After 1,000 layoffs, EA could find itself short-handed for Star Wars games (analysis)

Electronics Arts just laid off 10 percent of its staff and let go of chief executive John Riccitiello. Now it is about to take on a huge challenge: Making games for the legendary Star Wars franchise.

Can EA pull it off? Or will it find itself stretched thin — and maybe even forced to cancel some of its own games in progress?

A source familiar with the matter said that Disney wanted EA to buy LucasArts, the game division of Lucasfilm, which it had acquired from George Lucas in October. But after mixed results with big acquisitions such as PopCap Games, EA’s appetite for big deals was limited. So Disney decided to shut down LucasArts and then license the rights for Star Wars games to EA. However, EA chose not to pick up LucasArts’ major work in progress, Star Wars 1313, which has been canceled.

EA’s studios are going to find themselves busy, because the company laid off perhaps 1,000 employees in the wake of the departure of Riccitiello. If it finds itself short of staff, it could hire former LucasArts employees. Or there may be another shoe to drop: the coming cancellation of other games.

An EA spokesman declined to comment on upcoming Star Wars games or any possible cancellations.

However, Frank Gibeau, the executive vice president of EA Labels, said in a post on Monday that developers at DICE, Visceral, and BioWare are going to work on the EA Star Wars games. Gibeau didn’t offer more details or say what might be canceled, if anything.

Here’s an overview of what those studios are already busy doing:

• BioWare made the now free-to-play, massively multiplayer online game Star Wars: The Old Republic, a huge six-year effort that turned out to be a disappointment.
• EA’s DICE studio in Sweden already has several hundred people working on Battlefield 4.
• Another group at DICE was said to be working on Mirror’s Edge 2, but it’s not clear if that team would be in jeopardy if EA management wants to reassign the developers to work on Star Wars games.
• Visceral Games, the studio that made the Dead Space series, was also reportedly working on a Battlefield title.

EA might have the option to postpone games rather than cancel them outright, but if Disney was savvy enough to exact a heavy price for the Star Wars license, it would make sense for EA to get to work on those games as soon as possible so the company can start making revenues to offset its licensing costs.

EA is likely to shuffle around a lot of people in order to make the Star Wars games. Disney and Lucasfilm are working on the next Star Wars movie, Episode VII, due out in 2015. But from what we hear, EA isn’t going to work on a game related to the next trio of films — at least not yet. EA will borrow from the movies, but it plans to make original Star Wars titles.

Disney will retain certain rights to mobile, social, and online games, but that does not mean that EA cannot do mobile Star Wars games. In fact, mobile is a big priority at EA under its acting CEO, Larry Probst, and the license allows EA to make games across all platforms.

The challenge for EA is that, as usual, it has too many enemies. EA had commissioned multiple Battlefield titles in order to fully compete against Activision Blizzard’s Call of Duty modern-combat franchise, which comes out every year. EA’s Battlefield series was on a two-year cadence, alternating with its Medal of Honor combat franchise. But the poor performance of last year’s Medal of Honor: Warfighter game caused EA to take that series “out of rotation” and shift resources to a Battlefield-focused strategy.

DICE announced in March that it was working on Battlefield 4, which is expected out this year. Danger Close, the Medal of Honor development studio, has had some layoffs, and its next assignment hasn’t been revealed. But Visceral, which recently shipped Dead Space 3, was also secretly working on a different Battlefield title.

Will EA still have the staff to come out with a Battlefield game every year and still make the Star Wars games? Or will it have to cut some of the games in progress?

There’s no law that says EA can’t hire more people, but the company’s priority has been to cut costs in order to improve profitability. If it hires more people, such as the laid-off LucasArts employees, it won’t achieve the cost savings that it sought with the recent layoffs.

EA reports earnings today. We’ll see if any answers are forthcoming.