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Why EA and Activision Blizzard Cut Jobs

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EA is laying off 350 employees

Video game developer Electronic Arts (EA) has found success with its latest hot title, Apex Legends, which already has 50 million users. However, the company, like the rest of the industry, is dealing with some obstacles.

EA recently announced that it was laying off 350 employees, which represents nearly 4% of its total workforce. The layoffs were made mostly in the marketing and publishing departments.

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The company’s biggest competitor in North America, Activision Blizzard (ATVI), also laid off 800 employees in February, which accounted for ~8% of its head count. The fact that the top two gaming companies have both cut jobs within two months of each other suggests that the gaming space is struggling during a time of increasing competition.

EA has slashed its guidance for the current fiscal year

EA’s revenue growth in the third quarter of fiscal 2019 (which ended in December 2018) disappointed Wall Street analysts. The company reported revenue of $1.29 billion during the quarter, a rise of 11.1% from the corresponding quarter of the previous fiscal year. The company further disappointed investors by lowering its fiscal 2019 revenue guidance from $5.15 billion to $4.875 billion.

Battlefield V, one of EA’s biggest releases last year, tanked, selling fewer copies than the company had expected. The game alienated fans due to a pay-to-win controversy. In fact, apart from Apex Legends and its mainstay FIFA series, EA has had a tough go of things recently. The stock has fallen more than 16% in the past 12 months.

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