Exclusive: I’ve confirmed from multiple sources within Electronic Arts that the company is planning to layoff 500-1,000 people as soon as this week. As of March 31 public numbers, that represents between 5%-11% of total company employees. The layoffs were originally set for last Monday (4/9), but they were pushed back and we’ve confirmed they’re coming very soon.
After a brief resurgence, EA has had a rough year with Star Wars not matching lofty internal expectations, an expensive Popcap acquisition, a CFO departure, and being recently named the worst company in America.
While it looked like a possible banner year, over stretching on several fronts led to a disappointing fiscal year. Estimates put Battlefield 3 sales around 13MM units, the company ‘chased’ the launch dumping an estimated $30MM into incremental marketing after the game launched according to one source within EA. The same thing was done for Star Wars to extend its run and try to improve sales. Star Wars sell through is estimated to now be around 3MM units, but the subscriptions which are needed for an MMO to payoff are already declining.
It’s also another big blow to EA CEO John Riccitiello who this month marked his fifth year since returning to EA. I was working at EA and sat in the all-hands meeting to mark his return in 2007. While the quality of EA games has most definitely improved, the costs to produce these games and Riccitiello’s acquisition warpath have hurt.
Not to mention a stock price that has moved from $61 to where it sits now at $16, it’s safe to say that Riccitiello’s time is once again running out. On top of all this, Zynga has gutted EA’s management listing 5 of the top 11 executives as former EA senior managers including the COO, CMO, CCO (Creative), CPO (People), and the EVP of Corp Dev. Glassdoor.com puts his internal CEO rating at 53%, no where some Silicon Valley companies like Google (92%) or Yelp (89%) while closer to other CEOs in his category (Marc Pincus 54%, Bobby Kotick 36%).
UPDATE #1: EA has released a statement in regards to this post.
UPDATE #2: EA has released another statement with Joystiq.
UPDATE #4: via Gaming Blend: “The original report from Startup Grind indicated that EA was doing some internal shifting hinted at publishing giant and making the cuts before the month was out, and Startup Grind was right.”
UPDATE #5: Good summary of earnings call from Rip Empson of Techcrunch, “EA Tempers Coming Layoffs With $1.2B In Digital Revs For The Year, Promise Of “Big Social Title.”