Electronic Arts will cut 6% of its headcount, amounting to about 800 jobs, and reduce its office space, the company announced.
The video game company, whose popular titles include “Madden NFL,” “EA Sports FIFA 23,” “Apex Legends” and “The Sims,” is restructuring to focus on “strategic priorities,” CEO Andrew Wilson said in a memo distributed to employees Wednesday. As part of the cost-cutting moves, EA will wind down certain projects, according to Wilson, although he didn’t specify which titles are getting axed.
“As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams,” Wilson said in the memo. As of March 31, 2022, EA employed 12,900 people globally.
The company reported net bookings of $2.34 billion for the last three months of 2022, down 9% from the year earlier, falling short of Wall Street estimates. In announcing the results, Wilson told analysts that EA was “taking strategic actions to evaluate our cost structure as we navigate through the current macro environment.”
EA expects to incur impairment charges of $170 million to $200 million related to the restructuring, it disclosed in an SEC filing. That includes $65 million-$70 million related to intellectual property impairment; $55 million-$65 million related to employee severance and employee-related costs; $45 million-$55 million associated with office space reductions; and $5 million-$10 million of other charges, including contract cancelations. EA said it anticipates the restructuring plan to be “substantially complete” by Sept. 30, 2023.
Read the memo from Wilson, which EA shared on its website:
Team,
As we near the end of the fiscal year, I’m writing to share an update on our business. Even amidst macro uncertainty, EA is operating from a position of strength. Our business is gaining momentum as we continue to deliver high quality games and amazing content across some of the largest, most beloved franchises in the world. At the heart of global football culture, EA SPORTS FIFA 23 is pacing to be the biggest title in franchise history. Apex Legends performance is strong on the heels of a memorable 4th anniversary event, and The Sims is fueling imagination and engagement across its passionate community.
We are leaders in a dynamic industry with new audiences, new technology, and new media trends fundamentally reshaping the world around us. This level of transformation creates powerful opportunities. Now, more than ever, we must be focused on our strategic priorities: building games and experiences that entertain massive online communities; creating blockbuster interactive storytelling; and amplifying the power of community in and around our games with social and creator tools. These priorities align our investments with opportunities to make the biggest impact.
As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams. These decisions are expected to impact approximately six percent of our company’s workforce. This is the most difficult part, and we are working through the process with the utmost care and respect. Where we can, we are providing opportunities for our colleagues to transition onto other projects. Where that’s not possible, we are providing severance pay and additional benefits such as health care and career transition services. Communicating these decisions began earlier this quarter and we expect them to continue through early next fiscal year.
I want to extend my deep appreciation to all our employees who have contributed to our incredible story so far. It’s through your love of games that we continue to deliver on our mission of inspiring the world to play. Looking forward, we are focused on writing our next great chapter by bringing more amazing games to more people around the world — inspiring them to build community, participate in shared fandom, and have joyful experiences. The future of entertainment is interactive, and no team is better equipped to lead this transformation than us.
Thank you for all that you do.
Andrew
