Though Apex Legends continues to be a bright spot for EA, the game publisher and the industry as a whole still have hurdles ahead. Today, EA confirmed that it laid off 350 people in marketing, publishing and other departments.
Kotaku obtained an email sent to employees by EA CEO Andrew Wilson, which said that the main focus is increasing the quality of its games. A part of that is “ramping down” the company’s presence in Japan and Russia. Famitsu later confirmed that the Japan office has been closed entirely.
Of the 9,000 global employees at EA, the 350 people laid off represent 3.8 percent of EA’s workforce.
EA isn’t alone. The publisher’s biggest competitor, Activision Blizzard, let go nearly 800 employees, roughly 8 percent of its workforce, in February.
“We have a vision to be the World’s Greatest Games Company,” wrote Wilson in an email obtained and published by Kotaku. “If we’re honest with ourselves, we’re not there right now. We have work to do with our games, our player relationships, and our business. Across the company, teams are already taking action to ensure we are creating higher-quality games and live services, reaching more platforms with our content and subscriptions, improving our Frostbite tools, focusing our network and cloud gaming priorities, and closing the gap between us and our player communities.”
EA sent Kotaku the following statement:
Today we took some important steps as a company to address our challenges and prepare for the opportunities ahead. As we look across a changing world around us, it’s clear that we must change with it. We’re making deliberate moves to better deliver on our commitments, refine our organization and meet the needs of our players. As part of this, we have made changes to our marketing and publishing organization, our operations teams, and we are ramping down our current presence in Japan and Russia as we focus on different ways to serve our players in those markets. In addition to organizational changes, we are deeply focused on increasing quality in our games and services. Great games will continue to be at the core of everything we do, and we are thinking differently about how to amaze and inspire our players.
This is a difficult day. The changes we’re making today will impact about 350 roles in our 9,000-person company. These are important but very hard decisions, and we do not take them lightly. We are friends and colleagues at EA, we appreciate and value everyone’s contributions, and we are doing everything we can to ensure we are looking after our people to help them through this period to find their next opportunity. This is our top priority.
Gaming continues to grow, and record-breaking titles like Fortnite and EA’s own Apex Legends show that there is plenty of money to be made. In fact, Blizzard Activision CEO announced record earnings in 2018, but also said that the company failed to reach its full potential.
That potential has to do with a shift from a model that generates revenue once for a single title to something more akin to a content subscription service. In-app purchases and gaming subscriptions are accounting for more and more of game publishers’ revenues. The Financial Times reported in 2017 that, 10 years prior, one-off sales of packaged home-console software accounted for 64 percent of the global gaming market. That number dropped to 30 percent as in-game purchases and subscriptions continue to grow in popularity, as seen with games like Fortnite and Apex Legends.
“The layoffs at EA and Activision are the result of some company specific missteps,” said Brandon Ross, Managing Director and TMT Analyst at BTIG. “In this new ‘games as a service’ world, publishers need to tightly focus on creating content for their key franchises and execute. Both companies have needed to refocus their efforts.”
This more layered revenue structure creates something sticky with consumers, but also runs the risk of alienating them by constantly asking for more money, especially with a game that isn’t free to play.
We’ve reached out to EA and will update if/when we know more.