The tech industry continues to feel the dreaded layoff wave as Sony announced that it plans to cut hundreds of jobs. This time, it might not be due to the overhiring during the pandemic or a shift in resources. Rather, it could just be to make up for missing a huge sales target.
Sony Laying Off 900 Employees
PlayStation continues to feel the effect of the recent announcement regarding the sales of its current generation console, which says that Sony missed a PS5 sales target. Since then Sony's stock price has dropped by $10 billion, which may have prompted the planned job cuts.
With the plans to lay off around 900 employees, 8% of the global employment under the company will be affected. It will impact several of its video game studios, especially those behind many of PlayStation's popular exclusives.
The studios in question are Insomniac Games (Marvel's Spider-Man franchise, Ratchet & Clank franchise), Naughty Dog (The Last of Us franchise, Uncharted franchise), Guerilla Games (Horizon franchise), and Firespite (The Playroom), as reported by The Verge.
PlayStation CEO Jim Ryan said that they have made the "extremely hard decision" to conduct the job cuts affecting the company's overall headcount, "subject to local law and consultation processes." The most affected studio is the one based in London, which will be closing down.
"After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company," the chief executive said as the company focuses on "long-term sustainability."
Acknowledging the effect that the layoffs will have on its employees, Sony President Hiroki Totoki expressed that the impacted workers will be receiving support from the company, as well as severance benefits.
It's hard to tell which departments will be affected most by the layoffs, or which game developments, both announced and not, might be delayed due to the reduction in workforce. Sony is already resorting to other measures to boost profit.
For instance, it has announced that it will extend the PS VR2's compatibility with PC. Hiroki Totoki also mentioned the possibility of more Sony exclusives coming to PC this month, "allowing PlayStation gamers to explore our worlds in different ways."
It Boils Down to PS5 Sales
Other than the exclusive games that Sony creates, its gaming division majorly gains profit from the sales of its consoles. The PlayStation 5 suffered for the first two years after release due to many factors such as supply shortages and scalpers who buy the units and apply markups.
While the supply for the console eventually became steady by 2023, Sony announced that it was at the "latter stage of its life cycle." As per IGN, Sony SVP Naomi Matsuoka said that they expect the annual sales pace of PS5 hardware "will start falling from the next fiscal year."
Based on the previous consoles, the PS5 is at just about half of its expected life cycle. Release in 2020, the current generation console is just a little over three years old. It's still a long way from the usual seven-year life cycle that its predecessors had.
