The publisher is refocusing its resources on 'refining the organization' and 'quality' games.
EA announced in a blog post that it would be laying off 350 of its 9,000 global employees. CEO Andrew Wilson took to EA's blog to provide a bit more transparency around why the publisher needed to make this "important but very hard decision." This organizational restructuring will affect marketing, publishing, and operations, in addition to EA "ramping down" its presence in Japan and Russia.
This round of layoffs isn't a surprise, especially as a result of EA's last earnings report, where the publisher fell short of guidance on net revenue by $86 million, coming in at $1.29 billion. Additionally, net bookings were down 3 percent for the quarter year-over-year, recurrent spending was almost flat, and mobile took a 22 percent hit. As a result, EA's stock took a dive off a cliff, although it has mostly corrected itself thanks to Apex Legends' incredibly successful launch.
“In the face of this competition, we had significant challenges in Q3 and did not perform up to our expectations,” Wilson said in a prepared statement during the investor call. “We expect these challenges will continue to impact our performance in Q4, which has led us to lower our full fiscal year net revenue guidance today.”
We won't see how far reaching EA's troubled year will be until their Q4 2019 earnings call in early May.
These layoffs are hot on the heels of the worst 18 months for layoffs in recent memory. Between Activision Blizzard's dehumanized mass layoffs in February, ArenaNet's only mass layoff in its storied history, and TellTale's mass layoffs in September with a full closure in November (and many, manymore), game workers have faced the brunt of the damage. And while all industries are cyclical, where there are growth periods and declination, the game industry's $135 billion worldwide revenue means that any decline is going to be felt in massive waves, rather than tiny ripples.
Activision Blizzard may have set the standard for faceless corporate restructuring, but both EA and ArenaNet have approached their layoffs with a human face.
During ArenaNet's layoffs, founder Mike O’Brien was tearful and remorseful as he spoke with those who had just been laid off and those who will remain at the studio. "He loves this place," an anonymous source told GameDaily. "He kept wandering around just saying 'we’ll get through this' over and over and I think it was the only thing he managed to say."
In an email obtained by GameDaily, Wilson addressed EA's staff with a heavy heart.
"We are a company full of great people working to do great things for our players," the email says. "We work alongside friends and colleagues that are some of the most talented creators, innovators, experts and leaders across our industry. We are also living in one of the most disruptive times that gaming has ever seen. New audiences, new games, new technologies and new business models are fundamentally reshaping the world around us, the expectations of our players, and our business at EA. As we look out across a changing world, it’s clear that we must change with it."
Layoffs are, more often than not, the result of management decisions not lining up with the realities of the marketplace. Sometimes, it's overextending in markets that don't pan out, which may have been the case with EA's presence in Japan and Russia. Other times, it's betting on a game that hasn't received the critical acclaim (or the commercial success) that was forecasted for.
"The changes we’re making today will impact about 350 roles across the company," Wilson continues in the email, which mirrors his post on EA's blog. "These are very difficult decisions, and we do not take them lightly. We are friends and colleagues, and any situation where there will be an impact to people’s lives is emotional and hard for us all. We are doing everything we can to ensure we are looking after our people, and helping them through this period to find their next opportunity. This is our top priority."
The piece that matters the most is the people. It's heartening to see long-standing companies like EA and ArenaNet expressing remorse and a desire to do right by the people affected by management's decisions. It's not enough, because it will never be enough when a person's livelihood (and residency status, potentially) is on the line, but it's something.
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