Three weeks ago, on Feb. 27, Sony Interactive Entertainment (SIE) officially announced they would be laying off at least 900 PlayStation Studios employees — around 8% of its workforce — and would also be closing London Studio. In addition to the sudden closure of its London-based studio, other subsidiaries under the PlayStation Studios umbrella, such as Naughty Dog, Insomniac Games and Firesprite Studios, would also undergo downsizing. Despite being three months into 2024, more than 6,000 workers in the video game industry have been out of a job, with the recent layoffs of PlayStation employees adding to that number.
Hermen Hulst, head of PlayStation Studios, confirmed as such in a blog post made on SIE’s website that same day. Hulst stated in his blog post, “Today, Sony Interactive Entertainment initiated a reduction in our workforce — including within PlayStation Studios — and I wanted to talk about the impact that will have. These decisions have been extremely difficult, but they are necessary, and I think it’s important to be transparent. The US based studios and groups impacted by a reduction in workforce are: Insomniac Games, Naughty Dog, as well as our Technology, Creative, and Support teams. In UK and European based studios, it is proposed: That PlayStation Studios’ London Studio will close in its entirety; That there will be reductions in Guerrilla and Firesprite. These are in addition to some smaller reductions in other teams across PlayStation Studios.”
Later that same day, the soon-to-be departing CEO of SIE, Jim Ryan, claimed that the recent closure of its studio and the letting go of hundreds of its employees were due to changes in the industry, according to another blog post on SIE’s website that same day. Ryan stated in his post, “These are incredibly talented people who have been part of our success, and we are very grateful for their contributions. However, the industry has changed immensely, and we need to future ready ourselves to set the business up for what lies ahead. We need to deliver on expectations from developers and gamers and continue to propel future technology in gaming, so we took a step back to ensure we are set up to continue bringing the best gaming experiences to the community.”
In the same blog post, Jim Ryan also disclosed an internal email sent to SIE’s staff, in which he provided consolation and context, as well as promises of severance benefits. He stated, “This will not be easy, and I am aware of the impact it will have on wellbeing. Affected employees will receive support, including severance benefits. While these are challenging times, it is not indicative of a lack of strength of our company, our brand, or our industry. Our goal is to remain agile and adaptable and to continue to focus on delivering the best gaming experiences possible now and in the future.”
As to why Sony drastically cut so many employees and closed London Studio, there may be an explanation. The recent actions from Sony Interactive Entertainment come off the heels of recent financial reporting from Sony on Feb. 14, wherein the company’s Chief Operating Officer (COO) and President Hiroki Totoki announced that there would be no major first-party releases until March of 2025. Totoki, who will be replacing Jim Ryan as interim CEO in April, stated in Sony’s Q3 FY2023 Consolidated Financial Results, “Regarding first-party software, we aim to continue to focus on producing high-quality works and developing live service games, but, while major projects are currently under development, we do not plan to release any new major existing franchise titles next fiscal year like ‘God of War Ragnarök’ and ‘Marvelʼs Spider-Man’.”
The sudden closure of London Studios, which had been founded in 2002 and developed titles such as “The Getaway,” “EyePet,” “Singstar” and “Blood and Truth,” and had been working on a new multiplayer fantasy game, was seen as particularly egregious by the gaming public. This was primarily because Jim Ryan, along with the now former staff of London Studios, was photographed on February 20 for his retirement party. The shocking news hit many of the staff hard, such as Izzy Foley, an Associate Art Manager at London Studios, who posted on X (formally Twitter) on Feb. 27, “I have nothing to say. I’m in tears.”
Job security has always been a problem in the video game industry, but has become especially self-evident since 2022, with more than 24,000 workers let go within the past three years from studios both big and small. This marks the worst case of video game industry layoffs since the Great Recession of 2008. It is speculated that the recent sweeping changes in the industry are due to the end of the boom in video game sales spurred on by the COVID-19 lockdown. During the pandemic, consoles such as the PlayStation 5 and Xbox Series X and S sold at record rates, as well as the number of online users sharply increasing. With the end of the lockdown in late 2021 and 2022, people no longer had to find ways to keep themselves busy indoors, and the demand gradually decreased while leaving behind a surplus of consoles and games to play them on.
This gradual decrease in profit margins for many companies has led executives to cut costs for more favorable profits for their respective companies and shareholders, such as with Sony. This continued trend in downsizing across so many organizations has left some gamers and industry employees with the troublesome idea that no matter how well a studio performs or how well their projects do commercially and critically, they can be shuttered at any time.
Kelly Baker is an alumnus of West Chester University of Pennsylvania.