Apex Legends Developer Electronic Arts To Trim Workforce By 5%, Cancel Projects Amid Gaming Industry Slump

Electronic Arts (EA) is set to reduce 5% of its workforce as part of a restructuring plan, the company said last week. The developers of lucrative gaming franchises like “The Sims”, “Madden NFL”, “Apex Legends” and more, are also planning to cut back on their real estate assets as a part of its plan. In its most recent SEC filing, EA had reported a strength of 13,400 employees which means the layoffs will affect about 670 of them, as per Reuters. EA is the latest of the companies aiming to reduce its workforce amid a slowdown in the gaming industry. 

EA’s Restructuring Plan

EA’s broader restructuring is reportedly aimed at supporting “strategic priorities and growth initiatives,” according to a Tuesday securities filing. Thus, along with the layoffs, EA is also set to scrap the development of several titles, including “Star Wars” which was a first-person shooter game in the early stages of development at studio Respawn. The cuts will also impact work at Battlefield Studios and mobile games of EA as well.

“As a company full of creators and storytellers, we believe in the value of teams innovating together, and continue to learn and adopt new ways of collaborating to grow and serve our global communities,” read a memo from EA CEO Andrew Wilson, Variety reported.

Wilson added that the company is also looking to optimize its global real estate footprint as well. Thus, the plan is estimated to cost EA about $50 million to $65 million related to office space reductions, and $40 million to $55 million in severance and other employee-related costs, the company said, according to Reuters. The actions are expected to be nearly completed by December 31.

In the company’s third-quarter earnings call last month, CEO Wilson said the company would focus on continuing to invest in its existing gaming franchises to attract larger audiences. However, EA had also forecast below S-estimates bookings for the fourth quarter.

Suit of Layoffs in the Gaming Industry 

The video game industry has been slashing jobs over the past year. Just last year, EA laid off around 800 citing similar reasons as this year. Last week, Sony said it would lay off about 900 employees, or about 8% of its workforce in the PlayStation division. Furthermore, last month, Microsoft cut 1,900 jobs across its gaming division just three months after it acquired Activision Blizzard, the maker of hit games like Call of Duty and Guitar Hero.

Chinese tech giant, Tencent also cut about 11% of its workforce of its Riot Games division. Last year in September, the maker of the popular game “Fortnite”, Epic Games cut 830 jobs. There has been a slowdown in interest in games as the current set of gaming consoles available in the market has reached halfway of their lifecycle.

Earlier, Financial Times reported that the $200 billion gaming industry is witnessing the biggest slowdown in 30 years, and the huge growth driven by smartphone gaming and the latest generation of consoles has reached its limits.

Hardware sales including Sony’s PlayStation 5 have reduced. Further, consumer spending on mobile gaming declined last year, by about 2% to $107.3bn according to Data.ai, which forecasts low single-digit growth for 2024 as well.