Generation Gap Forces Electronic Arts' Hand

Video game software giant Electronic Arts (ERTS) is eliminating more than 200 positions worldwide as the company tries to successfully navigate the current console transition.

Company spokesman Jeff Brown did not specify the number of jobs EA is eliminating, but he said they amounted to less than 5% of the company's 7,000 employees. Brown said he did not know what the restructuring will cost the company.

EA is continuing to hire, and in some cases it will offer affected employees new positions with the company, he said. Those who are not given new positions will be offered severance packages.

Affected employees include those in EA's development studios, Brown said. The company is eliminating or cutting back on some product lines and development efforts to focus on new ones as the company and the video game industry as a whole go through a transition to new video-game technology, he said. Among the areas to which EA is redeploying resources are game development for next-generation consoles, online gaming and games for mobile phones and handheld systems, he said.

The restructuring is not unusual, Brown said, noting that the company took similar actions, including layoffs, about five years ago as it was going through a similar transition.

The job cuts come as EA prepares to release its fiscal third-quarter earnings later today. Brown said the cuts were unrelated to the earnings report.

"This has more to do with the transition than with quarterly sales," he said. "At this point in the technology transition, we would be doing this regardless of quarterly earnings."

Last fall, Microsoft(ERTS) launched its Xbox 360 game console, ushering in a new generation of video game technology. Sony(ERTS) and Nintendo are expected to introduce rival next-generation systems later this year.