Electronic Arts is implementing further staff layoffs, continuing a trend within the gaming industry this summer. The cuts are occurring ahead of EA's substantial $55 billion sale to Saudi Arabia's Public Investment Fund (PIF), which is slated to hold a 93.4% stake in the company upon completion. This information comes from sources speaking with Kotaku, who also shared an internal email sent to EA's customer support team.
Rationale Behind the Layoffs
EA attributes these workforce reductions to a need to "adapt how we work to better meet fans’ changing needs." The company stated that this evolution involves making or proposing changes to some roles, creating new positions, and relocating certain functions to different teams, locations, or external service partners. However, these explanations are often viewed as corporate jargon. Layoffs are a common occurrence following large-scale acquisitions, such as Microsoft's decision to cut 1,900 jobs after acquiring Activision Blizzard for $68.7 billion. Notably, reports from late last year indicated that the Saudi PIF itself was also reassessing its financial commitments.
The timing of these layoffs, preceding the acquisition's finalization rather than occurring afterward, is likely influenced by EA's significant debt. The publisher has reportedly incurred $20 billion in loan debt to facilitate the deal, suggesting a strategic financial maneuver to mitigate the immediate impact of this debt on the acquisition's terms. Despite these financial pressures, shareholder approval for the deal has been secured.
Impacted Departments and Industry Context
The incoming layoffs at EA are affecting several departments, including recruitment, customer support, trust and safety, and IT teams. These reductions follow a series of similar job cuts that took place at EA last year. Meanwhile, the company's CEO reportedly earned a salary 260 times that of the median employee, a disparity that has drawn criticism regarding corporate compensation practices within the industry.
The sale to Saudi Arabia's PIF has also raised concerns due to the fund's involvement in efforts to improve the country's international image, a practice often referred to as 'sportswashing.' This is particularly relevant given documented issues related to human rights, the treatment of women and sexual minorities, and restrictions on political dissent in Saudi Arabia. EA has asserted that its core values will "remain unchanged" despite these external concerns. However, some individual game development teams, such as those working on The Sims, have faced public backlash from their communities over the deal, even as developers have pledged that their internal operations and game content will not be affected.