Sony To Lay Off 900 PlayStation Employees To Help 'Grow Business'

Sony's latest layoffs will notably affect prominent game developers such as Insomniac, Naughty Dog, and Guerrilla Games.

Sony Group Corp

Sony Group Corp. announced a significant restructuring within its PlayStation video-game division, resulting in the termination of 900 positions globally, constituting approximately 8 percent of its workforce. Additionally, the company disclosed the closure of a division situated in London, as reported by Bloomberg. Jim Ryan, departing President and Chief Executive Officer of sony Interactive Entertainment, communicated these adjustments to the staff on Tuesday, emphasizing the necessity for strategic changes to foster business growth and corporate development. “After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company,” Ryan wrote in his mail.

The layoffs will notably affect prominent game developers such as Insomniac, responsible for the acclaimed Spider-Man series, Naughty Dog, renowned for The Last of Us, and Guerrilla Games, creator of Horizon. Sources familiar with the matter indicated that Guerrilla Games will reduce its workforce by 10 percent, approximately 40 employees. Moreover, sony confirmed the cessation of operations at PlayStation London, recognized for its SingStar series and virtual reality games.

Market Dynamics Prompting Shifts

Hermen Hulst, Head of PlayStation Studios, corresponded with the staff, revealing the decision to discontinue development on various gaming projects. He attributed this action to the fluid nature of the gaming industry, where market dynamics can prompt strategic shifts.

Sony had previously invested substantially in "games as a service," aiming to capitalize on prolonged monetization opportunities. However, the saturation of this market segment has led to underperformance, resulting in the cancellation of online adaptations of Spider-Man and The Last of Us.

In conjunction with the restructuring, sony terminated the development of a service game based on the Twisted Metal racing franchise, which was underway at the UK-based subsidiary Firesprite, also affected by the layoffs.

Sony Stock Downturn

The announcement follows a recent downturn in Sony's stock value, prompted by revised projections for the PlayStation 5 console. In addressing shareholders, Hiroki Totoki, Chairman of sony Interactive Entertainment, outlined initiatives aimed at enhancing profitability and streamlining development processes.

This restructuring in Sony's video-game division occurs amidst broader industry challenges, with over 6,000 job losses recorded this year. These challenges stem from escalating budgets, a slowdown in post-pandemic spending, and the impact of rising interest rates.