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Electronic Arts outlines plan to cut 1,000 jobs, close at least 9 facilities

December 20, 2008 | 12:15 am
Madden NFL 09

Electronic Arts on Friday said it would cut more jobs and close at least nine facilities amid a weakening economy and disappointing sales in North America and Europe.

The publisher of the Madden NFL football franchise, the Sims and other video game titles said it would cut 1,000 jobs, or about 10% of its workforce, and shutter at least nine out of 50 facilities, including a development studio in Vancouver, Canada. The cost-cutting measures are expected to save $120 million a year.

EA would not identify the facilities intends to close, other than the Black Box Studio in Vancouver, which created the Need for Speed and Skate titles. It is unclear how the company’s California operations, with offices in Redwood City, Playa Vista, Westwood and Emeryville, would be affected by the cuts.

“It is going to impact every division of the company in every part of the world,” said EA spokesman Jeff Brown, adding that further details may be disclosed in the first week of February, when the company reports its third quarter results.

The world’s largest game publisher earlier this month said it would be forced to trim costs, cancel some game projects and make deeper cuts than the 6% workforce reduction it announced in October. EA said it would take a charge of $55 million to $65 million over several quarters to pay for the job cuts and facility closures.

“EA, and indeed the entire industry, needs to rationalize their product lineups,” Todd Mitchell, a New York-based analyst with Kaufman Bros., told the Associated Press. “There are just too many games. Not every publisher needs to be in every genre.”

Investors reacted positively to the news. EA’s shares climbed 63 cents Friday to close at $17.39.
The video game industry has long been considered immune to economic downturns, because games are perceived as delivering hours of entertainment. But as the economy slows, retailers have grown more cautious about the number of titles they stock, concentrating on top sellers. That’s impacting even major game publishers like EA.

EA had only a single title among the top 10 games for November, Left 4 Dead, according to market researcher NPD Group. The season’s sales were dominated by games developed by Nintendo for its Wii video game console, and two popular combat games, Microsoft’s Gears of War 2 and Activision’s Call of Duty: World at War.

-- Dawn Chmielewski and Alex Pham

Photo: A screen from Madden NFL 09. Credit: Electronic Arts

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