EA Drops the Layoff Hammer

[VanCitySportsGuy]

http://kotaku.com/5400594/rumor-ea-g...layfish-buyout

EA recently bought Playfish for 300 million and than turned around and axed hundreds of employees. People from Tiburon (Madden, NCAA Football, MMA, Tiger Woods) and Black Box (Need For Speed, Skate) were given the pink slip. It looks like other studios were impacted too.

I know there are people from those studios that post on OS so I'm hoping they still have their jobs.

[rudyjuly2]

Re: EA Drops the Layoff Hammer

Ouch. I'd like to know if anyone that posts here is affected as well.

Whether people like EA or not, these people all had bills to pay and many had families to feed. Hopefully some people won't celebrate this by filling this thread up with stupid fanboy posts.

[RoyalBoyle78]

Re: EA Drops the Layoff Hammer

http://kotaku.com/5400594/rumor-ea-g...layfish-buyout

EA recently bought Playfish for 300 million and than turned around and axed hundreds of employees. People from Tiburon (Madden, NCAA Football, MMA, Tiger Woods) and Black Box (Need For Speed, Skate) were given the pink slip. It looks like other studios were impacted too.

I know there are people from those studios that post on OS so I'm hoping they still have their jobs.

I thought Tiburion only worked on Madden and not all those other games?

[bkfount]

Re: EA Drops the Layoff Hammer

I thought Tiburion only worked on Madden and not all those other games?

tiburon did work on those games.

http://en.wikipedia.org/wiki/EA_Tiburon

[Tiko7523]

Electronic Arts reports 2nd-quarter loss, plans to cut 1,500 jobs, or 17 percent

Electronic Arts reports 2nd-quarter loss, plans to cut 1,500 jobs, or 17 percent

On 4:33 pm EST, Monday November 9, 2009
Buzz up! 0
Print
Companies: Activision Blizzard, Inc.Electronic Arts Inc.
NEW YORK (AP) -- Electronic Arts said Monday its loss widened in the latest quarter in what's been a difficult year for the company and the broader video game industry.


AP - FILE - In this video game image released by MTV Games, a scene is shown from "The Beatles: ...

Related Quotes
Symbol Price Change
ATVI 11.54 +0.29

ERTS 19.53 +0.53

The company behind games such as "Madden NFL 10" also said Monday it is laying off 1,500 employees, or about 17 percent, to focus on games that have higher profit margins.

The fiscal second quarter's net loss was $391 million, or $1.21 a share, 26 percent wider than the loss from a year earlier.

Net sales fell 12 percent to $788 million in the July-September period. But sales including deferred revenue from online games grew 2 percent to $1.15 billion, inching past Wall Street's expectations.

Electronic Arts Inc., which is based in Redwood City, Calif., said it expects to report a net loss for the full fiscal year.

The video game industry has had a tough time for much of this year after capping 2008 with record retail sales. The recession has forced people to cut back on shopping, and the relative lack of big hits compared with last year has made year-over-year comparisons difficult.

But there are some bright spots. Last week, EA rival Activision Blizzard Inc. posted better-than-expected results for the third quarter and reaffirmed its outlook for the year amid high hopes for its upcoming "Call of Duty" game, which launches Tuesday and could break entertainment records when it comes to how much cash it can make in a week.

And earlier Monday, EA announced it has bought Playfish Inc., a maker of social online games such as "Pet Society," for $275 million in cash.

With the acquisition of the two-year-old startup, EA is diving further into the lucrative world of social online games, which tens of millions of people play on Facebook, MySpace, the iPhone and other platforms.

http://finance.yahoo.com/news/Electronic-Arts-posts-2Q-loss-apf-1749445973.html;_ylt=AvkJPIpTYvFgzc8XABIr9yW7YWsA;_ylu=X3oDMTE1YTczZzgzBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawNlbGVjdHJvbmljYXI-?x=0&sec=topStories&pos=1&asset=&ccode=

[DrJones]

Re: EA Drops the Layoff Hammer

It's not good. At least 2 of my EAC friends got the axe today, along with 3 from last month.

[elgreazy1]

Re: EA Drops the Layoff Hammer

Just atypical practice from any major company, so nothing new. Think about it, the easiest cost cutting in any business is down-sizing because you can't adjust your production, distrubtion, pricing, etc costs but you can adjust what employees cost you (wage, benefits, etc). Just sucks to see more layoffs continuing around the country.

From a consumer standpoint, it probably appears you will see even less work put into EA's yearly batches of sports games due to less employees. Research & development means innovation, new intellectual properties, etc, with these guys gone be prepared for recycled junk.

[DGuinta1]

Re: EA Drops the Layoff Hammer

Electronic Arts to Cut 1,500 Jobs After Latest Loss (Update2)

http://www.bloomberg.com/apps/news?p...6fXaKTWI&pos=5

[Crimsontide27]

Re: EA Drops the Layoff Hammer

The silver lining in this could be that we could see the exclusive contracts go away.

Im willing to bet that the people losing their jobs arent the ones causing all the problems, its the suits that control all the business decsions and more than likely are keeping their jobs.

Edit...

So further reading mentions this should save the company around 100 million. Let the contracts for football go and thats another 400 million in savings! Should be easy to see just to let the exclusive contracts go and you save the company 400 billion. Theres no set of numbers that can justify keeping the contracts. Remove all the exclusive contracts and EA is back in black.

Stop releasing garbage and your sales will go up, keep releasing trash and your sales will go down. You dont have to be a business executive to figure that out.

[elgreazy1]

Re: EA Drops the Layoff Hammer

But that's the thing, the exclusive license brings in more money than it costs. Can you imagine Madden having to actually compete with another NFL-related football game? It would be getting whooped or tested like it did with Madden VS Sony Gameday or Madden VS 2K football (when it had the license).

[Knight165]

Re: EA Drops the Layoff Hammer

But that's the thing, the exclusive license brings in more money than it costs. Can you imagine Madden having to actually compete with another NFL-related football game? It would be getting whooped or tested like it did with Madden VS Sony Gameday or Madden VS 2K football (when it had the license).

Absolutely, positively not.
First, the license adds nearly 100 million dollars a year to the bottom line of the product.
Secondly, you would need to see a substantial increase in sales....solely due to the exclusive....I'd say probably nearing 40% to offset the yearly cost. If I'm not mistaken....sales DROPPED since 2005(the first exclusive year).
Is this really the CEO of EA posting?

M.K.
Knight165

[rudyjuly2]

Re: EA Drops the Layoff Hammer

Absolutely, positively not.
First, the license adds nearly 100 million dollars a year to the bottom line of the product.
Secondly, you would need to see a substantial increase in sales....solely due to the exclusive....I'd say probably nearing 40% to offset the yearly cost. If I'm not mistaken....sales DROPPED since 2005(the first exclusive year).
Is this really the CEO of EA posting?

M.K.
Knight165

I disagree. I think EA has done fairly well with the exclusive license. Exclusive or not, EA would still have to pay a lot of money to get the NFLPA and NFL license. It's not like they would save millions a year if the license wasn't exclusive. Given the fact that 2K5's low sale price forced them to drop their sale price, this was a very easy decision and also eliminated the competition. Even as Madden sales have slipped over the last few years, it's still a cash cow without fear of competition. One of the surest bets to make money every year.

I think the worst decision EA made was signing up with ESPN. They don't really use the license and paid millions for it. That is an utter waste that doesn't really help the bottom line. That might be a worse deal than MLB paying huge money for exclusive baseball rights.

Note: The original deal between the NFL/NFLPA and EA was roughly $300 million over 5 years = $60 million per year. I think Madden sells close to 5 million games per year across every console which mean the deal costs EA $12 per game per year. They were already paying a lot so I estimate the extra cost to go exclusive was at most $5 per game. Easy decision.

http://money.cnn.com/2004/12/14/commentary/game_over/column_gaming/

[elgreazy1]

Re: EA Drops the Layoff Hammer

Thank you rudy for doing the research for me.

[Knight165]

Re: EA Drops the Layoff Hammer

Actually, I think those numbers are slightly off.
I'm pretty sure the license is north of 400 million dollars.
Some rumors actually had it close to 500 million but EA was afraid of investors bailing at that ridiculous amount...but that's just conjecture.
Also...I think the 5 million in sales is generous....but again...I digress because what you are posting has nothing to do with what I was replying to.
Here is the quote from you elgreazy
"But that's the thing, the exclusive license brings in more money than it costs."
How does anything that rudy brought up(even if it is 100% correct) relate to the license bringing in more money than going out?
To see that you would need to see a SUBSTANTIAL increase in sales due to the license.
Even if the price went up 5 or even 10 dollars per game.....so did all games pretty much...it was because of cost of development. If anything....the price increase that EA would have done anyway was pretty much a wash because of the exclusive.
...and there is no way that they paid anything close to even the amount you linked(which is a guess) for the regular license. I would guess in the neighborhood of several million dollars for that.

M.K.
Knight165

[DrJones]

Re: EA Drops the Layoff Hammer

Actually, I think those numbers are slightly off.
I'm pretty sure the license is north of 400 million dollars.
Some rumors actually had it close to 500 million but EA was afraid of investors bailing at that ridiculous amount...but that's just conjecture.

Sources for the $400M+ figure? I worked at EA at the time, and the number I consistently heard was the same as the article ($300M for 5 years). No idea about subsequent deals.

Difficult for me to say if the exclusivity deal has been a net plus or minus for EA. Regardless, I don't think it's played a significant role in EA's financial woes. Personally, I believe the market for North American sports games has reached a saturation point. The cost of making games gets more expensive every year (there's a vast jump for every console change), while retail prices have pretty much stayed the same, and sales are flat.