One Of Pandemic's Biggest Problems Was Being In California

Readers of Kotaku can discern this week that EA CEO John Riccitiello covered many topics during his recent interview with this site. One of those, of course, was EA's Pandemic Studios, which was all but shut down last month.

Timing is never good for an action that lays off 200 employees and shutters a studio's offices. The Pandemic move shifts the brand into EA's Los Angeles office and retains only key senior employees.

But this timing was made all the more awkward last month due to the pending release of Pandemic's next game, The Saboteur, next week, as well as the fact that Pandemic was purchased, along with BioWare by Riccitiello's EA just two years ago for over $600 million. The studios were bought from Elevation Partners, an investment group Riccitiello had been a part of prior to returning to EA as its CEO.

So what happened?

Riccitiello focused on two factors for the shuttering of the studio's offices: Location and a surging move toward a digital games marketplace.

The EA boss described California as a "bloody expensive" place to employ workers, saying it costs the company two to three times more to employ developers in that state than it does in Montreal, the U.K., eastern Europe or China, all regions where EA has developers and artists at work. He blamed a combination of recent regulatory changes in California that he says are affecting all technology and entertainment companies as well as tax incentives in places like Montreal that subsidize publisher costs.

So, Kotaku asked, mindful that some recent Pandemic games, such as its Lord of the Rings title were not critically well-received, the studio's biggest fault was location, not game quality?

Putting it in the larger context of "facility consolidation," Riccitiello maintained that location was a significant factor. He expressed his sympathies for those who lost their jobs, but said it was nonetheless inconceivable that a business could justify, as he said was the case with Pandemic and EA LA, two development offices, located within 10 miles of each other, both two-thirds full in part because the offices were outsourcing work to the aforementioned regions.

"For good or for bad, we are taking down headcount in California because it is really expensive," he said.

But, Kotaku asked, wouldn't EA have known about some of these hazards just two years ago when it purchased Pandemic?

"The shift toward fewer titles and the acceleration towards digital is moving faster [than expected]," Riccitiello said. He expects digital gaming — everything from dowlnoaded titles to iphone to Facebook games to browser and micro-transaction games — to account for more than half of the game industry's revenue as soon as next year. "In a world that used to be all PC, then used to be all console, now it's neither. It's not a packaged goods business any more."

The broader context, Riccitiello said, is that EA is moving toward making fewer boxed games and more digitally-distributed ones, a shift for which he does not seem to think an independently-located Pandemic was ideal.

Pandemic as a brand and as a talent pool is not done, Riccitiello said. "We know the consumer likes the Mercenaries intellectual property, the Pandemic property, some of the key designers and their insights," he said, noting the recently-announced development of Mercs Inc. as a Pandemic-branded game through EA LA. "We're hoping they're going to want Saboteur. I think they will. Then we'll probably sequel that too. And I don't know if your readers will know whether we kept the lease in Westwood."

I noted that some of our readers would, as some had tipped us off to the changes at Pandemic.

"On the individual basis, like with this particular reader of yours, I feel sorry for them," he said. "One of the things I talk to with key people at Pandemic, EALA and [EA-run Dead Space development studio] Visceral [Games] — there's good and bad… If you're a capable art director, development director, game designer or producer you can multi-task and have a bigger job than you've ever had before, but you've got to have the skill of managing teams that are physically not in your neighborhood. You can get more done than you've ever done before."

Pandemic's last game developed out of its own offices, The Saboteur, ships next week.