Stark Contrasts

Cutting 1500 jobs is not a news story that's ever going to be spun in a positive way, but for Electronic Arts, the timing couldn't possibly have been worse. The industry's former 800-pound gorilla, which has been looking less and less like the pack alpha for several years now, was forced to announce the wide-ranging job losses in a week when the contrast is starker than ever. As EA's staff nervously wait to discover if they need to pack up their desks, rival Activision Blizzard is popping champagne corks over the unprecedented success of Modern Warfare 2, a game which has taken home around half of the worldwide gross of record-breaking movie Titanic - in a single day.

What is happening at EA is the latest chapter in a long-run and complex narrative, with its roots way back in the middle of the last console generation. For years, the company has had a serious problem right at the heart of its financial situation. Turnover rose slowly or not at all for several years, while costs escalated. Profits and margins were squeezed. Even while EA still dominated the boxed games market, it found it increasingly difficult to actually make decent money.

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