, and delivering high-quality games to consumers.”

It’s an unfortunate development but one that’s been a long time coming, and I wouldn’t be surprised to see even more cuts announced early in the new year. It’s impossible not to feel badly for those affected by the layoffs and closures (or at least it should be) but the prospect of an EA that doesn’t suck is awfully appealing. Will this be the beginning of a real turnaround at EA, or just another step in another long, inexorable slide into irrelevance?

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