Video-game maker Electronic Arts (NASDAQ:EA) recently announced that it will be cutting about 5% of its workforce. The Electronic Arts layoffs are estimated to affect about 670 employees.
That’s not all, however, In addition to the workforce reduction, the firm has decided to cancel the release of a Star Wars game that it had previously planned to introduce. EA will halt the development of a number of other games as well.
EA stock is little changed on the news this morning, down by less than 1%.
The Electronic Arts Layoffs: Cutting Back at EA
Electronic Arts explained in a U.S. Securities and Exchange Commission (SEC) filing that it is carrying out the job cuts in order to boost its “strategic priorities and growth initiatives.” On top of the layoffs, the firm plans to reduce the amount of office space it uses and its licensing deals.
EA will have to pay between $50 million and $65 million in charges due to its office cutbacks and between $40 million and $55 million as a result of the layoffs. Finally, the firm will have to shell out between $35 million and $45 million as a result of reducing its licensing deals.
The company “expects the actions associated with its cost reduction strategies” to be finished by the end of 2024, per Seeking Alpha.
These layoffs follow the lead of Microsoft (NASDAQ:MSFT), Sony (NYSE:SONY) and Tencent (OTCMKTS:TCEHY), which have all slashed hundreds of roles at their respective video-game units in recent months.
Cancelling the Release of New Games
In addition to the workforce reduction and other cutbacks, EA has also reportedly decided not to proceed with the development of a Star Wars “first person shooter” game it had previously planned to release. The game, which was being made by its Respawn subsidiary, was first mentioned by the company back in 2022. In a statement, EA Entertainment President Laura Miele indicated that EA believes customers are “most excited” about the company’s Star Wars Jedi series and “Respawn’s rich library of owned brands.”
Meanwhile, EA has also decided to shut down another one of its game development studios, Ridgeline Games, per Video Games Chronicle. Ridgeline had been developing a game based on “the Battlefield universe.”
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
