Electronic Arts Announces Major Layoffs Despite Strong Profits

KEY TAKEAWAYS

Electronic Arts (EA) plans to lay off over 700 employees, about 6% of its global workforce, despite reporting a $1.3 billion gross profit in the latest fiscal quarter.

The company aims to shift its focus to projects that align with its strategy, concentrating on successful titles like The Sims 4, EA Sports FIFA 23, and Apex Legends.

Affected employees will receive severance pay, healthcare, and transition services, with some being reassigned to other projects within the company.

The layoffs are expected to cost EA around $170 million to $200 million, and the company is also reviewing its real estate investments to reduce office space.

EA's layoffs follow similar moves by industry peers such as Twitch, Microsoft, Take-Two, and Unity, with some experts suggesting that these layoffs may not result in actual cost-cutting.

Electronic Arts (EA), the prominent video game publisher, has announced plans to lay off more than 700 employees, approximately 6% of its global workforce of around 12,900.

CEO Andrew Wilson made the announcement on Wednesday, even as the company reported a $1.3 billion gross profit for its latest fiscal quarter.

EA had previously lowered its full-year profit expectations, even though it experienced revenue and profit increases compared to the same period the previous year.

The company cited macro-economic uncertainty as a reason for the layoffs.

This follows similar moves by industry peers, including Twitch, Microsoft, Take-Two, and Unity.

Shift in Focus and Reduction in Office Space

Wilson did not provide details on which departments or projects would be affected by the layoffs. 

He stated that EA would move away from projects not in line with its strategy, focusing on “building games and experiences that entertain massive online communities; creating blockbuster interactive storytelling; and amplifying the power of community in and around our games with social and creator tools.”

The company is set to concentrate its efforts on successful titles like The Sims 4, EA Sports FIFA 23, and Apex Legends.

Additionally, EA will continue supporting Madden 23, Battlefield 2042, and upcoming releases such as Star Wars Jedi: Survivor and The Sims 5.

EA has already announced plans to remove Battlefield 1943, Battlefield: Bad Company, and Battlefield: Bad Company 2 from online stores in April.

However, these catalog reductions appear unrelated to the recent layoffs.

Electronic Arts (EA), the prominent video game publisher, has announced plans to lay off more than 700 employees, approximately 6% of its global workforce of around 12,900.

Severance and Transition for Affected Employees

Some employees may be reassigned to other projects within the company, while those who cannot be reassigned will receive severance pay, healthcare, and transition services.

EA began notifying affected workers earlier this quarter, and the process is expected to continue into the early part of the next fiscal year, which starts in October.

The company laid off 200 Apex Legends QA testers in February, as reported by Kotaku.

EA is not the only gaming company experiencing significant layoffs; 400 Twitch employees were let go as part of Amazon’s recent termination of 9,000 workers.

Microsoft laid off 10,000 employees earlier this year, reportedly impacting studios such as Starfield developer Bethesda Softworks and Halo Infinite developer 343 Industries.

Financial Impact of Layoffs

According to a financial document published by EA, the company expects the layoffs to cost around $170 million to $200 million.

EA is also said to be reviewing its real estate investments, as part of its strategy to reduce office space.

Some experts argue that such layoffs may not result in actual cost-cutting and could simply be companies following the actions of their peers.

As EA reevaluates its investment strategy and scales back spending, it has also halted development on mobile titles such as Apex Legends Mobile and a mobile Battlefield game.

The company reportedly canceled a new Titanfall single-player game as well.