EA layoffs signal a change for the games industry?

News: 

Electronic Arts have let go 1,500 staff and dropped a dozen unannounced titles recently in a major cost-cutting and restructuring plan, but it has many pondering on what this means for the games industry in general.

The cost-reduction plan has come shortly after EA's acquisition of game developer, Playfish, for a total of $400 million (US). It has signified to many about EA's shift from disc-based retail store games to social and online games and their new direction in that space. Their press release contained the following statement confirming their new aim from the acquisition:

"The acquisition accelerates EA's growth in social entertainment and strengthens its focus on the transition to digital and social gaming."

Additionally, John Schappert (EA's COO) has reiterated on EA's new focus...

"The digital business is very complementary to our packaged goods business. Digital downloads allow us to sell additional content to players and keep our titles fresh at retail."

Shacknews has quoted EA CEO John Riccitiello on some interesting numbers concerning declining software sales and the rapid growth of online games. From Shacknews...

"Industry packaged goods software sales [e.g., the usual $60 retail game] are down approximately 12% year-to-date." This comes despite their enjoying a slight 4% increase in share for the same in North America and Europe. At the same time EA sees the digital market, in which they include mobile, micro-transactions, subscriptions, and advertising, growing at a rate of 20% or better for the next several years.

It's hard to deny the popularity and the numbers boasted for online social gaming. The stats behind Playfish games include "150 million installations and over 60 million active players with over a billion play sessions per month between its ten games". Their titles include Restaurant City, Quiztastic! and Bowling Buddies on popular social network sites and apps on Facebook, MySpace, iGoogle, and iPhone. Read more at Shacknews.com

Comments

NathanRunge's picture

While I understand EA's position and, from a business standpoint, support their call... I still don't like hearing this. It's painful to watch the bubble burst over and over for people with whom I can sympathise and will now need to compete with for future jobs. Regardless, we'll see where EA goes from here.

Lach's picture

Staff Roullette!
Genius!

Lach's picture

Had a look at playfish's site,- hows about this-
'Holiday' the game,
you just send your little avatar dude on holidays to interesting destinations doing fun holiday things you can't afford(ie while you're on staycation yourself). Social aspect is package tours and accomodation make it cheaper to get to destinations if you go with friends.
Hey maybe dancing Matt (Harding) could do a tie in.

Anonymous's picture

and Underlines.

Get on board Oz devs, handheld, DLC and phone apps are your future if you want one!
Our reputation in traditional media is such that we're going to struggle to get original IP out into the traditional market even as the global economy improves, and successful original IP are what you need to land sweet license deals and provide a steady income stream.

Rant, ends

Anonymous's picture

Smart devs are already heading down this route. Ignore it and you run the risk of becoming the next TG (or Pandemic, Auran, Perception, Ratbag, etc.)

Anonymous's picture

I think the key to success is slightly more refined than that. Those platforms all offer lower investment requirements and a direct route to market, but you still need a strong strategy. Part of the issue is that devs generally don't have the capability to promote or effectively monetise their games without the guiding hand of a publisher. This issue will only grow as the sea of content increases massively as laid off devs reform and jump into those markets.

I think our studio has made some good progress with respect to that, as well as having a strategy which spans both licensed and original IP, but we'll see how it plays out over the next couple of years I guess.

Certainly you are on the money that we need to get a lot better at creating original IP (and raising product quality) in this region.

Regards

Mario

Anonymous's picture

uuuuuu

souri's picture

Honestly, can anyone imagine the way games are currently made surviving another generation?

Publishers like EA are probably more than aware that the millions spent on numerous titles with the hope that some become hits and the rest breaking even is bringing ever diminishing returns with every new generation of consoles. Exasperating this is the fact that gamers don't really want to pay much more on retail games. U.S gamers are already up in arms about paying $60 (US) for games, and we're certainly not happy with paying for $120+ games (not counting those that come with peripherals) either.

So is anyone comfortable with paying $150? or even $200? My last purchase was a $120 game, and even I'm beginning to think about getting into the whole used-games scheme at places like EB Games. I can see why that option is so appealing, putting aside the fact that that practise is horrid and killing the games industry.

If next-gen means games cost a lot more to make and little in the way of game price rises, then it doesn't take too much to figure out that the industry is not going to be sustainable any longer if developers don't monetise the new (social, casual, downloadable) markets that are popping up.

Bittman's picture

I feel I'm with that crowd that feels paying more than $100 for a game feels like a lot, but I do get that the chance game prices are on the rise is increasing given the enormous amount of extra money that is going into them despite an increased audience size. That said, I don't feel the problem is the consumer price, many men have already said that if it's good, people will pay for it, regardless of the price. Last game I bought was $150 (Guitar Hero with some digit on the end) and I have no qualms regarding the price for games I want to play. But when it comes to that point, it often means only the super-hyped games can get away with what is probably good pricing when it feels like some to overpricing.

I do think this year is a bit of the tide before the storm. The decline in job's is the tide, we're about to be hit by a storm of startups and innovation.

Agreed with the point that most developers need to look at properly harnessing social/casual/digitally-distributed markets.

Anonymous's picture

In literature and, to a certain extent, film and music there are a variety of prices that are somewhat indicative of the brand prestige and production values. It is only a matter of time until the game industry begins to see massive variety in prices. The differing production qualities have always existed and have been growing for quite some time. In the past, with retail distribution, a certain price has been maintained to cover distribution costs and to avoid price differentiation by consumers. Those that produce 'cheaper' games have typically set their prices to the 'par' retail price so as not to convey the message that their game is in any way inferior.

With the growth of indie development as a separate approach than commercial development, however, coupled with the greater accessibility of digital distribution it is probable that we will begin to see separate price brackets becoming more defined in the near future. We may get 'blockbuster' games from developers such as Infinity Ward and Creative Assembly (Randomly selected examples) selling for $150 to reflect the effort and money invested, with movie tie-ins selling for slightly less and smaller, independent games selling down towards $20. As the market adjusts to a more fractured marketplace and altered distribution practices the new order is likely to settle. These are interesting times, especially for those at the razor's edge of development.

-Nathan Runge

Anonymous's picture

Content warning: poetic license + humour.
[ Do you wish to proceed? Yes / No ]

1. Console life-cycles, multiply media x 3 to complement, stokes
fires of consumer desire, publishers create annual franchises from
individual game designs, head down looping road through a dark forest,
paved with sweat, blood, broken marriages, in search of gold.

2. Rise in prominence of gaming media, forums & community on the internet,
audience develops habitual + timely reliance on gaming boob, tight loop
of digestion re:clumping of opinions, into polar
opposites, mob rule, flaming knee jerky in th' kingdom of [+1 -1],
Rome burns, still waiting for Neo-Gaf approval.

3. Time spent playing games: goes down !important / participation in
peripheral social acitivity [ grand-standing ]: goes up !important,
communal interactions, streamlining of merit, consensual genre
champions, eccentuates peaks + troughs [ middle ground falling away ].

4. Big boys get fed > beat up on fresh men, who go hungry, get jobs in
accounting or web development, hopes dashed, reality sinks in, money:
goes up !important, creativity: goes down !important, big boys gobble
each other up: form companies of 400+ big boys, getting older, busy
working, world changes, audience shifts [ gets older ].

5. Kids increasingly game literate, fed on online diet of sarcasm,
a sniff of enthusiasm, naivette begets idealism = punk ethic, open
tools, 13-year old indie game developers born, old men continue
crafting exquisite mouse mazes, industry slumps, new toys -> now.

-

BGM optional
http://bit.ly/46pSJR

-- Chuan

Anonymous's picture

What the hell are you talking about? If you had any good arguments you wanted to present then that wasn't the way to do it. FAIL.

In response to Souri's question, I think it will survive but in a leaner form. I think there will always be a market for big budget games. As successful as games like Mafia Wars and Trism are, the experience they provide is in a different class than what you get playing GTA or L4D. I think the traditional development process will continue where its viable - big companies like for Blizzard, Valve, Rockstar etc. They too will feel the pinch but are better positioned to weather it. Most others will probably get squeezed out.

Maybe its just me but I don't see the social/casual game space and digital distribution as the panacea to our industry ills. Its AN option, and we urgently need to find some way to keep balancing the books, but it won't help everyone. Its a flooded market with much lower unit prices and can't support all of us out of suddenly out of work.

In a few years time what do people think will be said about it? Id like to think we'll all celebrate and talk of how focusing on/expanding into this market solved our problems. But I expect it will be a savior to a disappointingly small number of people. The rest of us will put it in the over-hyped category with AI and VR. With that said, I don't have any alternatives to present. Other than hoping that the surviving studios will draft bigger and bigger budgets, and their massive scopes will create more jobs. Negative post? I delivered. Flame responses? That's now up to you!

Anonymous's picture

^

This industry of ours seems to be lacking imagination [ and perhaps a bit of reading comprehension ].
To dumb it down for you, and make it a bit more boring for the rest of you: there are fewer successful
games in each genre than say 20 years ago due to primarily to budget -> dependent on how the audience
is [1] playing, and [2] relating to games as a form of entertainment.

All this ancillary stuff like reading Kotaku, following the same news as everybody else [ read: having
the same shared social experience of 'games' ] is taking more and more time, and I also believe funneling
opinion into a more narrow or conservative appreciation of games. It's all about being 'current' now without
the same kind of breadth; and being connected with the meta-gaming stuff which reads as seeking or wanting
engagement with a kind of "community".

We now have this artificially created notion of games as a timely medium when it is inherently not, and
that's probably due to the chomp + churn of the marketing beast. Why are we always looking at this top
layer of sediment instead of digging deeper, and appreciating / buying / playing games in a manner which
would be more workable for both developers and audience? Certainly most of the older gamers I speak to
all have a stack of games to catch-up on ..

It's somewhat alarmingly similar to the way people approach going to see the latest crap film and write it
off as a social event or simply something to fill in a Saturday night. Suppose it's a thing to do with being either
passive or active about your media [ see: push / pull content paradigm ]. Some people listen to the radio,
some people search out things and find their own trajectory. Some grist for thought ..

-

As for games, IMO we really should be focusing on the kinds of connected spaces and devices that will be
with us very soon in the home and hope to innovate in this regard. The sticking point is not that the amount
of money spent on games is at threat [ re: recession gloom gloom gloom ], but rather that it's all accumulating
around fewer and fewer titles which are earning ridiculous amounts of mega-money. If anything the amount
spent on games will continue to increase as devices to play them on are made more accessible + ubiquitous.
Check out what Ericsson and Sony are working on re: media fabric if you want a heads up.!

That's the kind of stuff we should likely be looking at as savvy developers, and not waiting to secret some
mana from heaven. You're also completely ignoring the fact that these blockbuster games do not command the
same timeshare, and hence value proposition for the audience as they used to. Facebook and Twitter are free,
and for most they're quite fun, and even better gives a sense of social connectedness that sitting in a dark room
twiddling your fingers between your thighs apparently does not ..

-

Might as well be proactive instead of sitting around waiting for your big company in shining armour to come
and give you a nice job. If ever there was a time to be gifted with the right circumstances, it has to be now
with the timing of the markets, content creation tools and lead up to new distribution platforms. To not see this,
and make sense of it would be deserving of your own damnation methinks.

Wake up + smell the fucking coffee man, just where do you think these "bigger and bigger" budgets are going
to come from given that it's the publishers which have pulled the plug on such projects here already? It will be
interesting to see how LA Noir fares to say the least -- touch wood.

A*star -> reply!

-- Chuan

Anonymous's picture

the problem is- what do you and what does "what the hell" do for food while you are developing and how can you break through the signal to noise difficulty of marketing your game if everyone is in this desperate gold rush you speak of.

Anonymous's picture

Find some work, any work but ideally something which lets you privilege your time and not get
caught up in overtime or other politics so that you stay healthy & sane. For example, nightfill at a
supermarket [ especially on wk.ends ] pays handsomely and will free up your week. Don't overlook
manual jobs just because you have aspirations to be a game developer though by the same token
be mindful of exhausting yourself in [ hospitality ] jobs where the pay is low and attrition high.

Of course, a better option is to make use of any professional skills that you may have and try find
some contract work through the various agencies for IT and such around town. I suppose most here
are quite savvy with computers and quite adaptable. The resources are there on the internet for you
to skill up while you're time-rich, so take advantage of that as well.

Despite the economic down-turn, there's still a massive demand for IT services and professionals
who can get involved with building infrastructure, designing UX [ fancy acronym for user experience ] ,
and so on. Business happens on the web these days, and so there's always going to be money + work
there as well. Work at it strategically like you'd play an RTS and build up your base before you set out
on sorties into the unknown ..

Again, try and skill up: all you need are a computer, an internet connection, some time + dedication
and these skills will help you in other areas as well when it comes to say deploying a site to promote
your iPhone game or giving an insight into possibilities of networked / social games with stuff like the
Facebook API. Take an entrepreneurial approach to all of this, and take responsibility for yourself.?

-

As for the 2nd point, the iPhone app store would have to be the classic 'gold rush' you mention and
I was also initially scared about the glut of games on there but then whenever I ask other people what
games they're playing [ or more tellingly that they've bought ] then it's still the same 6-10 games that
always come up.

Why is this happening? Because so much content on there is just forgettable or else appeals to a niche
-- which can also be a good thing. I'm thinking that the real problem is not so much "too many games
on the appstore" as "not enough games worth buying" discounting the kind of impulse $1.19 sales that
everybody seems to be going for ..!

Of course there's still going to be a problem with visibility though fortunately the people who write for
the websites that you probably follow are super-approachable through email and social IM in a way that
didn't exist previously. In all likelihood, they probably want to write about something new and interesting
like a game that you might be making. After all that's what they get paid to do, and what drives their
readership.

-- Chuan

Anonymous's picture

It's going to get a lot worse !!

souri's picture

I know this news will probably hit more closer to ex-Brisbane Pandemites, but it looks like Pandemic L.A is facing some "substantial" staff cuts as part of the EA restructuring..

Also affected are former Sims studio and creators of Spore EA Maxis, Mercenaries and The Saboteur makers Pandemic Studios LA, and social network gaming acquisition Rupture Studios. Each is expected to lose substantial staff, and remaining employees will be relocated to EA headquarters in LA and Redwood Shores.

http://www.gamesindustry.biz/articles/report-ea-jobs-will-go-within-pand...

Quite a U-turn from the acquisition / PR that was made just two years ago, and, well.. even last year.

http://www.tsumea.com/australasia/australia/news/161007/pandemic-on-the-...

http://www.tsumea.com/australasia/australia/news/240208/a-post-independe...

Anonymous's picture

.... the majority of the games that have been released over the last 10 years have been terrible, and no one has bought them.

And it wouldn't take long to list the games that have actually sold well over the last 5 years. So it was only a matter of time before the industry collapsed as investors money runs out.

Because of this the games industry is now making an incredibly messy transition from one run by enthusiasts and dreamers to one run by business men. Sadly we are being caught in the middle right now.

Until that turns around in full, the only viable business option is to work on titles and IPs that can be continually added to and grown upon. Rather than the "Create a game, release it. Create a game, release it" churn that the industry has relied on up until recent years.

This is why titles like GTA, Fallout 3, Left4Dead and so on are the only ones that people now become and will remain interested in. With these titles you know that your initial investment in buying the game will be rewarded with additional downloadable content. So once a studio gets an IP that people 'buy into' straight away, they have the chance to stabilise their income from then on by carefully timed releases of new content. This new content enables the game to both continually be marketed, as well as to continually evolve itself as trends change. And so remain in view and sellable.

This is short-term, but this is the only way for now. And studios without these IPs will continue to die off.

Lach's picture

Its all mostly run by business men and has been so,
-for example private equity business men turned a neat profit on pandemic,
And companies have milked their cash cows making sequels since the dawn of time, if ever anything sold they were sure to make sequels to do just that.
The creative aspect is the risk and the potential for reward- like bunch of wild west prospectors.

but yes evolving/growing the fan base and growing the risk for a property is a way to go--
testing market reaction on a small scale/small risk and building from there

but thats sad about pandemic- I remember the jokes about being assimilated by the borg when they were bought by EA.
Now this.

Anonymous's picture

.... I would say the industry has been funded by business men (like your Pandemic example), but not run by them.

There is no way over 50% of the games made in the last 10 years would have been signed off by someone purely looking at the bottom line.

Lach's picture

Twiddle their thumbs?
If you had a publisher they were pretty keenly interested in that side.
the trouble is games take so long to make you're looking into the future- making projections(or the publisher was).
Which don't always turn out.

Anonymous's picture

..... taking about publishers as well.

It has only been in recent years that games publishers have started to look outside the games industry for staff. In the last 2 or 3 years people with FMCG sales and marketing experience have been in high demand within the games industry - because they bring with them knowledge and experience of maximising shelf-space, aggressive marketing plans, and working to low cost margins. But prior to that this was not the case, and sales and marketing staff simply came from elsewhere within the entertainment industy.

Snacuum's picture

All this makes me wonder if I could work in the industry at all.

Anonymous's picture

Krome started culling yesterday in Adelaide.

Anonymous's picture

Melbourne too.

Anonymous's picture

Tantalus has started culling in Brisbane.

NathanRunge's picture

I'm not questioning the factuality of this claim, but I am interested in the source. Have they made an announcement, or is this news coming from the inside?

Anonymous's picture

I've heard it as well from a friend who works there. He says they are "inbetween" projects at the moment, and there are no upcoming projects coming in.

Anonymous's picture

The Tantalus studio only had about 10 guys to begin with didn't it so I wonder how many have gone?

Anonymous's picture

Tantalus Brisbane I meant....