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Electronic Arts Inc. is cancelling plans to open a new video game development studio in Vancouver, citing slow holiday sales in North America and Europe and concerns about the sagging global economic situation.

EA's announcement comes just two days after the company lowered its expectations for both revenue and earnings for fiscal 2009.

“These are challenging times, they're uncertain times for our industry and across the board,” EA spokesman Colin Macrae told The Globe and Mail. “We continue to be firmly rooted in Vancouver.”

The video game maker still operates two studios in the Vancouver area; the company's Black Box studio is located in downtown Vancouver, while its sister studio EA Canada operates out of nearby Burnaby.

These studios produce some of EA's most successful game franchises, including FIFA soccer titles and the Need for Speed racing series.

The new unnamed studio was to be housed in a 20,000-square-foot facility in the city's Yaletown district, and would have provided the company with new development space to accommodate its Vancouver staff. Although planning for the new studio began about a year ago, Mr. Macrae said the company has already leased the space to a new tenant.

The company had not set a hiring target for the new facility, Mr. Macrae said.

EA announced plans to trim about 6 per cent of its global work force when the company reported its most recent quarterly financial results on Oct. 30.

But on Tuesday, the company said it was increasing the number of planned layoffs in addition to plans to consolidate some of its facilities and to reduce the number of games it will produce in fiscal 2010.

“While we saw significant improvement in the overall quality of our key products this year, we are disappointed that our holiday slate is not meeting our sales expectations,” EA chief executive officer John Riccitiello said in a statement.

“Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business.”

EA's job cuts have already begun in Vancouver, however Mr. Macrae said it is against company policy to comment on specific headcount reductions at regional studios.

EA's stock is hovering near a seven-year low and investors are growing increasingly restless with the company's current management team, Wedbush Morgan Securities analyst Michael Pachter said in a research note.

“Just when investors began to believe that things couldn't get worse, they did,” he said. “Notwithstanding management insistence that it finally is taking the necessary steps to generate operating leverage, we think that investors have tired of the promise of a turnaround without the commensurate commitment.”

Earlier this year the company attempted a hostile takeover of rival game maker Take-Two Interactive Software Inc. – publishers of the popular Grand Theft Auto series – however, the company abandoned those plans as the global economy began to sputter.