Heads rolling: EA axes 600 employees

EA's axe - Image 1EA Games put into effect a cost reduction plan which includes a reduction of its work force of about 6 percent, which is approximately 600 employees. The reason behind the cut: growing losses and weakening retail. Hard to believe? Read more on full article.

EA Games - Image 1 Publishing giant and corporate overlord, EA Games, put into effect a cost reduction plan citing a general weakening of the retail market as the main cause.

“Considering the slow down at retail weÂ’ve seen in October, we are cautious in the short term,” said EA CEO John Riccitiello in the company’s results statement.

The major publisher’s cost reduction plan includes a reduction of its work force of about 6 percent, approximately 600 employees. It will be a global reduction, not just focused on one studio or one location. Through the layoffs, the publisher hopes to gain pre-tax savings of US$ 50 million.

I admit I hard had a time swallowing this news, at first, since EA seemed to be in pretty good shape lately with the strong launches of Madden NFL 09 (Nintendo DS, PSP, PS3, Xbox 360), Spore, Mercenaries 2 (Xbox 360, PC, PS3) and Warhammer Online. Add this to the strength of their previous titles and one has to wonder why they’re choosing now to trim the fat.

According to their financial statement, EA’s overall revenues rocketed to US$ 864 million, a 33 percent boost over last year’s US$ 650 million. Problem is, their losses grew by around 37 percent too, from US$ 195 million to US$ 310 million. A fairly alarming stat in the face of a slumping economy, which, until recently, many felt would not greatly impact the gaming industry.

Riccitiello ended his official statement with a hopeful note, however, saying:

Longer term, we are very bullish on the game sector overall and on EA in particular. The industry is growing double-digits on the strength of three new game consoles and increases in the number of homes with broadband internet connections.

Included in the studios that will be experiencing the layoffs are Los Angeles and Pandemic. Keep it tuned here for more news on this issue.

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Via Gamasutra

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