Electronic Arts laying off 5% of workforce to focus on ‘owned IP’

Electronic Arts Layoffs: 670 Workers Impacted

Electronic Arts is laying off 5% of its workforce, or around 670 of the company’s workers. EA employed around 13,400 people by the end of last March, according to a regulatory filing. Sixty-five percent of those employees are located outside the U.S., it said at the time. Notifying impacted employees “has already begun and will be largely completed by early next quarter,” EA CEO Andrew Wilson wrote in a note to staff published Wednesday.

Focus on Owned IP and Online Communities

Wilson also said EA is “moving away from development of future licensed IP that we do not believe will be successful in our changing industry.” Instead, it’ll focus on “owned IP, sports, and massive online communities.”

“We are also leading through an accelerating industry transformation where player needs and motivations have changed significantly,” Wilson wrote. “Fans are increasingly engaging with the largest IP, and looking to us for broader experiences where they can play, watch, create content, and forge deeper connections. Our industry exists at the cutting edge of entertainment, and in today’s dynamic environment, we are advancing the way we work and continuing to evolve our business.”

Games Development Shift at Electronic Arts

No specific games were mentioned in Wilson’s note, although EA is currently developing several games based on licensed properties, like a reported third Star Wars Jedi game, along with Marvel’s Black Panther and Iron Man. EA announced in 2022 that Respawn was developing three separate Star Wars games, one of which was Star Wars Jedi: Survivor. The two others were unannounced; one of those games, a first-person action game, has been canceled, according to Video Games Chronicle.

Financial Impact and Company Restructuring

The cuts come almost one year after EA laid off around 700 people, or 6% of its staff, in March 2023. EA expects to spend $125 million to $165 million on these layoffs and other cost-cutting measures. Office space reductions will cost roughly $50 million to $60 million, while $35 million to $45 million is expected to go toward “costs associated with licensor commitments,” according to a securities document filed Wednesday.

Industry Trends in Video Game Layoffs

EA is, unfortunately, not alone in the worrying trend of increasing video game industry layoffs. Roughly 8,000 people have been laid off in the first two months of the year in a worrying trend that’s quickly outpacing 2023, where around 11,000 people were laid off, per industry trackers.

Why are these layoffs happening? A comedown after the pandemic is part of it, but not the whole story that includes increasing interest rates on loans, how expensive it is to make games, and a shift in video game industry business models. One important failure to consider is that executive leadership expected the engagement built during the pandemic to continue and grow; executives expanded their companies recklessly without a realistic long-term plan.