Sony announces plans to layoff 8% of gaming division workers

Sony Group (SONY) is joining the trend of companies reducing headcounts, announcing it will lay off around 900 employees globally from Sony Interactive Entertainment, or 8% of the video game segment's workforce. This restructuring comes after Sony cut its sales forecast for the PlayStation 5, citing slowing demand for its flagship gaming console.

Yahoo Finance's Brad Smith and Seana Smith break down the details and how this restructuring will affect Sony's video game division.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video transcript

SEANA SMITH: All right. Well, let's take a look at Sony because shares are roughly flat this morning after announcing that it is laying off 900 employees across its video game division worldwide. This will impact about 8% of its workforce. Now the company also closing its London division.

This is part of the cuts that were announced today. The CEO of Sony Interactive saying in a note to staff this morning that the cuts are needed to, quote, "Continue to grow the business and develop the company." Now, this announcement comes on the heels of what was announced just about a week or two ago when the Japanese gaming giant here cut its sales forecast for the PlayStation 5 console-- that was back on February 14-- warning of lower demand.

So the company is being forced to make some adjustments. This time, joining a long list of companies, Brad, that you and I have talked about many times over the last several weeks that are being forced to cut headcount in order to better position themselves for the rest of 2024.

BRAD SMITH: Yeah, really impacting the PlayStation community at Sony here. They in a blog post confirming this news and saying that they envision reducing the headcount by about 900 people, as you mentioned, 8% of the workforce. Several PlayStation studios are affected by this. The company did note PlayStation Studios London closing in entirety.

You've got reductions in the Firesprite Studio as well, reductions across various functions in SIE in the UK as well.

So, a larger kind of inclination here that the company also feels, it sounds like, implementing a next career support program, as well, as part of this. But this no doubt not an easy decision, it sounds like, the company needed to make. And if you think about the broader environment, too, where we've seen so much shift as well in the difficulty, in making sure that you're building out titles, and in the console business for PlayStation for so much of that that has shifted to cloud consumption of gaming as well, whether that be mobile or whether that be a console that connects to the cloud.

That places a larger question on, OK, what are the titles that are actually going to continue to drive console adoption or console purchases? And how does Sony need to readjust as they're doing here to make sure that they have the necessary headcount to operate efficiently within that manner yet still put a very compelling product out into the market right now?

SEANA SMITH: Yeah, and Brad, similar to what you're saying, I mean, this is an issue that the industry at large is struggling with, right? When we talk about the slowdown that we have seen play out across the gaming companies since we were in the midst of the pandemic, since we did see rapid adoption. So they're being forced to adjust headcount as a result of this.

And Sony joining Microsoft. Microsoft earlier this year is saying that it's laying off 9% of its gaming unit after it completed the acquisition of Activision Blizzard. A number of other competitors have also been forced to adjust their business at this point. So Sony, the latest here to announce the job cuts.