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Electronic Arts announced Wednesday that it will lay off about 5% of its workforce as part of a broader restructuring plan approved by its board of directors. As of March 2023, the company, which produces Madden and EA Sports FC among other non-sports video games, reportedly had 13,400 employees, and the layoffs would affect approximately 670 people. Become.
The company estimates that the 2024 reorganization will cost between $125 million and $165 million. Just under half of this is related to reductions in office space, and one-third is related to severance and employee-related costs. The plan also includes licensing fees estimated at $35 million to $45 million.
The licensing costs associated with EA’s sports division are obvious. As college football games return with EA Sports College Football 25 after a more than 10-year hiatus, EA is sending out NIL offers worth $600 each to over 11,000 athletes. This equates to over $6 million in potential deals with individual athletes.
EA Sports also recently rebranded its soccer game to EA Sports FC, following the end of the company’s nearly 29-year partnership with FIFA in 2022. According to its Q3 2024 earnings report, the franchise saw a 7% year-over-year increase in net bookings despite a 7% year-over-year increase in sales. The title of the game does not include the global governing body of soccer. The Madden NFL game also achieved a 5% net booking increase.
EA had net revenue of $1.95 billion for the quarter ended December 31, 2023, an increase of 3% year over year.
The company’s layoffs come on the heels of layoffs in several other gaming divisions in 2024. Earlier this week, Sony Interactive Entertainment announced that it would lay off 8% of its PlayStation division’s global workforce. Last month, Tencent-owned Riot Games laid off 11% of its staff worldwide, and Microsoft Gaming laid off 8% of its gaming employees at Activision Blizzard and Xbox. Amazon-owned streaming platform Twitch laid off even more employees in January, at 35%.
These layoffs are in line with a trend that includes the broader tech industry, as Snapchat, Youtube, and other tech giants also cut jobs in the first quarter.
EA stock was trading at about $138 per share around 11 a.m. Thursday. The stock is up 1.7% this year and 25% over the past 12 months.