EA layoffs hit 1,000, Black Box 'consolidated'

[UPDATE 2] Publisher widens staff reductions to 10 percent, will reap $120 million annual savings; Need for Speed Undercover studio moving in with EA Canada, label will remain intact.

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The day before Halloween, Electronic Arts spooked its staff by announcing it was laying off 6 percent of its workforce. Last week, it alarmed analysts by announcing--without revealing any specifics--that its annual earnings would fall below expectations. As a result, it was expanding its layoffs and canceling future projects.

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Today, the company announced an expanded restructuring that will see EA increase layoffs to include 10 percent of its worldwide workforce. The 1,000 pink slips will be sent out by March 31, 2009, and will encompass the "consolidation or closure of at least nine studio and publishing locations," according to EA.

The restructuring will both cost and save money. After incurring charges of $55 million to $65 million as a result of severance packages and other reorganization-related expenses, EA anticipates an annual savings of $120 million.

Analysts blamed EA's troubles on the underperformance of several games, such as Mirror's Edge, Dead Space, and Need for Speed Undercover. Little surprise, then, that one affected location is Undercover developer EA Black Box, which will be closing its office facilities. (In an ironic footnote, Black Box's official site still bears the tag line "Growth...and lots of it!") The staff of the Vancouver-based shop, which is currently working on Skate 2, will be relocated to EA Canada's offices in the nearby suburb of Burnaby. However, an EA representative told GameSpot that the studio name will remain.

"This does not mean that the Black Box studio is closing," said the rep. "The studio is moving to our Burnaby campus to share the facility with EAC and other EA teams that operate out of our state-of-the-art facility. We will operate two distinct studios, each with their own distinct culture and teams, out of our Burnaby facility."

EA said that Black Box's expected move date is June 2009. The rep also said that the studio's games would follow as well, but declined to comment if any were being considered for cancellation. "[We've made] no announcements regarding franchises," stated the rep.

In the initial news release, EA also issued the following blanket statement outlining how it will examine each of its series' viability: "EA is implementing a plan to narrow its product portfolio to focus on hit games with higher margin opportunities. The company remains committed to taking creative risks, investing in new games, leading the industry in the growing mobile and online businesses, and delivering high-quality games to consumers."

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