EA and PopCap Explain Huge Layoffs

Frank Gibeau, president of Electronic Arts, admitted that the recent PopCap layoffs were part of EA’s efficiency savings in a recent interview with Bloomberg.

The interview, which discussed a variety of topics including Gibeau’s take on the console generation shift, can be found here. The conversation about PopCap begins at 3:50.

In this interview, Gibeau said that the layoffs were just part of making PopCap’s integration with Electronic Arts efficient.

Typically, at EA what we do is, when we acquire a company we make sure that we go slow initially, and really understand the culture at the company that is now joining Electronic Arts. [T]hen, what we do is we look for where there’s opportunities to integrate the companies, and then we acclerate. [S]o with PopCap, what we found is that there are some areas inside PopCap that were duplicate to what EA was doing, a lot of central resources, legal, business affairs, those types of things; so we accelerated the integration there. We also looked at pivoting a little bit harder towards mobile and away from social, so we made some adjustments in the speed plan there. [P]opCap is a fantastic company: Plants vs. Zombies, Bejeweled, incredible IP that is unique and new to Electronic Arts, and we’re really excited about it. We’re just accelerating the integration.

In a blog last week about the layoffs, co-founder of PopCap John Vechey said the following about EA’s involvement in the cuts:

One year ago, we decided to integrate PopCap with EA. I know I wouldn’t choose to be anywhere else right now. EA has provided a lot of resources for us to grow and allowed us to operate as an independent studio. I’ve seen speculation that EA is no longer letting PopCap run independently, and that’s simply not true. The founders, CEO, and executives who were in charge of PopCap still are. The decision to reorganize was 100 percent made by us, with no pressure from EA. EA has a diverse business with games on consoles, PCs and practically every other platform under the sun. We’re glad to have those resources supporting us when a lot of other independent studios are struggling. In addition, some of the people affected by the reorganization may be retrained and reassigned to other jobs in the EA studios. If we didn’t have EA behind us, the cuts would have been worse.

However, Vechey still felt optimistic about the company’s future:

What’s next [for PopCap]? Part of making changes is to stay healthy and viable. Good companies don’t wait to change until it’s too late. We’re growing quickly into new areas of mobile and social, and are expanding in new markets like Japan and China. And there are many more great games to come from PopCap.

While today’s news is distressing in some ways, especially to those of us who’ve been with PopCap from the beginning, we’re sincerely excited about the company’s future prospects and committed to continuing to lovingly craft the very best and most broadly appealing video games in the world.

Analysis: The days of playing snake on a Razr and trying out an N-Gage at the local GameStop are long gone. Mobile games are rapidly becoming big business thanks to the rise of smartphones and tablets, and a big AAA publisher like Electronic Arts needs to adapt and go wherever the customers are. What they need, then, is a company with a proven record in making games that are lightweight, addictive, and very simple. That’s PopCap.

So it looks like PopCap is trying to transition into a mobile games-oriented business at the behest of EA. Vechey especially seems to believe that social games are on the outs, and that for a company like PopCap to survive in the future, they have to turn towards mobile development to try and keep pace with the gaming consumer.

As always, this is a case of an investor trying to make sure that its investment stays profitable. EA wants to take a huge grab at the booming mobile game market, and it feels that PopCap is its best chance to penetrate that market, so those in the company that can’t help contribute to that goal just aren’t needed anymore. It’s nice to have the full clarity behind the situation now.

Losing your job in such a competitive industry is always terrible, and those affected by these layoffs may have some hard months to come. Choosing to have such a large number of layoffs is always difficult in business, but hopefully, PopCap can pull through this trial in a healthy manner and release some more plants, zombies, and jewels in the near future.

Connor Horn

About Connor Horn

Connor is a laid-back long-haired California hipster who listens to music "you'll never find on the radio" and who voted for Ron Paul to "make a difference." His favorite kind of games are MOBAs and rogue-likes, and he is a huge fan of PC gaming and the future of digital distribution.