Yet another video game giant is cutting back its staff.
Electronic Arts has announced plans to lay off 5% of its workforce, roughly 670 employees, as the industry faces slowing sales and ongoing consolidation. The restructuring, which EA said is meant to emphasize “strategic priorities and growth initiatives,” follows a series of layoffs across the gaming landscape.
Year to date, the video game industry has slashed nearly 8,000 jobs, including EA and cuts earlier this week at Sony Interactive Entertainment. A slowdown in interest in games as the current crop of consoles reaches the midway point in their life cycle, and fast-rising budgets for title development, are the most often cited reasons.
EA echoed this in its announcement, saying it plans to lean into its hit franchises and move away from licensing intellectual property from other entertainment companies (with the exception of some Star Wars games).
“We are also sunsetting games and moving away from development of future licensed IP (intellectual property) that we do not believe will be successful in our changing industry,” wrote EA CEO Andrew Wilson said in a memo to employees. “We are streamlining our company operations to deliver deeper, more connected experiences for fans everywhere that build community, shape culture, and grow fandom.”
EA also plans to reduce its office space footprint.
Some analysts who cover EA said the move makes sense.
“The changes that were announced on Wednesday mesh with the reality of an increasingly AAA-centric marketplace, and they provide us with additional comfort around EA’s ability to deliver its profit expansion ambitions for FY:25,” wrote Nick McKay of Wedbush.
Others, though, cautioned that creating new franchises ais essential to growth.
“While its annual sports franchises may seem mature in core markets, EA Sports is well positioned for the convergence of linear and interactive media,” wrote Brian Fitzgerald of Wells Fargo. “Still, new IP and mobile, each wrapped in live services, must be the growth driver. One to two new at-scale franchises would solidify the bull case, while EA’s lucrative sports franchises limit downside risk.”