Electronic Arts Layoffs Explained
Electronic Arts (NASDAQ: EA) drew quite the controversy when it was revealed that the company planned to layoff as many as 1,000 people. While the game publisher attempted to reduce the bad press with a couple of vague statements, EA never actually denied the layoffs.
However, just as people are hired for three- and six-month jobs in Hollywood, the game industry is very much a per-project business. With that being the case, when is a layoff really a layoff at a game company?
To get these answers and more, Benzinga turned to an expert in the field: Mary-Margaret Walker, founder and CEO of Mary-Margaret Network, a recruitment company that serves the game, mobile, web, multimedia, IT, TV and film industries.
During our discussion, I started by asking Walker how EA's layoffs compare to those of other major corporations in other industries, such as Ford (NYSE: F).
"Well, most likely Ford isn't going to replace those positions any time soon," said Walker. "I'm not an expert on Ford, but I'm gonna guess they're looking at moving those positions to another facility when they do replace them. And they are also doing a lot of outsourcing. So those positions you lose from the big companies, they may end up hiring some of them back, but they're not gonna hire nearly as many back."
In contrast, Walker said that with the game industry, "if they lose a project or they're going in a different direction, they tend to shed a lot of people because they don't want to have overhead while they're making the transition."
But within the next 6-12 months, that company will typically start hiring again. "Sometimes they're hiring more people than they laid off," Walker explained. "Sometimes those people have completely different skill sets. Sometimes those people are pretty similar to the people they laid off, but during the time of transition they didn't have the overhead."
Faster Than Most
Walker estimates that all of the companies within the game industry are smaller than Ford, even though we're starting to see some conglomerates emerge. As a result of these smaller and leaner companies (and the way in which video games are developed), this industry moves faster than most.
"So it's kind of [a] negative for the game industry because it makes your job that much more unstable," said Walker. "We recently connected with The Amazing Society and Zipper Interactive, who both had layoffs in Seattle. They were clients, so we told them to send [everyone's] resumes to us. We put them in a batch, and we sent those resumes out to all the hiring managers in the area to help those people find a job."
Walker would like to be doing more of that, she said, "Because at the same time that someone is being laid off, someone else is hiring."
"That's again the difference between Ford and the games industry," she added. "If Ford is laying off, you can pretty much bet that there are layoffs at other car companies. So there's not necessarily [the ability] to go down the street and get a job there."
In providing a quick example, Walker spoke about a friend of hers who was laid off from Microsoft (NASDAQ: MSFT). "It took her three months, but she's now with another company," said Walker. "And she didn't have to move and she didn't have to jump through any big hoops. She just put out that she was looking. She's more high-tech than she is game industry, but here in Silicon Valley there's not always a huge difference. She used to work in the games industry so she could have done it again."
The Pros and Cons of Layoffs
Walker said that she does not think that layoffs are "as much of a trauma to the overall industry and the overall employment market" as people might think.
"It certainly is a trauma to the individual person -- that's never something to be underestimated, especially if over the last six years they've been laid off twice and it's become a financial issue for them," Walker explained.
That, however, is a positive of the layoffs. "The negative of the layoffs is that because they [companies within the industry] move so quickly, people find themselves looking for a job on a regular basis," Walker clarified. "That's one of the things we do; we try to educate the candidates as much as possible."
Walker recommends that if you're going to be your own agent in this scenario ("which is what you are," she said), then you need to be as aware as possible. "You need to have your skills sharp, you need to make sure that you are constantly educating yourself, and you need to make sure that this is where you want to be, because that's one of the pitfalls of this industry."
Unlike other industries, which often leave its employees in a state of desperation, Walker said that many people within the game industry are able to focus on finding the next best job -- or at least a job that is right for them.
"I've had conversations with a lot of [job seekers] that have said, 'I really want to stay in Seattle, but if the right opportunity isn't in Seattle right now, I am willing to relocate,'" said Walker. "I've also had conversations with people who said, 'I need a job now, and I can't leave Seattle now because my spouse makes more money than I do.' Or 'I have an issue with a family member who has medical problems and we have a support group here.'"
Thus, there are a lot of reasons why layoffs are painful to the individual. "But throughout the market, it's just part of the games industry," Walker insists. "So one of the things we've been trying to do recently, and we're starting with our clients, is connecting with them as they have layoffs so that we can get those candidates in front of other people."
Follow me @LouisBedigianBZ
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.