Ye gods, Sony.

[schild]

http://www.eurogamer.net/article.php?article_id=332165

Sony has said that five per cent of its global workforce - around 8000 people - will be out of a job by April 2010.

The decision was made to combat the global economic slump, and will see manufacturing, production and inventory levels drop to bring down the company's operational costs.

Sony Computer Entertainment - the PlayStation division of the Japanese giant -will face review along with the rest of the company.

"In order to stay competitive in the accelerating global network environment, we will always carefully review and make structural changes, if necessary, in order to further expand and strengthen the PlayStation business around the world," SCE told GamesIndustry.biz in a statement.

Despite the large number of staff on the chopping block, analysts believe the cuts will not be enough, and foresee each arm of the Sony family having to prove profitability in order to maintain staff.

[Ard]

Keep in mind that's Sony Corp, not Sony Computer Entertainment.  The bulk of the jobs will likely be Sony Electronics like it was last time they had layoffs like this.

edit:  also of note:
http://www.gamasutra.com/php-bin/news_index.php?story=21434

Note in the very first sentence "4 percent of its work force".  Bad, but not catastrophic, like the eurogamer comments would lead people to believe.

[Big Gulp]

Keep in mind that's Sony Corp, not Sony Computer Entertainment.  The bulk of the jobs will likely be Sony Electronics like it was last time they had layoffs like this.

edit:  also of note:
http://www.gamasutra.com/php-bin/news_index.php?story=21434

Note in the very first sentence "4 percent of its work force".  Bad, but not catastrophic, like the eurogamer comments would lead people to believe.

I wouldn't be so sure.  Playstation definitely isn't the cash cow this generation like it has been, in fact, it's probably the biggest loss leader the company has right now.  With Wii's flying off the shelves and the 360 sucking down the majority of western games sold they'll be lucky to turn a profit at the very end of the PS3's life cycle.  Also, Sony doesn't have the cash reserves of a company like Microsoft to just absorb losses.  I'm not saying they'll abandon the market, but I wouldn't be surprised to see them retrench, further putting them behind their competitors.

[Sky]

Wow, someone is laying off employees?


STOP THE PRESSES! 

[Ard]

I wouldn't be so sure. 

I would.

http://www.sony.com/SCA/corporate.shtml

180,500 employees worldwide (Fiscal Year ended March 31, 2008)

SCE as a whole can't account for more than 10k of that tops.  I'd be willing to bet the number is far less than that even.  So yes, everybody panic.  Oh noes, the ps3 is doomed.  Oh wait, the vast bulk of that work force is likely the sony electronic factories...

Edit:  Also, on loss leaders, the playstation business is completely designed around taking a hit on the hardware and making it up on the software.  They aren't really hosed, since they're still making tons of money off of ps2 and psp game sales, despite the ps3 not selling well. 

Now go look at the electronics division and tell me how they're making money, when year after year, they've posted nothing but losses for a long time now.  This whole scenario already played out once a few years ago when they started trimming the fat off of the electronic's workforce.  It's just about to happen again.

[Velorath]

Now go look at the electronics division and tell me how they're making money, when year after year, they've posted nothing but losses for a long time now. 

Serioulsy.  Look at some of the losses those electronics guys posted up.  $1.7 billion dollars spent on developing something called the Cell processor?  What the hell?

Yeah, the game division totally doesn't need these electronics guys dragging them down.

[IainC]

According to the BBC it will be manufacturing plants closing that will account for many of the job cuts. I heard that a French factory is already closing.

[Soln]

in other news, EA (ERTS) is down more than 10% today on news of more probably layoffs


Edit: -11.52% end-of-day, ugly.  And no, that's not reflected market-wide (DOW only -2.72%)

[Ard]

Now go look at the electronics division and tell me how they're making money, when year after year, they've posted nothing but losses for a long time now.

Serioulsy.  Look at some of the losses those electronics guys posted up.  $1.7 billion dollars spent on developing something called the Cell processor?  What the hell?

Yeah, the game division totally doesn't need these electronics guys dragging them down.

You also understand the difference that it WAS sony electronics that took the r+d hit on that and then underperformed on actually doing anything useful with it, right?  And that it was co-developed with IBM and Toshiba, who also didn't really do anything with it.  You know, a bunch of companies that make computers, versus a company that for the most part, makes video game software?

[Venkman]

Sony mostly makes video game software?

And you can't have a loss leader forever, particularly when you didn't hit market penetration at a rate you thought you would, almost nobody is doing anything with the cell processor except yourself, and the entire industry is adjusting itself around the new mythical Casual Soccer Mom Gamer Overlord.

They like their "10 year strategy", but that's a lot easier to say when you're on top.

This downsizing is not dooming PS3. Sheer hubris alone will mean that's the last thing they touch. But expect their other plans to take longer to realize.

And that doesn't make unique. Anything anyone was planning for 2010 has a better than average chance of being put on hold moving to 2011.

[Murgos]

You're all blowing this way out of proportion.

All it means is that instead of making 364237 tv's a month they make 298345 and some store shelves sit empty.  Which doesn't matter because they weren't going to sell that many TV's this year anyway, which is why they downsized.

R&D is costly, but manufacturing?  That's real money.

[Velorath]

I'm guessing they're going to be manufacturing a lot less PS3's also.  I was at Best Buy yesterday and the "aisle" leading to the counters was made up almost entirely of PS3 boxes.

[Yegolev]

If they aren't selling, they had better stop or slow manufacturing of them.  Not that I happen to know where a PS3 is made... maybe France, but mine doesn't smell like cigarettes and cheese.

[NiX]

Lots of misreading of both articles. 4% of their global workforce plus an additional 8000 in temporary labour. That's actually a fair bit. Sure you can blame it on the current economy, but everyone knows Sony has been bleeding for awhile now.

Ard, stop being so touchy about this. It's not unreasonable to think SCE would be looked at and possibly restructured.

[Ard]

Lots of misreading of both articles. 4% of their global workforce plus an additional 8000 in temporary labour. That's actually a fair bit. Sure you can blame it on the current economy, but everyone knows Sony has been bleeding for awhile now.

Ard, stop being so touchy about this. It's not unreasonable to think SCE would be looked at and possibly restructured.

Lemme put this in perspective.  I'm touchy because I work for SCEA, but I don't do games development, and I'm saying that this is exactly like last time they announced it.  I've just been trying to avoid coming out and saying that, since I don't want to give people the wrong impression about what I do for a living. 

[HaemishM]

So can we expect the Matrix Online and Vanguard to get a shutdown notice soonish?