EA to cut jobs and titles in 2009

[Immortality]

Electronic Arts has said that it will cut the number of titles in its portfolio and lay off staff following slower than expected sales in Europe and North America.

The confirmation comes after analyst Colin Sebastian predicted such a move earlier in the week, singling out Need for Speed: Undercover, Mirror's Edge and Rock Band 2 as slow performers.

"While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations," said John Riccitiello, CEO.

"Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business."

The company said that it will reduce its product portfolio for the 2010 fiscal year, along with the associated headcount.

Riccitiello added, "While we are cutting costs, we remain committed to investing in great game quality, in new properties and in our direct-to-consumer initiatives. We will be launching several new titles and online games in fiscal 2010."

(gamesindustry )

[Birdie]

Lazard Capital Markets analyst Colin Sebastian has predicted that jobs and franchises could be cut at EA as a number of the publisher's games are failing to meet sales targets.

"While the video game industry continues to show some resilience in the face of a very challenging consumer environment, strength does not appear to be across the board, and we believe that several EA titles are underperforming expectations at retail," wrote Sebastian in a note to investors.

"Specifically, our checks indicate that sell-through trends of key holiday releases Need for Speed Undercover, Rock Band 2, and Mirror's Edge remain mixed, which may reflect some fatigue overall in the music and racing genres.

"We believe further cost and franchise reductions are likely," he added. "Importantly, we believe EA is continuing to review its cost structure and franchise base, and it is possible that management will announce further cuts in headcount and the development pipeline (including existing franchises) over the coming quarters."

Sebastian did note that some EA franchises have sold "fairly well this quarter, including Dead Space, FIFA 09, and Left 4 Dead, helping to offset some of the weaker performing franchises", but he also expressed concern about the company's release schedule going forward, "due in part to greater uncertainly over the long-term potential of the Rock Band franchise and the EA Casual label".

"In addition, we are lowering our expectations for the Need for Speed franchise, follow-on sales of Spore and Warhammer Online, and assuming more modest growth for the EA Sports segment," he added.

The analyst is however expecting "strong sell-through of the Beatles title scheduled for holiday 2009", while he thinks Star Wars: The Old Republic has "the potential for significant traction in the massively multiplayer online market".

[johnson22]

Despite the somewhat gloomy outlook, Sebastian still feels EA has much potential to remain a market leader by leveraging its "resources in online distribution, emerging business models (e.g., free-to-play), and geographical diversity to maintain growth of its core franchise base", and that it'll "continue to opportunistically seek further acquisition candidates, including developers and/or publishers with proven franchise successes".