EA "Disappointed" With Holiday Sales, Will Kill More '09 Games

Illustration for article titled EA Disappointed With Holiday Sales, Will Kill More 09 Games

Electronic Arts announced today that it expects earnings to be below expectations and will reduce the number of games in its 2009 game release line up. That will also mean further "headcount reductions."

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In October, EA announced it would lay off 6 percent of its employees, approximately 600 positions. The next round of cost cutting will see additional lay-offs, facility consolidations and a software release list leaner than 2008's.

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"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," EA CEO John Riccitiello said in a prepared statement. He attributed part of the decision to an "uncertain economic environment."

EA says it will be "taking steps to reduce our cost structure and improve the profitability of our business."

Analysts pointed to new titles Mirror's Edge, Rock Band 2 and Need For Speed Undercover as possible underperformers, leading to estimated holiday quarter earnings $70 million lower than previously projected.

Riccitiello said during an investor call that followed the release it plans to cut "SKUs from the bottom levels of profitability."

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He later clarified that reductions in the '09 line up would likely not affect its sports titles, but would be "divided evenly between core and casual" software.

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DISCUSSION

EA tries to make quality games and they loose money, mean while, Activision takes over the old EA business model and is now rolling in the dough. Just goes to show you how this industry works.