PopCap Lays Off 50, May Have to Close Irish Office

PopCap Games, a veteran Seattle casual video game publisher bought last year by industry giant Electronic Arts, is laying off about 50 people in North America as it grapples with the rapidly changing games business.

There’s also a chance that PopCap’s office in Dublin, Ireland may have to close if profits in Europe don’t improve.

Speculation had been building about layoffs at PopCap, which co-founder John Vechey confirmed Tuesday afternoon in a blog post.

He says the North American layoffs will be concentrated mostly at PopCap’s Seattle headquarters, and says the Dublin office is being studied to see if PopCap “can find a path to improve our profitability in Europe without having to close the operation.”

“Today’s news is something you expect periodically from a company in a fast-changing industry, but it sucks if you’re one of the people losing his or her job,” Vechey writes. “These people are our friends and we don’t like doing this.”

Vechey also took the blame for having to make job cuts when he announced the news on Twitter:

The entire video game business is in the middle of a huge change in the ways its audience finds, plays, and pays for games. Studios like 12-year-old PopCap were part of an earlier wave of change in the industry, which found a new audience for simple, fast, “casual” games like its flagship Bejeweled franchise.

In recent years, the rapid expansion of Facebook and adoption of smartphones have opened up new ways of playing games, often with business and production models that are very new to the U.S. market (although more time-tested in Asia).

A prime example of this change is Zynga, the social-game publisher that rose quickly on the back of Facebook’s growth but is now facing questions about its future. Established video game companies have tried to crack the social-networking platform as well, and also are investing heavily in mobile computing platforms. The dominant business model in both cases is a “freemium” service that gives away the basic game for free and charges for premium upgrades.

That has, in turn, changed the way that games of all kinds are conceived and produced. Where video games once were products of a traditional content publishing model (large staffs, long development timelines, and big product-release deadlines), they are now often produced and consumed as a service that continually changes and improves.

In his blog post, Vechey points to this large-scale change as the driving force behind the layoffs. He says there’s both a strategic motivation—the company has to change to reflect a changing market—and a financial one: “To stay in business, we need to manage costs, improve efficiency and maintain a profit.”

“We’ve been able to invest in creative new games like Peggle and Plants vs. Zombies because we had a high profit business. That business is challenged, and if we don’t adapt, we won’t be able to invest in new IP. That sounds harsh—but if we don’t stay in business, no more plants, zombies, jewels, frogs or worms,” Vechey writes. (IP is the video game industry term for game titles.)

Vechey also says the job cuts weren’t ordered by new PopCap’s owners at EA, which bought the scrappy studio last year for up to $1.3 billion. The layoff decision, Vechey writes, “was 100 percent made by us, with no pressure from EA.” He also says that many independent studios are struggling, and that the job cuts would have been worse without EA’s financial backing.

Some of the laid-off PopCap employees may find jobs elsewhere within EA, Vechey writes. He also says the studio will end this year with close to no net loss in staff because of hiring in other areas.

Just yesterday, PopCap announced a sequel to its hit Plants vs. Zombies.

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