PlayStation Lays Off 900 Employees Across Naughty Dog, Insomniac, Guerilla And Others

The video game industry has been no stranger to mass layoffs in the last year or two in the wake of Covid-19 booms, but now we have one of the most significant reductions we’ve seen, this time out of Sony and PlayStation.

Sony announced on Tuesday it will be laying off 8% of PlayStation employees around the world, or 900 people. In order to “provide context to our thinking,” Sony shared the email that went out to employees from the soon-to-be-departing Jim Ryan. Here are the stated areas being hit, but many have not been publicly identified yet.

• All affected U.S. employees will be notified today, and no specific studios are listed. Layoffs will hit major PlayStation studios, Naughty Dog, Insomniac and Guerilla Games, among others.
• Subject to labor laws, PlayStation’s London Studio will close entirely, which was working on a number of VR titles.
• Developer Firesprite will see reductions, which was made the well-received VR game, Horizon: Call of the Mountain, along with more layoffs across SIE in the UK.

This comes in the wake of many developments at Sony that forecast something like this was likely going to be coming.

• There were indications in the Insomniac hack that larger layoffs were on the way.
• We already saw over 100 layoffs occur at Bungie, the Sony-owned studio (it’s unclear if any of the 900 will be further cuts there).
• Sony has battled bloated budgets for its well-received, solidly selling single player games, making profit margins thinner than they should be.
• Outside of the recent blockbuster success of Helldivers 2, Sony has struggled with live service plans including cancelling The Last of Us Factions after several years of development. And part of the reason the Bungie layoffs already happened was plummeting revenue in Destiny 2, which opened the possibility of a Sony takeover of management of the company. Interim CEO Hiroki Totoki specifically said Bungie needs to improve its business and its delivery timelines.
• Sony has invested in hardware outside of the PS5 like PS VR2 and PlayStation Portal that have served niche audiences but it’s unclear how significantly those have contributed to the bottom line relative to their development and manufacturing costs. Many of these reductions are in studios that make PS VR games, making the future of Sony’s investment in VR unclear.

And this is only what we know. It’s a strange situation for PlayStation to be in, continuing to put out quality games and dramatically outselling its rival Xbox this console generation with record PS5 sales, but the industry is somewhat unforgiving.

Of course, it’s easy once again pivot to things like executive pay and poor management decisions that lead to hundreds of employees being laid off, workers who individually likely have nothing to do with these larger picture struggles.

This is an ongoing story and as the day goes on, we will have a much more full picture of the full scope of which studios are being impacted by these layoffs. Stay tuned for more.

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