Sony announces major layoffs and closes London Studio
Major studios such as Insomniac, Naughty Dog, and Guerrilla Games will feel the impact of job cuts
Sony Interactive Entertainment, the gaming division behind the iconic PlayStation brand, has announced plans for a significant restructuring that includes laying off approximately 900 employees worldwide and shuttering several studios, including the renowned London Studio.
In an email addressed to employees, PlayStation President and CEO Jim Ryan described the decision as "extremely hard" but necessary for the company's long-term sustainability.
The layoffs, amounting to about 8% of the global PlayStation workforce, are part of a strategic effort to streamline resources and ensure the delivery of top-notch gaming experiences for players worldwide.
"These are incredibly talented people who have been part of our success, and we are very grateful for their contributions. However, the industry has changed immensely, and we need to future ready ourselves to set the business up for what lies ahead," Ryan said.
"We need to deliver on expectations from developers and gamers and continue to propel future technology in gaming, so we took a step back to ensure we are set up to continue bringing the best gaming experiences to the community."
Ryan assured affected employees that they would receive severance benefits and outlined plans for career support programmes, particularly in Japan.
The restructuring will affect employees in all regions where PlayStation operates, with entire studios facing closure.
Particularly striking is the closure of Sony's London Studio, known for its contributions to PlayStation VR gaming experiences. The studio was established in 2002 through the consolidation of two other London-based studios and has been instrumental in creating famous titles such as "SingStar" and "This Is Football."
More recently, the London Studio ventured into the realm of virtual reality, producing acclaimed titles like "VR Worlds" and "Blood & Truth." It was reportedly in the midst of developing an exciting new project: an unannounced online co-op combat game set in London.
In a separate post, Hermen Hulst, Head of PlayStation Studios, confirmed that first-party studios such as Insomniac Games, Naughty Dog, and Guerrilla Games would likewise feel the impact of the layoffs.
Although specific details regarding which titles or franchises will undergo scaling back remain unclear, there are expectations of a shift towards multiplayer experiences geared towards generating recurring revenue through live services and micro-transactions.
Sony's decision comes amidst a backdrop of mixed financial results. While the PlayStation 5 (PS5) sales surpassed 50 million units worldwide, it was below expectations, leading to a dramatic $10 billion drop in the company's stock value.
Despite a 16% increase in revenue, Sony's operating income has fallen by a quarter. The company now expects to sell four million fewer consoles by the end of March than previously anticipated.
Analysts attribute part of the downturn to a near-decade low in game margins, indicating rising production costs impacting Sony's gaming profitability.
In response to these challenges, Sony is intensifying efforts to expand PlayStation games onto PC and mobile platforms. Analysts anticipate that the upcoming release of the PS5 Pro console later this year could help bolster sales figures.
The layoffs at Sony echo similar workforce reductions across the industry. Microsoft recently announced decision to cut 1,900 jobs from its Gaming division, including Activision Blizzard employees.Unity and Discord have also undergone significant workforce reductions, reflecting broader challenges facing the gaming and tech sectors.