Sony Cuts 8,000 Jobs — Time to Cut the PS3, Too?

55 Comments

playstation-3With the economy deep in the throes of a recession, the only question these days is who — or what — is next? Today it was Sony’s (s sne) turn, which, citing “the sudden and rapid changes in the global economic environment,” said it’s laying off 8,000 employees in its electronics division and shuttering 10 percent of its manufacturing facilities. In the subsequent corporate restructuring to come, “unprofitable or non-core businesses” are in the firing line, Game Industry Biz reports — most notably, the company’s Playstation division is under review.

What this means is too soon to tell, but if you were to ask me, I’d say it’s time for Sony to walk away from the Playstation 3 as much as possible. Its $400 price point is uniquely ill-suited for these recessionary times, and while the company could lower that MSRP, it already loses $130-$260 on each sale (depending on who you believe.) Meanwhile, the Xbox 360 sold twice as many units as the PS3 in October, the most recent month for which data is available (though both consoles trail far behind the Wii.) With the PS3’s install base so small in comparison, and the appeal of its highly touted Blu-ray drive questionable at best, it’s hard to see Sony benefiting from Playstation 3.

I checked in with Wedbush Morgan game analyst Michael Pachter to get his take; he thinks that with the PS3, Sony has “too much at stake to walk away.” Instead, he continued in his email message, the company needs to “plug away until manufacturing efficiencies allow them to be cost competitive. I don’t see them taking many risks over the next few years, but think that they can get by with a relatively lean operation until they become profitable.”

Maybe so. I think Sony could invest more resources in its Playstation 2 line, which is still selling almost as well as the PS3, and can easily be revamped into an attractive, cheap alternative to the Wii. Even at an $130 MSRP, Sony sells the PS2 at a profit, and the line’s record-breaking install base of 140 million units means a large audience to which Sony can sell peripherals and upgrades.

Whatever they decide, Sony has some tough choices to make. Of course that’s true for most game companies nowadays, but since Sony’s stuck with the white elephant called the Playstation 3, that pain will be all the more keen.

55 Comments

Rob

Oh man, look at all the fanboys on here. Y’all should be ashamed of yourselves. The PS3 isn’t going anywhere. It’s here to stay. They’ll keep making games. Same with the Xbox 360. Deal with it. Most of you come here from N4G and you know the title of the article before coming. Why do you read it and comment with rage after knowing full well what you’d get into? Do you not have enough REAL conflict in your life? (Real conflict = relationship issues, problems at work, kids acting up, you’ve been robbed, a family member has died, etc etc. Real conflict does not = Your PSN got disconnected when you were trying to download a new LBP level or your 360 crashed before you got the ‘Are you kidding me’ achievement in Gears). Grow up.

makemewanna

All the playstation 3 haters need to shut the fudge up, The PS3 is the beyonce of the console world, X-box is britney and the Wii is Christina Augliera.

Nuno Figo

“The Playstation group is under review.”
Did you check that link? Very questionable conclusion based on comments made by Sony Electronics division.

“Meanwhile, the Xbox 360 sold twice as many units as the PS3 in October, the most recent month for which data is available”
Read the link? US numbers only. In Europe and rest of the world, PS3 is matching Xbox; in Japan its selling more than Microsoft’s console.

Sorry, but this article is flawed…
Sony is going to face tough times, just as any electronics/luxury goods producer.

However, the videogame industry prooved, in the past, that it is able to face recessions positively, growing during economical crysis.
With that in mind:
– The Playstation 3 was not the success some expectated. Still, worldwide sales are (according to SCE) on track with expectations, and it’s prepared for a 10 year life time… That’s a lot of years to gain a large install base, cut back production costs and be profitable.
– The PSP, although selling less than the DS, is still a successful and profitable product.
– The PS2 is the most successful videogame console ever produced and a clear cash-cow for SCE. Cautious consumers see it as the best choice for “entry level” videogaming: games are much cheaper than the Wii, with a enormous catalog and many 2nd hand titles for sale.

All things considered, I don’t think SCE or the Playstation brand will face major problems (excluding normal cuts during recession periods).
I also don’t see major worries for Sony Music or Sony Pictures.
Sony electronics, on the other hand, are and will be suffering.

gmanuk101

I was looking for a decent comment thread,, some good points, however a lot of fanboy stuff….I own a PS3, and use it for more than games,,,media streaming, iPlayer, sonyHome (tomorrow). Also it’s a good bluRay player. I can’t understand articles like this really, the Forbes article goes to prove things about history.

It’s more than a game console, something that actually looks good, has very good internal workings, and above all something that will last.
Just my opinion, I can’t speak for others, it was in my budget as I know the £350 I paid for my 40gb bundle last year is a sound investment.

peace

Perspicacitycorruption

Greg

@Mark: That is a brilliant (and poignant) link!

@Author: You can link to figures all you want, that doesn’t excuse the blatantly slanted thrust of your poorly conceived article.

playstation moar liek GAYstation amirite guys??!

Thomas85

At last, the end of Sony and Playstation 3 begins. This is only the begining sony fanboys, your beloved playstation 3 is doomed and so Sony. No more games for the future.

Dave

This article may or may not be true, I don’t really care, I just love the way it’s reduced all you poor deluded fanboys to tears. Losers!

PS3Owner

That article was so bad it’s laughable! This is my first visit to Gigaom, but if this is the quality of it’s articles it will be my last!

You are even a rampant Xbox Fanboy or you are one of the most ignorant people I have ever come across!

You do know the PS3 is selling faster than both the PS2 and Xbox 360 did at this point in their lifecycles don’t you?

You do know the PS3 has already outsold the 360 by 300,000 units in Europe despite it launching a year and a half later at double the price with hardly any games?

You do know Sony are forecasting to turn a profit in their gaming division in 2009?

You do know the PS2 is also a Sony product and it selling as well as the PS3 is not a bad thing? You do know the reason it is selling so well still is because they’ve already pre-positioned the console as a cheap Wii alternative and a great kids console (The PomPom and the Sword eyetoy games for example).

You do know the PS3 was almost single handedly responsible for saving Blu-ray, and you do know that it would have cost Sony billions had Blu-ray failed?

You do know standalone Blu-ray player sales were up 300% on Black Friday in the US?

You do know “PlayStation” is probably Sony’s biggest (and most valuable) brand since “Walkman” and the name alone is probably one of their greatest assets?

You do know that Sony had more top-rated exclusives than the 360 in 2008 according to Metacritic data? You do know they have a boat load of exclusives coming in 2009 including juggernauts like God of War III, Uncharted 2, Gran Turismo 5, Heavy Rain etc etc etc?

You do know The Dark Knight Blu-ray is no 1 on the Amazon chart, with the DVD version at number 2, with most analysts thinking this film will do for Blu-ray what The Matrix did for DVD?

You do know that the PS3 is FAR better value than the 360 when taking everything into consideration (HDD upgrade costs, Wi-fi compatibility, online subscriptions etc)?

I could go on, but you get my point, my point being that you don’t seem to know very much at all! You should feel embarrassed that this article ever got published…

Mark

The PS3 is priced well at the moment. Sure it’s not as cheap as the Wii or the 360, but there are reasons for that. Clearly the 360 is poorly made, and no Blu-ray or Wifi, and you have to pay to play online. The Wii is cheap because it’s 2000 tech in a new box.

You get what you pay for. PS3 already offers unprecedented value for money, sure it will slowly drop in price, but even now, with all the great exclusives, you would be mad to choose either of the other 2 consoles based purely on price alone.

F*ck Sony and their p*ssy fanboys

I wouldn’t take a TrojanHorsestation 3 if Sony were giving them away for free. Apparently the “prison b*tches” above me don’t have a problem with companies like Sony using gamers as the patsy to sell overpriced in-house hardware to. What’s it like guys to be anally violated by Sony with a blu-ray player? And how does it feel to know that you are the blight/joke of the gaming industry?

Ian Betteridge

Exactly the same argument could be made that Microsoft should walk away from the Xbox, which is also losing money on every sale – money which isn’t being recouped anywhere else.

“Even at an $130 MSRP, Sony sells the PS2 at a profit, and the line’s record-breaking install base of 140 million units means a large audience to which Sony can sell peripherals and upgrades.”

You’re forgetting the years and years when Sony made a loss on every PS2. Walking away from PS3 now would be the equivalent of walking away from PS2 when it, too, was a loss-leader. And I’m sure that someone was writing that very story at the time :)

Dan

this authors most likely a xbox 360 nerd who has taken his opinion to his job. Get a life.

sergio cecconi

how is that such an ignorant guy can write an article like this… god, u are the one that need to quit… u are a ******

James

One Kyle your an idiot, and two microsoft laid off over 1500 people today as well. Just because you write on a web site doesnt mean you know how economies, and corporations work.

lia

Kyle, you’re an a**hole. That shows how much of a gamer you *really* are. YThe PS3 is unwanted garbage? Is that why it has kick ass first party games?

Ooooh, and I assume Microsoft has never lied before about anything? Guess what, all companies have the ability to lie their asses off.

That shows that a) You don’t own a PS3, and b) You’re full of shit.

Kyle

PS3 is a piece of unwanted garbage. Period. Nothing but lies. I love seeing the PS3rd fail this generation. Sony deserves it. Maybe their next console will deliver on the 120 frames per second/4D games. Probably not.

Xbox is the best gaming brand now.

Wagner James Au

Indeed! More references:

http://blog.wired.com/games/2008/06/sony-loses-33-b.html

Sales of Sony’s PlayStation 3 have resulted in losses of $3.3 billion dollars since the system’s launch, reports Forbes. Key to the company’s losses is the “strategic pricing” initiative it has adopted in an effort to catch up with Microsoft’s Xbox 360, a console which hit shelves almost a year earlier. [And despite those price cuts, the PS3 remains significantly behind the 360. – WJA]

http://www.gamasutra.com/php-bin/news_index.php?story=20865

The news for Sony Computer Entertainment was also relatively good, with revenues up by 10.3 percent to Â¥268.5 billion ($2.76bn). The games division still saw a Â¥39.5 billion ($405m) loss — albeit a far more moderate one compared to Â¥96.7 billion ($992m) at the same time last year. [A half billion dollar loss is good news? – WJA

… PS3 software sales more than doubled compared to the previous year, up by 10.7 million units to 21.1 million. This figure WAS STILL LESS THAN THE PS2 though, for which increasingly few new titles are now being released. [Emph. mine. – WJA]

commodore

Well when is SONY going to learn? I am a PS3 supporter and I can’t stand to see the PS3 start doing horrible…All because SONY is to stupid and greedy….No no no I am wrong, they will cut the price in MARCH!! (rumored) WHEN NO ONE IS INTERESTED IN REALLY BUYING A CONSOLE!!….They figure that Killzone 2 will sell systems (a few, but not many)…..STUPID. I swear I could run SONY. 8,000 jobs could have been saved…Instead of cutting your damn workforce and putting the economy down even more…How bout cut your price, and sell more? SONY makes its money off games.

The solution for SONY…Cut the PS3 by $100, get a TIDAL WAVE of new customers that are going to do what? Buy games, millions of games. Which then in return makes up for the price cut…HELLO!?

I am PS3 supporter and “I’m with stupid”

giga

This writer is talking out of his behind. Sure the PS2 is selling well but sales are starting to drop off. With the 360 price drop recently the PS2 would never be able to compete with the superior Xbox360. Sony will stay in 3rd place this generation that much is clear, but they will not abandon the PS3

jonondaspot

Wow, up until the recent price cuts the PS3 was outselling the 360 world wide. And gaining on it at a ferocious pace. Where were all of the doomsaying 360 articles about a failing console with an atrocious performance record and last gen disc media. As of November Bluray players officially passed DVD player sales in Japan. The PS3 is future proof in that regard.

No I chalk this up to a fanboy article willing to jump on the first month MS has managed to outsell Sony worldwide SINCE THE PS3 WAS INTRODUCED. How is that for a run? Where was the doomsaying then? No, the purpose of this article was fairly clear even if the infallibility of it’s supposed facts were sophomoric at best

Jeff B

Honestly, you honestly think they’re just going to throw in the towel on their ridiculous investment, because times aren’t so great. Hard to believe this article got published.

AAA

wow,, this could be the dumbest article i have ever read.

Author doesn’t even know what the hell he is talking about.he has just heard some stuff and decided to write this half assed article

Wagner James Au

“The Playstation group is not part of the electronics arm of Sony.”

True, but as said above, in the layoff’s wake, the Playstation group is now under review.

RealityCheck

The Playstation group is not part of the electronics arm of Sony. Sony is composed of many companies: Sony Electronics, Sony Computer Entertainment (makers of Playstation consoles and games for Playstation platforms), Sony Music, Sony Pictures, and the list goes on.

The press release was from Sony Electronics.

SM

Everyone who is buys a PS2 for $130 will be buying a PS3 when it its $130, why would you walk away now. It just takes time for the price to fall a bit, but with Bluray, there is no question it is the right upgrade path

Terry

I can’t believe this article was published.

GigaOM needs an editor to weed this kind of crap out.

RandyChimp

I’ll have you know that I own a ps3, and its worth the price. There have been no problems with it, it does exactly what it should do and its got an excellent selection of games. I’ve had it since the UK launch, and i don’t regret it. It’s a brilliant machine, more reliable than the 360, and more “grown up” than the wii. I’ll stick with my ps3 thanks very much!

John

Hahaha. It’s sites like this that lets the public know how much time you have on your hands. Try using your head before you type. Sales are only a fraction of the economic big picture you dumb shit. Or have you forgotten about the billions lost by Microsoft with the RROD? Sony has lost large amounts of money as well but nothing like Microsoft. Pretend you have a brain for a second and realize that Microsoft and Sony haven’t even cracked out of the red since releasing their consoles and XBox has been out longer. Now who’s doing worse?

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