Sony is making major cuts in response to the videogame industry’s tougher climate, announcing that it’s firing roughly 900 people from its PlayStation unit and shutting down a development studio in London. This amounts to around 8% of the division’s total workforce around the world, from the Americas to Asia, and represents a pretty significant reorganization. It’s laying off these employees after revising down its sales projections for the PlayStation 5 as we head into its third year on the market, which puts the problems facing the gaming sector in the post-COVID world into sharp focus.
Jim Ryan, Sony’s gaming head, cited evolving “game development, publishing and live service strategies” as the drivers of these “tough decisions,” adding that the company needs to make those moves to “remain competitive and continue to deliver sustainable growth and innovative games and entertainment experiences.” Those are simply his marching orders – Ryan, who took the reins in 2019, is set to retire at the end of March.
It puts Sony in good company, as industry giants Microsoft and Tencent’s Riot Games have both also made similar sweeping workforce reductions in the wake of the gaming market’s fitful recovery. The global gaming market eked out 0.6% growth to $184 billion in revenue last year, but not before losing over 5% of its value this year to come. Sony’s affected studios, including Insomniac Games here in the US and Naughty Dog, are responsible for well-known hits such as Marvel’s Spider-Man 2 and The Last of Us.
Furthermore, Sony said it expects a “decrease in unit sales” of the PlayStation 5 this fiscal year and expects to “reconvene” its major franchise title releases based on that (the fact that it’s sold through over 50 million units since its launch in 2020 is a testament to the colossal unmet demand for the PS5). That comes after getting off to the races with the fastest selling gaming console of all-time, despite initial supply shortages due to pandemic-induced production curtailments.
