Electronic Arts announced on Wednesday a plan to cut 5 percent of its workforce, a strategic move that also includes downsizing its real estate footprint. This decision comes as the video gaming industry faces challenges in growth amidst rising interest rates.
The company, known for popular titles like Star Wars Jedi: Survivor, anticipates incurring charges between $125 million and $165 million due to this restructuring effort.
Other major players in the gaming sector, including Sony, Microsoft, and Riot Games, have similarly reduced their workforce in response to a sluggish recovery in the market attributed to elevated borrowing costs.
In a letter to staff, CEO Andrew Wilson expressed the difficulty of the decision, stating, “While not every team will be impacted, this is the hardest part of these changes, and we have deeply considered every option to try and limit impacts to our teams.”
Of the projected charges, approximately $50 million to $65 million will be tied to reductions in office space, while an estimated $40 million to $55 million will go toward severance and other employee-related expenses, according to the company’s report.
The restructuring plan is expected to be largely completed by December 31.
As of the end of March last year, Electronic Arts employed roughly 13,400 individuals, with 65 percent of the workforce located outside the United States, based on a regulatory filing.
Earlier this year, EA had already predicted that its fourth-quarter bookings would fall below market expectations.
In the previous year, the company initiated layoffs affecting about 6 percent of its workforce, alongside additional reductions in office space, resulting in charges up to $200 million.
© Thomson Reuters 2024
