WAR: More Layoffs, Response and Analysis

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The last day or two have been busy ones for the folks over at Mythic Entertainment, and not necessarily because of the recently announced Call to Arms live expansion.

On Tuesday, Electronic Arts announced that Mythic’s Warhammer Online ended the third quarter of 2008 with over 300K subscribers from North America and Europe. This number, which is significantly lower than the 1.5 million units sold to retailers (not units purchased by the public, stock purchased by retailers) for launch, and the 750,000 registered players reported back in October (albeit these numbers included Australia as well), is still above the 250,000 number that had been previously thrown around.

This announcement, combined with the reports of layoffs in late January that saw the company lay off “21 customer service employees, half of QA and all of the playtest group”, has led some players to speculate that more cuts, and perhaps even the demise of the game itself are on the horizon.

Yesterday, according to reports at joystiq.com, at least a part of those predictions seem to be coming true. Joystiq cites “several well placed sources” when it writes that a second round of layoffs has taken place, this time taking out some of the development staff and perhaps even some Senior Designers. The report puts the number of layoffs at “between 60 and 130” people.

Now, speculation being what it is, there are many who would assume that the Warhammer numbers alone are accounting for this second round of layoffs, but it is also uneful to look at the overall “big picture” of the studio’s owner (or overlord, depending on your perspective), Electronic Arts.

Yesterday, in the same report that announced Warhammer’s 300K + subscription number, EA announced that they were reducing their workforce by 11% (1,100 people), closing twelve facilities, and “narrowing [their] product portfolio”. The bottom line: Things are not so rosy at EA and there are going to be casualties.

The 11% number for job cuts is a full 1% higher than the last report that placed the cuts at 10% and that Mythic VP Mark Jacobs referred to when he said in response to the last round of layoffs that:

Two things to keep in mind:

1. Our CEO JR has publicly stated theneed to cut costs across all of EA. This statement is old news and applies all throughout EA.
2. As part of EA, all studios are expected to do their fair share to meet the expectations of our CEO.

It isn't any more complicated than that other than to say that we have a very large studio and pretty much every person there has been and will continue to work on WAR for quite a while (meaning we haven't started work on another game yet). When we launched, we had over 400+ people working on the game in one capacity or another so it's not like we had a small team at launch or even a small team now.

This same sentiment would seem to be re-enforced by a statement from Mark Jacobs released yesterday in response to the announcement. In the statement, Jacobs points out that while there has been a decline in staff, that the team is still dedicated to working on WAR and that the schedule for the release of the live expansion and events has not changed:

Folks

Mythic has always been committed to maintaining a high level of development and customer service to our MMO players. In anticipation of rumors regarding staff reductions here at Mythic today, this seems like a good time to provide some insight into the future of development, customer service, quality assurance and play testing at Mythic. Though we are resizing the team to move from a pre-launch to a post-launch size, we remain fully committed to creating and delivering the best WAR experience.

We have a very exciting schedule planned for new WAR content and that schedule is unchanged. Over the next few months, the announced "Call to Arms" live expansion events, new careers, new Tomb King themed area and RvR dungeon will be made available to our players as planned.

With respect to customer service, quality assurance and play testing, prior to the launch of WAR, we hired additional people to deal with the rush of demand associated with an MMO launch and to insure the best possible experience for our players. We accomplished that goal and as a result we had the smoothest-ever launch of a major MMO. Since the launch last year, the demand for customer service has gone down as players become more familiar with the game. Obviously, demand for a large QA and play-testing staff also falls after launch. As a result, we saw a staff reduction which is in line with the company-wide initiative. In no way does this conflict with our commitment to customer service. Staffing numbers will always map to consumer needs – it goes up when we launch new products and expand popular ones, and comes back down as players become familiar with the game.

Although we now have fewer developers on the game than we did leading up to the launch, WAR still has a larger dev team today than we ever had for Dark Age of Camelot. At Mythic, we’re committed to maintaining the trust of WAR players – we’re going to deliver the content and service that keeps you playing.

Mark

Now, with all of that being said, a little bit of math is in order. It should be said that I’m doing this without a background in business or economics… or even post high school math, but it seems reasonable to present at least a scenario or two.

So, let’s look only at the numbers that we know about, hard and fast: We know that at least 21 people were laid off in the first round (the number is probably higher, but since we weren’t told how many people were in QA and Playtest, we’ll just go with 21). In the second round, somewhere between 60 and 130 people were reported to have been laid off. That, for you percentage fans out there, comes out to between 20% and 38% of the 400 employees that were said to have been on the team at launch.

Now that we’ve done some math, let’s take a little bit of logic into account. Yes, Mythic has (according to reports) lost more than the allotted 11% in layoffs, but there are some things to consider here other than hard and fast numbers:

When a company like EA announces layoffs of this magnitude, across numerous studios and companies, the numbers are never going to work out to exactly 11% at every studio. That just wouldn’t make good sense, the company as a whole is going to trim jobs where they can reasonably be cut, and often a game post-launch… even an MMO, is a good place to start. Jacobs himself points this out in his most recent address, citing less need for some positions in a post-launch situation.

Looking back to November of 2007, we can see where Mythic escaped the cost cutting axe of Electronic Arts when the company announced a round of layoffs (described at the time as a “head-count reductions and facility closures”), EA CEO John Riccitiello mentioned specifically that the Mythic studio would be safe from cuts. Perhaps, with their title now out the door, EA has decided that it’s Mythic’s turn to contribute to the “head-count reductions”.

So, is another round of layoffs over at Mythic Entertainment a good thing? No, probably not. It certainly isn’t celebration-worthy and doesn’t denote a massive success beyond anyone’s wildest expectations. That being said, neither the numbers nor the layoffs themselves would seem to indicate impending doom for the game or the studio.

While we will certainly hear many opinions supporting either the one theory or the other, it is safest to say that 300,000+ subscribers is neither a dismal failure nor a roaring run-away success, but something in between: a most likely sustainable number to support a moderately-sized dev team.

In the end, whether the number of subscribers or indeed developers will grow or fall over the coming months, as well as the game’s eventual fate, remains to be seen.