More bad news at the worlds second largest publisher with further redundancies on the way. While overall sales of video games were up 31% in November, EA has said that it will miss profit targets because of an “unexpected slowdown in retail orders.”
When the voluntary redundancy program started in October, many analysts predicted that EA would have to make cuts deeper then the 6% it aimed for to remain competitive, and unfortunately for the workers at the company, it looks like this scenario has eventuated. EA has announced that it is closing Black Box Games, creators of the Need for Speed and Skate games. In a press release, EA said that “It expects the restructuring plan will result in annual cost savings of approximately $120 million and restructuring charges of approximately $55-65 million over the next several quarters.”
After counting out the Wii early, only recently has EA started to get its game together and start putting out titles. Coupled with their relatively poor offerings on other consoles, it is no surprise that EA has had to reduce its workforce. As an analyst at Arcadia Investment put it, “Unfortunately, other people have better seats at the table than EA, Activision is doing really well with Call of Duty: World at War. Microsoft is doing phenomenally well with Gears of War 2. And Nintendo is doing well with Wii Fit and Mario Kart Wii. EA’s titles, on the other hand, have done somewhere between OK and a little disappointing. None of them have outperformed.”
The news comes after Sony Corp announced it was cutting more than 8000 jobs to cope with the “acute downturn in the economic climate”. Many analysts had predicted that the video games market would weather the crisis better than other businesses, much like cosmetic manufactures during the Great Depression, but it appears that they are not totally immune from the impact.