Layoffs continue in the video game industry. This time, it is the Japanese Sony which is making cuts in its workforce. The Sony Interactive Entertainment division, which manages the PlayStation brand and the group's game development studios, is letting go of around 900 people, or 8% of its staff. The announcement was made on February 27 by Jim Ryan, President & CEO of SIE, who will retire in March.
Describing the affected employees as “incredibly talented”, Jim Ryan cites “tremendous changes in the industry” and a need to “ensure the business is sustainable” and “prepare for the future” to justify the decision , which would have been carefully considered for months.
Advertisement
Prestigious studios are not spared
All geographic areas are affected, and even the most prestigious studios – like Naughty Dog (The Last of Us), Insomniac (Spider-Man) or Guerrilla (Horizon) – are not spared. Spider-Man 2, for example, has sold more than 10 million units since its release at the end of October.
In Europe, SIE is mainly present in the United Kingdom, and it is therefore there that cuts are made. London Studio will close its doors. Firesprite survives, but loses part of its teams. These two studios had produced some of the best VR games on PlayStation to date (Blood & Truth and Horizon: Call of the Mountain respectively). Layoffs will also take place in SIE support teams in the country.
London Studio was developing a multiplayer game for the PlayStation 5, and according to Bloomberg, Firesprite was working on a Twisted Metal online game. Both projects have obviously been canceled, all of The Last of Us Online and other unknown titles. Sony did not provide details on the subject.
Good financial results but concerns for 2024
Sony, however, recorded record results during its third fiscal quarter 2023 (running from October to December), presented on February 14. It sold 8.2 million PS5s over the period, and SIE's turnover increased by 16% compared to the 3rd quarter of 2022. However, its profits fell by 26% due to promotional offers on the console and a drop in sales of games developed by its internal studios.
Advertisement
It also expects a drop in console sales in the current quarter, and revised its sales estimates to 21 million units for 2023 (compared to 25 million previously). The PlayStation 5 passed 50 million units sold in December, after three years on the market. A good performance given its turbulent beginnings, but Sony must now ensure that sales do not run out of steam. It launched a new version in October, but could also have to lower the price.
Another risk factor, Sony's catalog of “first party” titles would be a little light for 2023. It can obviously count on games from third-party publishers, like FF7 Rebirth or the expansion of Elden Ring, but these don't make him as much money.
Prioritizing online games over single-player experiences
Hermen Hulst, who heads PlayStation Studios, explains for his part that Sony must reevaluate its strategy when it comes to big-budget single-player games (typically The Last of Us Part II or God of War). With the increase in the graphics capabilities of consoles, the budget of these blockbusters has exploded, often reaching more than 100 million dollars. These exclusives are the key to PlayStation's success against Xbox, but they leave little room for failure.
The company is therefore seeking to strengthen its position in so-called “live service” online games, that is to say, which are constantly updated to maintain the interest of players for years. These are not only less expensive to develop in many cases, but above all generate much more profits over time. Sony is apparently working on many such online games, with around ten expected to be released by 2026.
This quest for profitability recently pushed Sony to publish its games on PC, an operation which is proving to be a success for the moment. Microsoft has been doing the same for years, but it has a major motivation as the publisher of Windows. Last week, it was the PSVR2 virtual reality headset that Sony mentioned in this context. He is exploring possible PC compatibility while peripheral sales do not seem to be there for a year.
The video game industry is going through a dark period
These cuts at Sony occur in a deleterious climate for the video game industry. More than 9,000 jobs were lost there overall last year, and in 2024 there have already been 7,000 job cuts since the start of the year. Microsoft notably announced 1,900 layoffs in January, claiming redundancies following its acquisition of Activision Blizzard King. This drew the ire of regulators, as he had previously argued that there was no redundancy between the companies to get the deal approved. Unity, Riot Games, Twitch (Amazon), Sega of America and many others have also reduced their workforce.
Selected for you