PlayStation doesn’t earn enough, Game Over for almost a thousand employees
PS5 sells a lot, but the margins in the gaming section are small. While Sony seeks new methods to broaden its audience, its accountants have prepared a cost optimization plan that includes layoffs in the PlayStation division. And no real killer app is on the horizon until 2025…
The news had been in the air for some time and had strengthened after Sony released the data of the gaming division . PlayStation 5 sells a lot, not as much as its predecessor, PS4, but it rocks. So much so that, in order to survive yet another lost console war, after having signed a new redundancy plan , Microsoft has decided to turn towards multiplatform. But PlayStation 5 is not the goose that lays golden eggs that the Japanese were hoping for: there aren't the necessary margins. According to a CNBC calculation, the operating margin in the quarter ended in December did not even reach 6 percent compared to 9 percent in the same period last year. As if that wasn't enough, there is no real, new, killer application on the horizon (video games that are worth buying the console for) until 2025: the announcement of layoffs at PlayStation Studios, in short, was just a matter of time.
DISMISSALS AT PLAYSTATION
While Sony seeks new methods to broaden the audience and make the sector sustainable, perhaps by exploiting AI , its accountants have already set to work to develop a cost optimization plan, which obviously involves cutting staff.
The layoffs at PlayStation have already taken shape: the Japanese entertainment giant already knows where to target and who . The reduction in staff in this new round of cuts will be equal to 8% which will be equal to around a thousand employees, 900 to be exact, although in a new note the company has specified that validated numbers are not yet available .
THE STUDIOS AFFECTED BY THE CUTS
The ax of cuts will fall on Insomniac Games, to which Sony had recently approved a stellar budget of 300 million dollars for the development of Spider-Man 2 , the video game that should have been the spearhead of the 2023 gaming offer. But the title on Spider-Man didn't sell enough and such costs eroded already very low margins. Hence the cuts.
New layoffs also in Naughty Dog, the studio responsible for another Sony best seller: The Last of Us , which has also recently arrived in the form of a television series. The team of around 400 people had already been hit by cuts in 2023 with the cancellation of The Last of Us Multiplayer project.
GOODBYE TO PS VR2?
PlayStation Studios in London closes entirely. Not insignificant news given that the authors of Blood & Truth seemed in fact assigned to the development of titles to support PS VR2, the Sony headset that isn't selling as it should .
This should not automatically mean abandoning the project, but rather the fact that Sony at this stage prefers to delegate the development of titles for the device to third parties. Given the installed base, however, without "serious" internal support it is difficult to see killer applications on that front.
While other significant reductions will concern Guerrilla and Firesprite. As for the latter software house, the restructuring plan would have included the cancellation of Twisted Metal .
CUTS ARE LOOKED ON THE HORIZON
With reference to Guerrilla, however, according to rumors collected by the Dutch portal AD.nl, the authors of Horizon Zero Dawn and Horizon Forbidden West will have to convert the latter to PC by relying on 10% less staff: around 40 employees will be left at home out of a total of 400 collaborators.
Jim Ryan himself, currently CEO and president of Sony Interactive Entertainment, who had the burden of announcing the layoffs at PlayStation Studios is on his way out, even if his "farewell" to Sony after 30 years has nothing to do with the cuts in progress. A contemporaneity that certainly does not help to make the situation within the gaming giant more stable.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia-on-demand/playstation-non-guadagna-abbastanza-game-over-per-quasi-un-migliaio-di-dipendenti/ on Wed, 28 Feb 2024 08:20:20 +0000.