Sony Interactive Entertainment
is cutting staff and closing its game-development hub, PlayStation London Studio, seeking to reorganize itself as sales of its PlayStation5 console have lost steam.
The videogame maker said it is slashing 900 jobs, or about 8% of its workforce. The impact will be felt across America, in Japan, elsewhere in Asia, and in other regions. In the U.K., Sony is shutting down its PlayStation Studios’ London Studio, which developed games including VR Worlds and Blood & Truth.
Earlier this month, the company said it expects to sell around 21 million PS5 consoles in the fiscal year ending in March. Management had earlier forecast 25 million consoles, while the consensus call among analysts tracked by FactSet was for 21.5 million. Sony’s shares fell 6.5% on Feb. 15, the day after it shared the lower sales outlook.
On Tuesday, Sony Interactive’s American depositary receipts slipped 0.8%, while the
S&P 500
was down 0.2%.
Sony is the latest videogame company to let go of workers as the industry struggles. Game developers saw breakneck growth during the pandemic as lockdowns boosted engagement. Three out of every four people were playing videogames in the U.S. by mid-2020, according to a survey by the research group NPD. Activision Blizzard’s former CEO Bobby Kotick said that year that the firm needed to hire more than 2,000 people to meet demand.
But jump ahead to 2024, and
Microsoft,
which acquired Activision Blizzard last year, said it was cutting 9% of its total videogame staff, or roughly 1,900 employees.
Paramount Global’s
Noggin, an educational videogame and learning app, will shut down this year, according to an announcement this month.
Unofficial estimates within the videogame industry suggest that more than 6,000 videogame workers have been laid off so far this year, putting the figure at about halfway to the 2023 total with 10 months left to go. The estimates exclude companies that haven’t announced an official number and the latest news from Sony.
The surge in layoffs appears to be making up for the hiring spree seen earlier in the pandemic and reflects decelerating sales growth.
“It has become clear changes need to be made to continue to grow the business and develop the company,” wrote Sony Interactive CEO Jim Ryan. “The goal is to streamline our resources to ensure our continued success and ability to deliver experiences gamers and creators have come to expect from us.”
Ryan is retiring in March, ending a 30-year tenure, according to an announcement in September. On April 1, Hiroki Totoki will become interim CEO of Sony Interactive while he continues his role as Sony Group’s CFO and chief operating officer.
Write to Karishma Vanjani at [email protected].
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