Sony announces layoffs of 900 PlayStation employees with 'complete closure' of London studio

Sony is laying off around 900 employees of its PlayStation division, with the complete closure of the PlayStation Studios' in London, the company has announced. The layoffs, which will affect a number of its PlayStation companies, including Naughty Dog and Firesprite, are the most recent in a wave that has rocked the gaming and tech industries in 2024.

In a memo to staff, PlayStation chief Jim Ryan said: “We have made the extremely hard decision to announce our plan to commence a reduction of our overall headcount globally by about 8 percent or about 900 people, subject to local law and consultation processes. Employees across the globe, including our studios, are impacted.”

Multiple PlayStation studios are impacted, including Sony's London Studio in the United Kingdom, which was responsible for developing PlayStation VR titles. Additionally affected is Sony's Firesprite studio, the British development facility that created the PlayStation VR game Horizon Call of the Mountain. Sony disclosed last week that PSVR 2 support for PC is in development.

Ryan added: "I want to be as transparent as possible with you, our partners, and our community about what this means:  We envision reducing our headcount by about 900 people, or about 8% of our current workforce, there will be impact for employees across all SIE (Sony Interactive Enterntainment) regions – Americas, EMEA, Japan, and APAC, several PlayStation Studios are affected.

"I know that receiving this news will be hard and unsettling and you are wondering what this means for you. Timelines and procedures for how we approach this will vary based on your location due to local laws and regulations. For those of you in the US, all impacted employees will be notified today."

In a separate note, Hermen Hulst, head of PlayStation Studios, confirmed US-based studios like Insomniac Games and Naughty Dog are also affected, alongside Sony’s Guerrilla studio based in the Netherlands. Overall, employees across the Americas, Japan, and EMEA and APAC regions will be impacted.

He said: "I want to be clear that the decision to stop work on these projects is not a reflection on the talent or passion of team members. Our philosophy has always been to allow creative experimentation. Sometimes, great ideas don’t become great games. Sometimes, a project is started with the best intentions before shifts within the market or industry result in a change of plan. 

"I am deeply saddened to see talented individuals leave the company. I have so much admiration, appreciation and respect for their work. PlayStation Studios will continue to be a creator-led organization driven by evolving our beloved franchises and bringing new gameplay experiences of the highest quality to our fans."

In the UK, the company said there will be reductions in Firesprite studio and there will also be reductions in various functions across SIE in the UK, meaning they will enter a period of collective consultation before any final decisions are taken. Ryan added: "All employees who are part of the collective consultation will be made aware of the next steps today. 

"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."

The job cuts come just after Sony fell short of its PS5 sales target, resulting in a $10 billion drop in Sony's stock value, reported the Verge. While Sony had anticipated better prospects for the PS5, analysts also highlighted a nearly decade-low profit margin on games, indicating that the expenses associated with game production are eroding Sony's gaming profits.

The gaming industry has recently experienced successive rounds of layoffs, casting a shadow over the notable game releases of 2023. Last month, Microsoft reduced its workforce by 1,900 employees, affecting about 8 per cent of its Microsoft Gaming division, which includes Activision Blizzard and Xbox staff. Unity also downsized by 25 percent, while Discord let go of 17 percent of its workforce.