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EA Closes Chicago Studio

Video-game publisher Electronic Arts (ERTS) said Tuesday that it plans to close its game development studio in Chicago as part of the company's worldwide restructuring effort.

On its conference call with analysts last week, when it announced its second-quarter results , EA announced plans to close some facilities and reduce staff by about 350 employees across its studio, publishing and corporate divisions.

The reorganization would result in an annual operating cost savings of about $25 million to $30 million, EA said.

An internal memo sent by EA's president of games label Frank Gibeau said the closure is linked to the lack of near-term profitability at the Chicago studio, which produced such games as Def Jam and Fight Night. The company said relocation opportunities at the Chicago studio, which has 146 employees, will be offered to some.

"We're willing to take risks, make long-term investments and support teams and individuals between launches," said Gibeau in his note. "But each team is responsible for staying on a reasonable path to profitability."

"The Chicago location has grown dramatically in the past three years while revenue from the games developed there has not," Gibeau wrote. "As it stands, EA Chicago has no expectation of hitting our profitability targets until FY2011 or later."

EA also plans to close its development studio in Chertsey, U.K.

EA has said earlier it will incur charges of $90 to $110 million-- most of which will be in its third quarter -- as a result of the worldwide restructuring efforts.

Shares of EA were off 76 cents, or 1.3%, to $58 in recent trading.

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