EA Chicago Studio To Close

Geoff Keighley, who is guest-editing Kotaku this week, has the official release from EA that their Chicago studio is closing. The 150 employees that used to work at the site are trying to be placed throughout the rest of the EA structure, while the games on tap for development there are currently on hold. The release is fairly terse when describing the reason the studio is being closed: "Each team is responsible for staying on a reasonable path to profitability. Sticking to that strategy is what gives us the financial resources and flexibility to take risks on new projects. Unfortunately, EA Chicago hasn't been able to meet that standard. The location has grown dramatically in the past three years while revenue from the games developed there has not. The number of employees has grown from 49 in 2004 to 146 people currently in the new facility in downtown Chicago. As it stands, EA Chicago has no expectation of hitting our profitability targets until FY2011 or later."

I'm confused

[DarkMantle]

It says in the memo that they have 146 employees. But in the articles opening paragraph that they have 150+. If that's how they count, no wonder the physics for the vehicles in BF2142 are off.

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[Anonymous Coward]

You mean Battlefield 2150+.

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[DarkMantle]

No mod points. Give this guy +1 funny.

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[satoshi1]

Ew, EA? I hear Midway's Chicago location is hiring, however. My roommate was looking at doing an internship there.

Re:Could see this coming..

[eln]

I hear the developers at the Miami branch were executed.

Gee, that's a shame.

[rob1980]

Now where will people in Chicago have to go for 100 hour work weeks?

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[Ashmedi]

Hahaha! EA is still screwing people over for a living? I'm looking into Irvine, California right now...

Re:Gee, that's a shame.

[the_humeister]

Now where will people in Chicago have to go for 100 hour work weeks?

why, almost any medical residency of course! nothing like overworked, sleep-deprived medical professionals taking care of your health!

Making an example

[Dada]

EA middle managers regularly tell employees that the head office watches each studio's performance carefully. The subtext is of course that the least performing studios could suffer layoffs or outright be shut down.

I guess they weren't bluffing...

...Next week on Worlds worst jobs

[Macfox]

David takes on EA PHB's and learns the secrets to churning out crap, buggy games, just in time for xmas.

EA's strategy

[zdude255]

"Sticking to that strategy is what gives us the financial resources and flexibility to take risks on new projects." It's strategies like this that ensure we have such original games from EA like [Famous Person] [Sport] 200X.

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[sykopomp]

Actually, it's Madden and other sports games that sell a ton and bring EA lots of profits. While you may be put off by the idea that they might even mention innovation and creativity as part of their 'strategy', remember that all that funding that's going into Spore (and a couple of other actually good games, depending on who you ask) has to come from somewhere.

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[king-manic]

Spore (and a couple of other actually good games, depending on who you ask) has to come from somewhere.

A game that might be fun, might be innovative, and might be released sometime in the next year or ten is hardly a reason for anything. So far I'd say some people really got into the hype but I thought it was conceptually poor from the start.

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[mwvdlee]

Spore is the project by the Sims designer. Sims (and it's designer) was _bought_ by EA, not created as part of their strategy. Part of the deal of acquiring Sims was probably to let him reign free and Spore will be the result of that. If it doesn't become as big as Sims, I dare bet it'll be the end of his career at EA.

What did they make?

[ZJVavrek]

Which games/series were EA Chicago responsible for, in the scheme of things? I mean, it's EA, I'm not going to be really sad about one of their studios closing, but I'm curious if there's any direct reason I should care.

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[Ykant]

As I recall, they handled the last couple of iterations of Fight Night. They also did the Def Jam Icon game. My hope is that the people at EA who thought that game was worth selling are out of a job as well.

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[wdolez00]

This is correct. I was offered a job there back in March of 2007. I guess that I am lucky that I accepted another offer.

Translation:

[Cinnamon]

They didn't develop buggy games and slam them out the door fast enough. Let this be a lesson to the rest of you: Make crap faster.

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[Anonymous Coward]

That's why they closed EA Chicago.

Now they can afford to open EA Chennai, EA Bangladesh, EA Bangalore, EA Delhi and EA Beijing.

But remember, it has nothing to do with being cheaper and having less labor laws to deal with. It's because they're far smarter and better educated than anyone who worked in EA Chicago because there are no smart or hard working people left in this country!

EA buying and selling...

[NeutronCowboy]

So - Pandemic and Bioware are bought for $860M, which amounts to over $1 million per person. EA Chicago, which advertised as late as October of last year that it's a happening place for high-tech game development, gets closed because it's not projected to hit its profitability targets.

Can I ask? What the fuck is going on at EA? Do they even have a clue what they want? All I see is EA shitting itself down the drain. The saddest part? The grunts - the devs, testers and other peons who slave in countless death marches - will get fired, while the execs will get millions in severance packages.

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[pcgamez]

re: $860m

The value of a company is not only in the market value of the products they produce. It is also in the market value of what they could produce and the impact they could have on your company. I suspect that a significant part of the buyout was for this reason.

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[NeutronCowboy]

Over the lifetime of their existence, which is about ten years each, they amassed at total of about $900M in REVENUE. Not profit. In order to break even on the deal, EA has to get $860M in PROFIT from these two companies. That's not gonna happen, even if we wait 20 years.

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[aichpvee]

They'll just include the Mass Effect conversation engine in Madden 2009 and claim that all the profits from Madden were due to the assets they acquired with Bioware. They're also likely to turn over sequel duty to a third string development team and have them crank out one a year for five or six years while the core teams that they bought work on the next title. Don't count out the "restructuring" they are sure to do to give the games from these teams more "mainstream" appeal to boost sales for the price

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[servognome]

Not profit. In order to break even on the deal, EA has to get $860M in PROFIT from these two companies. That's not gonna happen, even if we wait 20 years.

The companies they purchased have assets that can be sold off in the future. For example if EA decides to sell off the Baldur's Gate trademark, Aurora engine, or if they just decided to sell off the studios to somebody else in the future they can make profit on the deal in other ways than selling games.

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[Macfox]

Couldn't happen fast enough. While EA's quantity of quality direction exists, it drains the available pool of money for smaller operations. EA also lock out competing products with exclusive content licensing deals. Despite better game engines existing, competition suffers. Just think of the NFS situation. For years no other game developer could use any of the top supercars in their games, due to EA exclusively licensing them.

In many respects EA is like the RIAA. Old business sticking to what made them rich

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[jollyreaper]

Can I ask? What the fuck is going on at EA? Do they even have a clue what they want? All I see is EA shitting itself down the drain. The saddest part? The grunts - the devs, testers and other peons who slave in countless death marches - will get fired, while the execs will get millions in severance packages.

Look on the bright side: this is like a giant tree in the forest, massive and imposing but rotten at the core. Once it falls the canopy opens, sunlight reaches the forest floor and new saplings now have a chance to take its place. I for one am looking forward to the mighty crash.

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[badasscat]

Can I ask? What the fuck is going on at EA? Do they even have a clue what they want?

It seems pretty clear what they want from the press release, which spells it out in no uncertain terms. They want profitability. Nothing wrong with that; they're a business, and this is a capitalist economy. You don't like it, either go somewhere else or vote your conscious for political candidates who believe in changing it, but don't blame EA for acting the way they're supposed to act within the system in which they exi

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[NeutronCowboy]

You missed my two main points.
1) They're talking about profitability when they just laid out an ungodly amount of money to buy.... what, I don't know. Not to mention that profitability was apparently ok last year, when they were busy advertising. Something's wrong here.
2) This kind of grand strategy starts all the way at the top. My experience is that the bottom tries to make the grand vision work through free overtime and ulcers, while the grand strategists get golden parachutes.

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[Edgewize]

Your business accounting appear to be a little rusty. I think it's analogy time!

You are a dairy farmer. You have five cows. One of those cows has been eating more and more grass lately, but isn't producing much milk. What's more, the last milk it produced was extremely sour [metacritic.com] and didn't even pay for its grass. Do you keep this cow? No, because it will continue to eat grass that would be better given to other cows. You cut your losses, slaughter it, and make use of its meat to get some benefit out of th

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[NeutronCowboy]

Analogies are fine and dandy, but they have no place in business accounting - or accounting in general. Please show me how the Bioware/Pandemic acquisition is going to result in $860M in savings and direct profits over any foreseeable future. Keep in mind that EA acquisitions tend to have a life of about 5 years, after which they turn into mere shells of their former selves. Mass Effect could make a cool $300M in revenue - but that's revenue, not profit. Not to mention that an acquisition does not transfer

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[Edgewize]

I'm pretty sure that at least EA thinks that Bioware/Pandemic will provide more than $860M of value in 5 years. I'm inclined to agree:

- the two studios come with 10+ fully-owned IPs/franchises
- successful technology, tools, and development processes can be re-used throughout EA
- BioWare, known for RPG excellence, has a LucasArts-licensed MMO in production
- also in production: Sonic the Hedgehog and other low-dev-cost/high-sales-target DS games
- development costs for Mass Effect are already covered prior to

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[Cecil]

They're talking about profitability when they just laid out an ungodly amount of money to buy.... what, I don't know.

Regardless of how you feel about the sensibility of their purchase of Bioware, they've clearly decided that is the direction they want to go. Perhaps their reasoning for doing both things at once is something like this: They have a new, profitable studio in Edmonton that they've just invested a bunch of money in, and now that the dust has settled on that, they realize that it's a much better

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[aztektum]

They could always quit. But that would be taking the easy way out and wouldn't earn them sympathy.

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[DerekLyons]

Can I ask? What the fuck is going on at EA?

Profitable studios are being bought, and unprofitable ones shut down. That should be obvious.

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[servognome]

Can I ask? What the fuck is going on at EA? Do they even have a clue what they want?

Do you have a clue about business?
It's clear EA wants more money so they are investing where they expect a greater return and cutting losses in other areas.

The grunts - the devs, testers and other peons who slave in countless death marches - will get fired, while the execs will get millions in severance packages.

What's sad is when the restaurant next door can't maintain profitability, the waitresses and chefs who slave away

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[NeutronCowboy]

Good grief. Not another one. Have you had a look at the actual math of the acquisition? Do you know what the Return in ROI has to be in order for the ROI to be positive? Any idea? Let me give you a hint - it's tied to the investment, and in an ugly fashion.

As for your comment on building yourself up to be an exec... I suspect I'm way ahead of you in that area. Will that make it ok when my mistakes cause you to be laid off, while I make a cool couple of million in the process? Didn't think so. Greed's a funn

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[servognome]

Have you had a look at the actual math of the acquisition? Do you know what the Return in ROI has to be in order for the ROI to be positive? Any idea? Let me give you a hint - it's tied to the investment, and in an ugly fashion.

Lets see what EA bought for their $860M
From just a unit sales perspectvie
1) Two soon to be released 1M+ unit titles with most development costs already paid - Mass Effect & Mecenaries 2
2) IP for games that would expect to sell 1M+ units based on name recognition - Full Spectrum

Unusually Frank Press Release

[quanticle]

Within the EA Games Label, we are committed to running each franchise and facility as a city/state, teams with unique creative identities as well as responsibility for product quality, ship dates and profitability....Unfortunately, EA Chicago hasn't been able to meet that standard....

Is it just me, or is that snippet unusually frank for a corporate press release? Usually PR people try to spin this sort of news as the result of some kind of unexpected event that was beyond the company's control. This re

Re:

[religious freak]

Agreed. There was reference above questioning *why* this was done, but as you said... it's perfectly clear.

If a studio churns out crap games that make no money and hire too many people, it gets shut down.

Yeah, but...

[Malkin]

It's easy to be frank, when you're blaming someone else.

Real innovation allows for project failures.

[Richard Steiner]

If you look at the companies and facilities which have been centers of innovation over the years (Xerox PARC, 3M, IBM, etc.), you'll notice that most of those allow folks to work on something at least part of the time which has no present or foreseen future market value at all.

The idea is that something good *might* come from these apparently far-fetched projects.

This is also true for games and game-related concepts. If teams are expected to be profitable, essentially letting sales be the main determinant for their current actions, then most of the software that they will come up with will be little more than a derivative of existing stuff.

This is why we have game sequels ad Nauseum today. :-(

I think they're shooting themselves in the foot.

Cost of Buisness in Chicago...

[PolishPimpin]

Maybe its the fact that the high cost of business in this wonderful city I live in has driven out EA just like hundreds of other businesses. Property tax here has increased about 100% in the last few years as well as ridiculous other taxes that have been inflated by Emperor Daley and the Cook County Board Stroger Dynasty... having the highest sales tax in the nation apparently isnt enough, Daley wants to propose a tax on anything he can imagine... recently he even proposed an additional tax on BOTTLED WATE