EA's Profits Up, Workers Get Layoffs

Gamespot and GamesIndustry.biz has the news from yesterday's conference call where EA CEO Larry Probst reported higher earnings for his company in Q3, despite a small yearly decline. He also held forth on the future cost of next-gen games, which in his opinion will likely stay as high as $50 and could perhaps fetch more on retail shelves. Just before this story was to be published, Tim Butler wrote in with the news from 1Up.com that EA was laying off members of its LA studio. From the article: "According to sources close to the company, Electronic Arts is currently in the process of laying off between 50-70 team members from its minty-fresh new EA LA office. The teams affected worked on the poorly-recieved GoldenEye: Rogue Agent and the forthcoming Medal of Honor: Dogs of War FPS titles." Update: 01/27 06:34 GMT by Z : Update to the layoff article: "The first step is to rebalance the team. This has required us to let go 60 people -- from many different teams. There is no focus on any one team or any one class of individuals. It's a studio-wide thing to reset the business fundamentals and get the studio to the next level."

Comments

Team Balancing ACT 2005

[fembots]

If you had read the friendly article, you would have seen the update:

After speaking to Neil Young, General Manager of the EA LA studio, it's now clear that the confirmed 60 layoffs are not heavily confined to one team or another, countering early rumors that the GoldenEye or Medal of Honor teams were specifically targerted -- countering the implication that the underperformance of certain games might have been the catalyst.

Maybe EA is shaking its developers up for the foreseeable battle with TakeTwo?

And it's undeniable that EA is in a good position to pull this kind of team-balancing stunt, because there are simply too many willing-to-work-25-hours-a-day multimedia graduates. If you come across an apple tree full of apples, you'll surely pick the best ones too.

Re:Team Balancing ACT 2005

[Antonymous Flower]

there are simply too many willing-to-work-25-hours-a-day multimedia graduates

So there really is life on Mars?

Re:Team Balancing ACT 2005

[cubicledrone]

If you come across an apple tree full of apples, you'll surely pick the best ones too.

And then throw half of them in the trash? Oh, you mean they waited until after the game was done to realize these weren't the best candidates for the job? That's convenient. Why not just call it a temp job?

Re:Team Balancing ACT 2005

[Anonymous Coward]

Making the joke funny would have been sufficient.

Re:Team Balancing ACT 2005

[badasscat]

Why not just call it a temp job? I have two friends that work in the gaming industry (one does sound the other does character). Both have been laid off multiple times. Why? The major project they were on was done with and there were no new projects on the table, so they were laid off. The first time for both (they worked together at first) it was a small company so that was understandable.. but from my limited knowledge this seems to be the norm.

Well, this seems to be what the industry is moving towards, and it's honestly not such a bad thing.

The film industry and in fact most creative industries operate on a project-to-project basis. You're hired for a specific project, you work like mad for six months, you make a year's worth of money during that time and then you're done. You then shop yourself around to other producers and try to get yourself attached to another project. Or, you take six months off and recharge.

This makes most creative industries pretty cut-throat, but it has a couple of positive effects. First, it keeps creative professionals from being too overworked, which as we all know is a huge problem in the games industry. Right now, the industry operates like a project-based industry but with permanent employees, so the workers don't ever get that break when projects end. Second, it hopefully causes the cream of the crop to rise to the top, because it's sort of a Darwinian system. The strong survive, the weak can't get themselves attached to new projects and eventually find other work. Of course, it doesn't always work out that way in any creative industry - the most creative minds are not always great at networking, for one thing. But it does ensure at least a basic level of competence in the industry, which right now is lacking (I think we can all agree that the technical quality of games these days is really all over the map).

If there really is a transition within the industry to become more like the film or other similar industries, then once it's complete I think workers will actually be better off. There will still be permanent workers and plenty of them, but, like the film industry, they will mainly be in marketing and administrative positions, which are often (though not always) both lower stress and higher paying than development or production jobs are today. The pay per project of developers will actually go up, because there will be an actual incentive for developers to recruit top talent for top projects, and the number of total hours worked per year for developers will go down - unless someone's a real coding rock star who's in high demand and chooses to simply move straight on from one tough project to the next.

Again, plenty of industries already work like this and it makes more sense than asking poorly-paid, often untalented full-time employees for 24/7 devotion to the company. Weed the untalented out of the industry, pay the talented better and give them some more time off. If they've got the talent and some basic interview skills, they'll have no problem finding more work in such a system.

If the game was bad

[Anonymous Coward]

shouldn't they be held responsible?

Why should they be carried by better producing teams if they couldn't?

Oh no!

[Anonymous Coward]

A business acting like a business! Boooooooo! Hissssssssss! Profits up and they fired people? Well, good god, only evil can be afoot. There's no other explination!

Re:Oh no!

[bladesjester]

Profits are up and they are firing people from teams that already work 70-80 hours a week, which will probably cause even more work for those that are still employed with them.

I'd say that's pretty "evil"...

Re:Oh no!

[readpunk]

This is such childish logic.

Of course EA is acting like a business. I am upset about people getting fired in all positions when their company is making profits not because this doesn't benefit the hierarchy within the corporation, this is logical for those at the top who value strength in the stock market as well as long term profits for themselves.

What sickens me is that we live in a world with an economic system where the most logical thing to do when your profits are up is to fire workers.

Just because something is logical for those doing it, does not inherently make it "normal" in the sense that human beings are naturally inclined to do it, nor does it make ethical.

Re:Oh no!

[jxyama]

there are many companies that are "businesses" but don't act the way EA has. goldman sachs comes as one example of a very profittable company that has also been commended for its fair and dignified treatment of the workforce.

not all businesses are alike. pursuing profits isn't mutually exclusive with treating its employees with respect.

the way EA is doing business is one way, and it's their way of doing things. personally, i'd never work for or buy products from company that seems to show absolutely no compassion in its business practice or for its employees. that's my way of doing things in response to such companies. and i doubt that i'm alone.

Re:Oh no!

[CAIMLAS]

It's not a business operating as a business. It's a corporation acting as a corporation. Businesses look out for their employees, as they're valueable assets. Corporations don't give a fuck. They're big enough that they're visible and able to bring in the brightest/best/most.

Re:Oh no!

[BrookHarty]

After mergers you have to lay people off, thats the sad fact. The big problem is when EA just buys companies for the rights to a game.

Thats why people hate EA, they are putting people out of work just for the rights to videogames.

Take your company public, EA could buy it out from you, and own everything you work for.

Re:Oh no!

[Coryoth]

The reality, however, is that while hard decisions like this might be very good for the investors in the short term (and hence help boost investment) because of the boost in quarterly profits, in the long term EA is aquiring quite the reputation as a slave driver with no loyalty to people it employs. If EA develops too much of a reputation for that they won't get anywhere near the same employee pool to pick and choose from - the smart people will be staying away. Long term it is potentially gutting the company if they push it too far.

And that, right there, is the big problem that causes so many people to complain about big corporations: They have come to favour short term quarterly profits over long term sustainable profits. If you look at most complaints, from environmental, to labour, to political, when you pare it down it is occuring because companies are considering their short term future but not bothering to look at the long term results.

Jedidiah.

This is Not a Layoff

[techsoldaten]

Don't look at this as a layoff.

This is an invitation to enter the field of merchandising the games they built directly to consumers at the retail level. WalMart, Best Buy and Target are all hiring, and can use people knowledgable about the games themselves.

Seriously, how much money does that company make from building these games? All the hard work, blood, sweat and tears that go into being an EA employee and this is all they have to give their developers. And you know their executives are going to receive higher bonuses this year for trimming the fat.

I guess all we can say is thank you for the nedless hours of high-tech distraction your guys have provided us, at least the gaming community appreciates you.

M

Re:This is Not a Layoff

[cubicledrone]

Companies have to make profits. If they don't, then they won't be able to employ anyone.

They are making profits.

If they're talented, they'll find new employment.

So they can get fired again. I gotta ask: when do we get real jobs? Not bullshit temp work, but a REAL FUCKING JOB?

What's wrong with that?

Nothing, until their car gets reposessed and the bank forecloses on the house.

Nothing at all.

Re:This is Not a Layoff

[cubicledrone]

Losing your job is a fact of (American) life.

Fine. Then say so. Don't tell people "work hard, get an education and get a good job." Tell people the American dream is "they'll fire your ass."

If not, then maybe they don't belong in their current field?

And who makes that decision? Oh, the same people who just got through firing several dozen employees? Yeah. No problem there.

There are thousands of thousands of average companies that hire average employees to do average jobs.

But I thought they had to be talented?

If their car got reposessed and their house foreclosed, whos fault is that?

Hey, they showed up and did their job. They held up THEIR END OF THE BARGAIN.

It behooves a person to ensure he/she can afford an item they own, be it a car, house, motorcycle or television.

That's why they worked their ass off to get a good job.

Re:This is Not a Layoff

[Canberra Bob]

"And they were compensated for it."

This comes down to whether they were on contract to do just that job or whether they were full time employees. Before you say "sure sure, thats just being pedantic" hear me out

If they were contracted to do just that job, then they would have expected to be paid for a short term job ie. a higher pay than a permanent employee. If they were a full time employee, then part of the bargain of the employee accepting lower pay than the contractor is the implication made by the company that by accepting the lower pay there is greater job security.

I guess what Im getting at is that if a company does not want employees on for long periods, then it should not offer permanency to staff. If it does offer permanency with the knowledge that it plans to downsize the employee in the forseeable future then it is being dishonest as it is promising permanency only with the view to reduce how much it has to pay.

Dont want permanent employees - only hire contractors. That way both sides know what to expect from the arrangement.

Goldeneye: Rogue Agent

[KnowledgeFreak]

I didn't hear that Rogue Agent did badly. I bought the thing and loved it.. yeah, it had some aspects that were obviously a knock off of halo, but some of it was innovative for an FPS, and parts of it were a hell of a lot of fun.

the person who should be fired for goldeneye..

[glenkim]

I talked to a friend who was actually one of the game designers for the new Goldeneye game. When I found out he had worked on it, I told him that the game looked pretty crappy and he told me the reason. Apparently, the producer of the game wasn't happy with the initial draft of the game's script... so he went home and rewrote it. by himself.

BOFHs writing games? Yeah right, I hope his ass was canned.

Re:the person who should be fired for goldeneye..

[HisMother]

"BOFHs?" Don't you mean "PHBs"? BOFH is "Bastard Operator From Hell". PHB is "Pointy Haired Boss".

I'll say it right now

[bonch]

EA is evil. EA represents the suit-and-tie, corporate-owned, mainstream conversion of the gaming industry. They represent cheesy CEOs coming over from other failed companies who are only getting into the game industry because they see massive annual revenues from this thing, not because they're into games. Merely ten years ago, we had a sort of Silver Age of gaming, from Doom to Descent to Command & Conquer to Myst to Simcity 2000 to...well, you were there. It all spanned multiple genres. Where is it now? The good games are far and few between. Now, it's the yearly update of the new Tony Hawk game, complete with skateboard fat clowns that spray graffiti, and the "underground racing" games where morons who think neon lights are a good investment tell each other how "sick" their "tricked out" cars are as obnoxious, over-compressed, repetitive rap music blasts while you race down wet, nighttime city streets. Because that's "underground!" Meanwhile, the PC industry purposely speeds itself up faster and faster to increase the yearly bullshit upgrade cycle. If you don't have a video card with two fans taking up two slots in your translucent, neon-lit PC case, your penis just isn't big enough to play the latest id Software game made up of approximately 90% pitch black darkness on-screen. Innovation? Fuck it, let's fuck up Deus Ex so we can get on the console in time while we destroy Fallout 3. After that, we'll suck the teat of the latest Microsoft DirectX release, focus-group tested with a new name ("DirectNext! Because it's the NEXT one!") guaranteed to generate 87% profit margins on new graphics card updates. And that blazing fast PC you custom-built last year? Fuck it, better ditch that because your goddamn RAM chips aren't operating at a fast enough speed to melt the paint off the wall and generate enough electromagnetic fields to shrivel the balls off your legs as you read the latest paid-for review in a dying game magazine.

I'm bitter about today's PC gaming.

Re:I'll say it right now

[Capt'n Hector]

I'm bitter about today's PC gaming.

Really? You sure do a nice job covering that up; It's hardly noticable.

Re:I'll say it right now

[BarryNorton]

You sound like my parents complaining about "that damn rock music!"

The analogy's not even fair - unless those Rock musicians you listened to brought out the same album year after year, just reworked enough that you needed a whole new stereo to play it on!

I'm all in favour of a good rant now and then, and I think he did it well...

Re:I'll say it right now

[WhatAmIDoingHere]

Ever heard of a "Greatest Hits" album, a "Live Concert" album, the "Remastered" album, the "Double Live Reunion" album..

Sweatshop 2005

[j1bb3rj4bb3r]

New from EA Games... Sweatshop 2005 where you start a 15 year career as a team manager putting out world class video games. You must keep your team happy-ish, while driving them to the brinks of insanity. New features include 'personal day approval' where you must decide whether letting your multimedia developer go to their mother's funeral is worth the slip in schedule. Transfer team members to other lower performing teams in order to maximize your cost/benefit ratio. Upgrade your staff with 'efficiency experts' for that extra paranoid boost of productivity. Move up the ranks of the corporate ladder while crushing those who stand in your way. Collect praise and bonuses for the slave labor of your subordinates.

I'd play it.

You know

[cubicledrone]

The cynical answer to this would be "no comment." So obvious is business' contempt for education and an honest day's work now that it becomes pointless to even discuss it.

But each time anyone attempts to emphasize the fact that business has turned its back on just about everything except its quarterly earnings, we get "nobody owes you a living so get over it."

The fact is, it is wrong to fire people like this. It is absolutely wrong. These companies are damaging, and in a lot of cases destroying the careers of people who work for a living. It isn't fair and it isn't right.

EA has no problem investing millions and tens of millions to build colossal glittering corporate edifices where they can hold meetings about whom to fire this week. But on payday they claim costs are too high.

W-4 employment is obsolete.

Not the first company you can think of!

[CrackedButter]

Replying with Microsoft, gets me modded as Funny or Flamebait.
Replying with SCO, gets me modded as either Troll or Insightful.
Replying with IBM gets me modded as Overrated.
So that leaves HP doesn't it? I can't keep up with who is our friend this week on slashdot.

Anyone else say "screw em"?

[EZmagz]

Here's my take (given that I haven't RTFA, it ain't worth much)...to hell with EA. Seriously. I'm not a huge gamer or console freak, so I don't spend a lot of money on games. Maybe 2 or 3 a year max, so it's not like my money matters in that much in the grand scheme of things.

That being said, after reading all of the crap that EA has been putting their employees through, I refuse to buy a game from them anymore. The last sports game I bought was Tiger Woods Golf 2004 for my PS2, and that WILL be the last game I'll buy from EA. Period. I refuse to give my money to a company that gets away with the slave labor antics and rediculous headcutting that EA has graced us with. While all those 100-hour-a-week programmers get sent to unemployment, EA's CEO still gets his 7-figure salary and a fat bonus. And YES, I realize that my Old Navy jeans are made in China and my polo shirt was made in some third-world country. Exploitation goes on worldwide, and I've come to terms with it. This is just one battle that I choose to let affect my purchasing decisions.

So basically EA, fuck you. I'll take my $100 a year that I would have spent on your products and go to one of the two or three remaining competitors left in console gaming. Or maybe I'll go buy some basement-made games like Uplink instead. Or maybe I'll just say screw you all and go buy used NES games, which still entertain me way more than your 'Sports Title $YEAR' titles ever will. Either way EA, you can kiss my money goodbye.

Prices

[Ra5pu7in]

future cost of next-gen games, which in his opinion will likely stay as high as $50 and could perhaps fetch more on retail shelves.

I can already tell you that if every next-gen EA game comes out on the shelves at a $50+ price point, I'll simply turn to other games (or, more slyly, wait until the games appear used - in which case EA gets no profit out of the resale). They may hold certain niches, but they don't own the market ... no matter what they have convinced themselves of or how many developers they buy out.

Re:Prices

[alphaseven]

Midway is experimenting with lower prices, they lowered the upcoming game NARC from $50 to $20 recently, they're predicting they'll make it up on volume. Lower prices doesn't mean less profit, the success of ESPN recently and Katamari Damacy may be evidence of this.

I remember reading there was similar debate in the industry about DVD pricing, some studios (Disney? Fox?) thought DVDs should be cost far more than the current $20 because movies budgets were increasing. Instead the low price for DVDs turned out to be a real boon for the industry.

Yeah, right

[Spy der Mann]

Please disengage this childish and silly crusade.

Hey, what's this? Anonymous Coward? Let's see who's hiding behind that mask!
(removes mask from Anonymous Coward)
*GASP* It's some guy hired by EA!
"Yes, and if you hadn't unmasked me, i'd probably had been successful at shutting up those meddling kids!"

Another case solved!

I live about a mile from the offices

[gphinch]

Maybe they shouldn't have spent all their money on an all glass building 1/2 mile from the beach, compelete with full soccer field. Perks are nice, but nothing beats a reliable paycheck.

Re:I live about a mile from the offices

[SenorChuck]

I'd like to make an addition to your statement.

Nothing beats a reliable paycheck unless it's a reliable paycheck in a healthy work environment. A good boss is one that lets you get out after you've put in your honest day's work, and also treats you well. The overlords make all the difference.

Re:EA is the Microsoft of the gaming industry.

[werelord]

The two biggest franchises around are Grand Theft Auto and The Sims. EA owns one, Take-Two (the newsworthy competitor to EA) owns the other

EA's The Sims is a Maxis creation. While EA did buy Maxis, The Sims was originally a Will Wright creation, and was not a "star product" like others were. GTA is a Rockstar game also; published by Take-Two (perhaps in the same position as Maxis and EA)..

Don't confuse publisher with developer. While the publisher will often fund the developer's projects (and and own the IP), they are still the creations of the smaller developer.. rarely will you see a blockbuster be developed in-house by the publisher..

Re:What's With the Obsession Over EA???!!

[JonLatane]

The reason that everyone is opposing EA lately is because of the slave-like conditions that their employees are forced to work under. That, and their ridiculously unfair business practices with the NFL, forcing Sega (which, in my honest opinion, has much better sports games and has been the only company to take a multiplatform stance) to shut down their sports division.

As far as your comment that this is "certainly not stuff that matters to most people here," this is, in fact, important to a lot of people here. This is news that actually affects people. It's certainly much more significant than "Oregon's Governor Backs Open Source Development" or "Running Windows Viruses Under Linux" as I'm sure the number of people who live in Oregon or the number of people who want to run Windows viruses under Linux is much lower than the number of gamers in the world.

It was all I could manage not to mod you down, as I seriously don't think something so uninformed should be modded +5. However, I really don't like to mod people down, so I'm saving my points to mod up more worthwhile comments.

Tool of the media

[siskbc]

That being said, after reading all of the crap that EA has been putting their employees through

I don't want to have to defend EA here, but do we really know if they're worse than the rest of the industry? I'd never work for a company like that, but let's remember that this whole thing started from the blog of a wife of an EA programmer. Now we have slashdot posting everything they do. I'm not saying they *aren't* the antichrist, but let's actually consider first whether there's some manipulation or just plain shoddy reporting at fault too.

Just think...

[elmegil]

if they laid off ALL their employees, their liabilities would be zero and their profits infinite!

The Big One

[CastrTroy]

Anybody who's seen Michael Moore's The Big One would know that this is the standard way that companies operate. Lay off everyone just when you're starting to go good. Sad to see a Canadian company doing it though.