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In a bid to improve profitability, EA made two big moves, as pointed out in their Q2 financial report. For starters, EA picked up social games network, Playfish, for $300 to $400 million to “capture the exciting opportunities for social gaming and networking across a mass-market audience”. Additionally, approximately 1,500 employess will be getting laid off by March 31, 2010 in a massive restructuring plan. While the restructuring will cost EA around $150 million in short-term costs, the company feels it will save them around $100 million every year thereafter. While the report didn’t specify from where the cuts were to come, Gamasutra is reporting that Visceral, Tiburon, Mythic, and Black Box are all on the chopping block. The following paragraphs are terse excerpts from the report explaining the “acquisition” and “cost reduction plan”.
Acquisition of Playfish EA has announced that it has acquired Playfish Limited, a leading social games company, for approximately $275 million in cash and approximately $25 million in equity retention arrangements. In addition, the sellers are entitled to up to an additional $100 million in consideration upon the achievement of certain performance milestones. The acquisition accelerates EA’s growth in social entertainment and strengthens its focus on the transition to digital and social gaming. Playfish will operate within EA Interactive, a division of EA focused on the web and wireless space. Playfish’s industry-leading talent and critically acclaimed games join EA to capture the exciting opportunities for social gaming and networking across a mass-market audience. Cost Reduction Plan EA has announced a plan to narrow its product portfolio to provide greater focus on titles with higher margin opportunities. This action will result in the closure of several facilities and a headcount reduction of approximately 1,500 positions, of which 1,300 are included in a restructuring plan. The majority of these actions will be completed by March 31, 2010. This plan will result in annual cost savings of at least $100 million and restructuring charges of $130 to $150 million. EA remains committed to delivering high quality games for consumers and leading the industry in the growing digital direct gaming sector. |
