Electronic Arts has closed the door on its game developer unit Pandemic Studios.
EA shut down Pandemic as a separate unit on Tuesday, laying off 200 employees, according to published reports, but moving a small core team to EA's Los Angeles headquarters. Those exiting include Pandemic's two founders, Andrew Goldman and Josh Resnick.
An Electronic Arts spokesperson confirmed the news to CNET, but called it a consolidation rather than a closing, saying that the company merged Pandemic with EA's nearby LA campus. The core team of developers integrated into EA will continue to work on Pandemic properties.
An internal memo by EA Games Label Senior Vice President Nick Earl also confirmed the closing, as reported by the Web site Kotaku.
"I want to make it clear that the Pandemic brand and franchises will live on," wrote Earl in the memo. "In the months ahead, we will announce plans for new games based on Pandemic franchises. This type of change can be difficult. But the situation calls for us to act decisively, to take control of our destiny and to run a stronger, more focused development operation. That's how we will continue to make great games in our LA studios."
The EA spokesperson also confirmed that the Pandemic brand and franchise are still alive and well, and that EA is still very committed to it.
Started in 1998, Pandemic Studios was later bought by Electronic Arts in 2007 as part of a deal for which EA paid $860 million for both Pandemic and Bioware. Pandemic is behind the design of many popular titles, including Star Wars: Battlefront, Mercenaries, and Full Spectrum Warrior. The studio's most recent game for EA, The Saboteur, will hit stores next month.
On the plus side, Bioware seems in little danger of closing. With its slew of blockbuster games, such as Mass Effect and Dragon Age: Origins (which triggered more than a million downloads of premium content in its initial week), Bioware has proved to be one of EA's more successful studio purchases.
Hit by weak game sales, EA has been hurting since last year when it warned that 2009 would be a tough one. The company said at the time that it would need to cut staff, trim product lines, and close studios. EA initially announced job cuts of 10 percent of its workforce, then later revised that to 11 percent. In January, EA also jettisoned Pandemic's studio in Brisbane, Australia.
Electronic Arts has indeed struggled this fiscal year, announcing higher losses and lower sales for its first quarter and again for the second quarter, ended September 30.
The continued downturn forced the company earlier this month to announce additional job cuts of 1,500 employees beyond the initial 11 percent. With the layoffs scheduled to occur by March of next year, the game maker hopes its actions will trim annual expenses by at least $100 million.
"Laying off employees and closing facilities is never pleasant--we have a lot of compassion for those impacted--but these cuts are essential for transforming our company," said EA CEO John Riccitiello in an earnings call following the announcement of the cuts.
Rival game makers Electronic Arts and Take-Two Interactive Software signed a confidentiality agreement after agreeing to hold private talks about a potential transaction, EA announced Monday in a regulatory filing.
EA, which had unsuccessfully courted Take-Two for six months, announced last week that it was abandoning its $2 billion hostile bid after Take-Two agreed to present its three-year product release schedule and financial forecasts to EA.
"As a result, EA does not intend to make any further announcements regarding the status of any discussions or negotiations with Take-Two unless and until discussions between EA and Take-Two have been terminated or such parties have entered into a transaction," EA said in a regulatory filing with the U.S. Securities and Exchange Commission.
The announcement is the latest twist in EA's long-running but oft-rebuffed effort to acquire Take-Two.
EA took its buyout offer public for the publisher of the wildly popular Grand Theft Auto franchise in February at $26 a share after Take-Two spurned an earlier attempt at a friendly takeover at $25 a share. Take-Two rejected the $26 offer as too low, and EA launched its hostile bid in March. EA subsequently reduced the offer to $25.74 a share. But repeated extensions and offer revisions seemed to hurt the company's credibility.
On Wednesday, the Federal Trade Commission said it had conducted an investigation of a merger of the companies, but said no further action was required, and closed the investigation.
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The federal government would not have stood in the way of an Electronic Arts-Take Two merger, according to documents published to the Federal Trade Commission Web site.
The FTC said it had conducted an investigation of a merger of the companies, but said no further action was required, and closed the investigation, Reuters reported Wednesday.
But the FTC's efforts appear to be moot at this point. After months of pursuing Take Two, EA allowed its hostile bid to expire Monday at midnight.
The video game publishing powerhouse's original $2 billion takeover offer was made in February, and Take Two declined the overture several times.
Take Two is coming off the most successful video game release ever, with Grand Theft Auto IV sales reaching $310 million on the first day alone.
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