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What You Missed This Week in Video Games

Posted April 5, 2023 at 10:30 am

Sam Martinelli
The Fly

EA to lay off roughly 6% of workforce

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: 

This week’s notable new release is Electronic Arts’ (EA) golf sim “EA Sports PGA Tour,” which launches on PC, PlayStation 5 (SONY), and Xbox Series X/S (MSFT) on April 7.

EA RESTRUCTURING: 

In a regulatory filing last week, EA announced that its board of directors approved a restructuring plan focused on “prioritizing investments to the company’s growth opportunities and optimizing its real estate portfolio.” The plan includes actions driven by portfolio rationalization, including intellectual property impairment charges and headcount reductions impacting approximately 6% of the company’s workforce, in addition to office space reductions. The company estimates that it will incur approximately $170M-$200M in charges in connection with the plan. These charges consist primarily of approximately $65M-$70M in charges related to intellectual property impairment, approximately $55M-$65M related to employee severance and employee-related costs, approximately $45M-$55M associated with office space reductions, and approximately $5M-$10M of other charges, including contract cancellations. Of the aggregate amount of charges that the company estimates it will incur, the company expects that approximately $80M-$100M will be future cash expenditures. The actions associated with the plan are expected to be substantially complete by September 30, 2023. Certain payments associated with lease obligations will be paid in accordance with their terms.

ESPORTS/DOJ: 

This week, the U.S. Justice Department filed a civil antitrust lawsuit against Activision Blizzard (ATVI) for imposing rules that limited competition for players in Activision’s “Overwatch” and “Call of Duty” professional esports leagues and suppressed the wages of esports players in these leagues in violation of the Sherman Act. The complaint, filed Monday in the U.S. District Court for the District of Columbia, alleges that in two esports leagues owned by Activision, Activision and the independently-owned teams in each league implemented a so-called Competitive Balance Tax. As alleged in the complaint, the Tax was structured to penalize teams in the Overwatch and Call of Duty Leagues, respectively, if a team’s player compensation exceeded a threshold set by Activision. At the same time, the Antitrust Division filed a proposed consent decree to address its competition concerns. If approved by the Court, the proposed consent decree would prohibit Activision from imposing any rule that would, directly or indirectly, limit player compensation in any of Activision’s professional esports leagues, or that would tax, fine, or otherwise penalize any team for exceeding a certain amount of compensation for its players. The proposed consent decree with Activision would also require Activision to certify that it has ended all Competitive Balance Taxes in its professional esports leagues, to implement revised antitrust compliance and whistleblower protection policies, and to provide notice and an explanation of the final judgment to teams and players in its professional esports leagues.

PSVR2 SALES: 

Last week, Bloomberg’s Takashi Mochizuki reported that Sony is projected to sell fewer than 300,000 PlayStation VR2 headsets in its first weeks on the market, a sluggish start for the new device from the PlayStation maker. The company will likely sell roughly 270,000 PSVR2 units between its February 22, 2023 release and the end of March, Mochizuki said, citing estimates from IDC. Sony had a lofty target of making roughly 2M headsets for the PSVR2’s launch window, the author added. “Consumers around the world are facing rising costs of living, rising interest rates and rising layoffs,” said IDC’s Francisco Jeronimo, vice president of data and analytics. “VR headsets are not top of mind for most consumers under the current economic climate.”

E3 CANCELLED: 

Last week, the Entertainment Software Association confirmed to IGN that this year’s Electronic Entertainment Expo, or E3, has been cancelled. “This was a difficult decision because of all the effort we and our partners put toward making this event happen, but we had to do what’s right for the industry and what’s right for E3,” said ReedPop Global VP of Gaming Kyle Marsden-Kish in a statement issued by the ESA. “We appreciate and understand that interested companies wouldn’t have playable demos ready and that resourcing challenges made being at E3 this summer an obstacle they couldn’t overcome. For those who did commit to E3 2023, we’re sorry we can’t put on the showcase you deserve and that you’ve come to expect from ReedPop’s event experiences.” The Fly notes that E3 has long been a major event for video game news and announcements, though interest in recent years has waned due to a number of factors, including large publishers choosing to broadcast their own announcements digitally.

  • Capcom (CCOEY) shares in Tokyo surged to an all-time high on Monday [read more]
  • Nintendo (NTDOY) and DeNA officially launched their Nintendo Systems joint venture [read more]
  • A court filing says that over 300 Roblox (RBLX) users are laundering money by using in-game currency, Forbes reports [read more]
  • Tencent (TCEHY) was upgraded to Buy from Hold at Loop Capital [read more]

Originally Posted April 4, 2023 – What You Missed This Week in Video Games

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