Sony announces PS3-related job cuts in US -- forgets to mention when or how many

It's not like we didn't see it coming or anything what with Sony's game division -- home of the PS3 -- recently posting a $1.91 billion loss for the year. But man, our hearts go out to those whose jobs at Sony Computer Entertainment are now on the chopping block. Thing is, Sony, while announcing plans to cut jobs in the US, is only turning the screw deeper by not providing any details. The move comes as Sony struggles to keep up with Nintendo which again snagged top-honors for the 4th consecutive month in the US market: 360,000 Wiis sold to the PS3's 82,000 while Microsoft sold 174,000 Xbox 360s. The gap between the Wii and PS3 sales in Japan is just as bad, if not worse. Fortunately for Sony, their Bravia LCD TVs, VAIO computers, and Handycams are all doing well enough to (mostly) offset the PS3 related losses. We'll have to wait and see if Sony's summer game catalog, bigger disks, and possible price cuts can reverse SCE's fortunes.

[Mak @ Jun 7th 2007 5:25AM]

Anyone notice, when Microsoft lay off employees form the Xbox division, it only gets reported on MicrosoftWatch, and nobody else bothers reporting it. When Sony lay of 100 employess (a very small percentage of SCEA), it's headline news..

Anyone also notice, that way back in 2005, Microsoft's losses in the XBox division were over 5 billion US$, and considering they are still losing money on each 360 sold, and sky high failure rates and warranty costs, that number today is going to be closer to 7 billion US$

Now consider, that Sony are making money on PS2, and have done for some years now, in addition to making money on the original Playstation, things are not so bleak.

The bottom line, is Microsoft have not made a single cent from the XBox division, the original never made any money (and lost $4billion), and the current 360 has still to make any money, and my Microsoft's own admissions, is unlikely to, until deep into 2008 (if it's still around by then, and not superceeded by XBox1080p). Sony have eventually made money from ALL their consoles, the PS3 will be no exception, I am sure..

[Thomas Ricker @ Jun 7th 2007 5:51AM]

The difference is in the size of the bet Sony made on the PS3 and the tech inside. What's more, the impact of the PS3 launch took Sony Corp. as a whole into the red.

Thomas

[Garry @ Jun 7th 2007 10:45AM]

@Mak:

I've read all of your comments on this page, and I can't figure out if you're a Sony shill or if you're just clawing at anything that might possibly justify your purchase.

Have fun with your paperweight. Those of us with brains will either enjoy the systems we have now, or buy a PS3 when it's reasonably priced and doesn't suck.

[Whackmushrooms @ Jun 7th 2007 1:10PM]

right on!

[Revrant2394 @ Jun 7th 2007 5:35AM]

Well that comment ruined my urge to comment, Ugh.

[jim @ Jun 7th 2007 5:35AM]

Guys, the standard of your reporting continues to drop - what are you trying to say here with the "if" here?

"But man, if our hearts don't go out to those whose jobs at Sony Computer Entertainment are now on the chopping block."

[Thomas Ricker @ Jun 7th 2007 5:52AM]

@jim, yeah, too slangy, changed the wording.

Thomas

[sal @ Jun 7th 2007 5:36AM]

Didn't Sony make a loss with the PS2 when that first came out, I seem to remember they did. It's the same model all over again except the losses this time might be slightly higher. Again, the price of the console dropped within the first 6 months of release like it did with the PS2 & 1 and I suspect will continue to fall over the coming years. So what's new? We all know that the industry makes it's money on the software, not the hardware. It's just this time nintendo have a decent contender, whch might not match the ps3 on specs, it certainly looks more fun and looks like it (the games) has good playability. The xbox isn't a major threat to sony. I don't think sony had any serious rivals last time, this time they do, their name is nintendo. Sony's only hope IMHO is to cut the price of the console to something more affordable for everybody, take a big loss and make the revenue back in kick-ass games.

[Big @ Jun 7th 2007 10:26AM]

Most Video Game Consoles are sold at a loss simply because the company's behind them intend to make up those losses using software licensing fees.

My problem with Ps3 is that it seems to have been sold based solely on the fact that it was the 3rd system in the PS family - off the reputation of the PS2.

Sony's problem is the PS2 is STILL DOING FANTASTIC and most homes aren't ready for the upgrade - NOT FOR $600 they aren't !

Sony screwed up royally not having more launch titles available.

[Teetdogs @ Jun 7th 2007 1:43PM]

What do you mean that the Xbox isn't competition for Sony? are you high? Xbox IS the competition

[Ihar `Philips` Filipau @ Jun 7th 2007 6:14AM]

"The only reason Microsoft are selling consoles in the US market, is patriotism, because people believe buying Microsoft helps the American ecomomy."

Oh c'mon. We Europeans are not buying 360 because our salaries are lower than those of Ameracans.

And also because our home game market is very very poor. How many games of European origin you know? Compared to American games? Japanese games?

Truth is we Europeans have absolutely no clue about entertainment. Good local supplier might have changed that - but most gaming companies are all foreigners to the market. And all imports are heavily taxed.

Here you have: only Chinese can compete on European market with their 0.02€ ware - which after crossing border becomes 1.00€ ware.

Few families - especially families with kids - can afford to buy game console and games later. And they are presumed to be target audience.

Even cheapest of new consoles Wii has only few of cheap titles. PSP (180€) is very expensive (games 45-55€). DS (140€) is bit cheaper, since once can find games for 30€ here (new games are 40-45€). Xbox360? PS3?? hundreds euros???? Forget about it.

[McGinley @ Jun 7th 2007 7:29AM]

Yeah,the first thing anyone looks at when choosing what console they want is who will benefit in the economy.

From now on I'm not going to buy ANYTHING that is imported.

[pigfister @ Jun 7th 2007 2:44PM]

that's a very bold statement considering that the 360 is outselling the ps3 and has done for all except the launch month in europe. the ps3 atm is a flop because no one other than fanboys will purchase an overpriced console that has few games to play on the dam thing!

http://www.vgchartz.com/eweekly.php


Europe total:
Console Weekly Total
DS: 127,670 13,837,201
WII: 70,268 2,101,659
PSP: 52,441 7,746,000
360: 24,529 3,178,459
PS3: 18,713 951,885

UK:
Console Weekly Total
DS: 43,922 3,551,120
WII: 27,572 661,558
PSP: 16,361 2,031,685
360: 13,366 1,292,728
PS3: 5,446 285,940

the month by month data with a full Euro breakdown can be found at the above link!

the real reason for the ps3 is the next gen format war as Sony Europe VP Matt Brown confirmed with the Guardian news paper: http://ps3.qj.net/PS3-A-smokescreen-for-Blu-ray-/pg/49/aid/88299

[pigfister @ Jun 7th 2007 2:46PM]

that's a very bold statement considering that the 360 is outselling the ps3 and has done for all except the launch month in europe. the ps3 atm is a flop because no one other than fanboys will purchase an overpriced console that has few games to play on the dam thing!

http://www.vgchartz.com/eweekly.php


Europe total:
Console Weekly Total
DS: 127,670 13,837,201
WII: 70,268 2,101,659
PSP: 52,441 7,746,000
360: 24,529 3,178,459
PS3: 18,713 951,885

UK:
Console Weekly Total
DS: 43,922 3,551,120
WII: 27,572 661,558
PSP: 16,361 2,031,685
360: 13,366 1,292,728
PS3: 5,446 285,940

the month by month data with a full Euro breakdown can be found at the above link!

the real reason for the ps3 is the next gen format war as Sony Europe VP Matt Brown confirmed with the Guardian news paper: http://ps3.qj.net/PS3-A-smokescreen-for-Blu-ray-/pg/49/aid/88299

[Ihar `Philips` Filipau @ Jun 7th 2007 6:01AM]

Sad reality of "business as usual" paradigm.

My friends (who is btw planning to buy PS3 soon) said that Sony with PS3 works now after "supply creates demand" principle.

Every time they do that, heads of - no, not the guys who push overpriced product onto unprepared market - simple workers are rolling...

[T.H. @ Jun 7th 2007 6:10AM]

The difference between the PS3 losses and the PS2 losses were the PS2 sold extremely well and the losses were within calculation. Every console, even Nintendo's, is a loss already due to development costs. The PS3 is selling poorly and though they lose less with bad sales of the PS3...the fact remains that they NEED these sales and higher losses.

A smaller uptake now means it is much harder to gain as well as retain developer support later. Success begets success. Developers are not loyal to Sony, Nintendo or Microsoft. They will go where the money (users) are.

The PS3 is turning into a debacle. Sony has been a company that is for the most part stagnating for years. The only bright spot was the PS1 and PS2 and now that the PS3 has failed, it can't prop up the other ailing divisions. At least with the Xbox 1 and Xbox 360, MS knew it was going to lose money and that their hope was to eventually recoup the billions spent by becoming a dominant player in the industry. Sony went from being the dominant player to a company that has had one of it's top executives "retire" and, more tragically, lots of employees getting the ax because of bad decisions at the top.

Sony can't afford to drop the price on the PS3 too fast or it will turn into a product that will never make any money. It's pre-launch estimates by one Japanese executive was that the PS3 would recoup it's costs in five years. I'm not sure that is possible given current PS3 sales. The only hope would be to lower the price of the PS3 console but then you lose even more money subsidizing the cost of the console to gain a wider installed base. This means you have to sell even more games than your previous projection to recoup costs before you can even turn a profit.

It's a lose/lose situation for Sony at this point. Your previous projections had you making money in the 5th year, but probably having you projected as the market leader and this isn't happening. Keep the current strategy and watch as your competitors kick your rear end meaning you have no hope of getting back your money. Or you can lower your console prices to "win" the console wars and watch as you have no hope of recouping your money. And by win I'm talking about like how the Xbox 1 sold more than the Gamecube which actually turned a profit.

Sony's ten year plan is looking more and more like a ten year loss at this point. It seems anyone that is the least bit objective saw this coming a mile away. ANALysts, fanboys, and Sony were probably the only ones who couldn't.

[Mak @ Jun 7th 2007 6:43AM]

You do know that PS3 sales match the PS2 and PS1 trends very closely. Many people that think the PS3 is failing, are 15yr olds, who were 8yr olds, when the PS2 launched, and still in daipers when the original Playstation was launched, they don't get how it works...

Anyone that thinks PS3 is failing, is an idiot. It's sold over 1 million in Europe in 8 weeks, and globally 3.5 million since Novemeber. How on earth can that be considered failing? The 360 has taken 15 months to reach 10 million...

[paakofi @ Jun 7th 2007 7:17AM]

you lie bad!

[Mak @ Jun 7th 2007 7:31AM]

Sorry, it's fact. The sales figures are posted from several sources that report on retailer figures.

The sales trends compared to PS2 and Playstation are available online (I can't find the link at the moment, will find it later).

Sorry if the truth hurts..

[kaztm @ Jun 7th 2007 7:43AM]

"our hearts go out to those whose jobs at Sony Computer Entertainment are now on the chopping block"

What do you mean?
Engadget was/is the biggest anti-Sony advocate.

[Tommy @ Jun 7th 2007 7:47AM]

too bad they can't mulligan this

[brutha @ Jun 7th 2007 7:59AM]

PS3=flop. blu-ray is dead in the water. Microsoft takes round 2, Halo 3 around the corner:)

[T.H. @ Jun 7th 2007 8:19AM]

Mak, you forget to mention that the video games market is much larger than when the PS1 was released and larger still than when the PS2 was released. So with a larger potential user base, it is in fact doing worse. Then there are those who never plan on buying a single game for the PS3 and bought it instead for the Blu-Ray. The PS2 was also supply constrained while there are plenty of PS3's lying on shelves at this point in each consoles time line.

You can manipulate numbers all you want but it still doesn't change the fact that the PS3 is doing worse than what Sony expected. And that's doing worse than their scaled back expectations mind you.

The bottom line in any business is to make a profit. From that standpoint, the Xbox was a failure even though it "won" second place ahead of the Gamecube in sales numbers. Of course the fanboys will cheer on their Xbox even though it was a pyrrhic victory. In much the same way the Sony fanboys keep pointing out that the PS3 is keeping pace with PS2 sales.

Blu-Ray, while currently looking rosey is not guaranteed to be the successor to the DVD. In fact with players coming out that can do both HD-DVD and Blu-Ray, we may never have a true winner but rather releases in different formats but one player that can play them all. This is bad for Sony because it keeps the licensing costs down due to competition and it splits the money spent on licensing fees between the patent holders of Blu-Ray and the patent holders of HD-DVD.

The PS3 is in very great danger of becoming a failure because it's starting to look like Sony may never recoup the money it spent developing and subsidizing the PS3.

[ghostdoggy @ Jun 7th 2007 8:25AM]

Every time I hear a note on Sony and the PS3 I keep hearing that darn Queen song "another bites the dust!"

But maybe all of us to simply join Sony in their psychosis and expect the market and revenue to change for the better in year 3, 4, or 5 for the PS3.

[Me @ Jun 7th 2007 8:39AM]

"The only reason Microsoft are selling consoles in the US market, is patriotism, because people believe buying Microsoft helps the American ecomomy. It does not, it pays wages in Mexio, China and Eastern Europe..."

That's gotta be the dumbest thing I've read in a while.The Xbox 360 could've came from Estonia I still would've bought one.

PS3 is doing so poor because of it's lack of quality titles.PS2 did very well,but no one can deny that GTA helped sell a lot of consoles.I know people who bought one just because of GTA.They don't have that luxury this time around its coming to Xbox the same time.I'll probably get one later this year when Socom comes out.

[Mak @ Jun 7th 2007 8:57AM]

Sure Sony may have lost the GTA exclusivity this time (although until we see the DVD9 360 version and the 25GB/50GB Blu-Ray version, who knows...)

The point is there are plenty of other killer exclusives coming to PS3 this year...

[Phil @ Jun 7th 2007 8:55AM]

To quote Phil Harrison....."it's all about software now"

And that is basically it.

Yes, we all know Microsoft and Nintendo have games in the pipeline, but Sony has a ton of great games in the pipeline......people fail to remember that EXCLUSIVES like Metal Gear Solid 4, Final Fantasy XIII and Gran Turismo will sell consoles by the bucket load. Not to mention many, many other great games coming out this year and next.

To sum it up, Sony has sold 3.5 million expensive Playstation 3's without really having any games out.....not bad going really if you ask me.

[Mark @ Jun 7th 2007 8:58AM]

I really wanted to buy a PS3, really. But then I tried to decide which games I would buy with it and realized I'd be buying a $600 DVD player. PS3 will start selling once the worthy games are there.

[noob @ Jun 7th 2007 9:17AM]

i don't understand what the arguement is about.

here are a couple of facts:
the next gen console war between xbox 360 vs ps3 has been won by xbox 360

who cares if MS never makes money on its gaming division? they have billions of dollars to waste on anything they want. the fact of the matter is that they have knocked sony off the top spot for next gen consoles.

you guys forget the MS is a software company and their LIVE service is awesome. The PS network or whatever is SHODDY AT BEST. Before you trolls go wahh wahh, just to let you know I have had a 360 since launch and my friend has had at ps3 since launch and guess what, we both agree that xbox is a) a better value b) has better online service and c) unless you REALLY like mgs or final fantasy, there is NO reason to get a ps3.

forget the wii its like a completely different target audience...the casual gamer.

[Phil @ Jun 7th 2007 10:13AM]

The so called 'war' hasn't even started yet.

10 year lifespans, etc, etc..............

[noob @ Jun 7th 2007 10:28AM]

dude who cares about 10 year lifespans. I buy a new console everytime a new one comes out...the best of the generation 1 or 2 years after launch is all that matters.

[James @ Jun 7th 2007 9:33AM]

Blu-ray isn't dead in the water... I bought a PS3 mainly for the Blu-Ray drive (movies) I like to play the best games as well (Metal Gear Solid, GTA, Devil May Cry, Colin McRae). Blu-Rays out selling HD DVD by 3:1...

And to the comment that Europeans know nothing about entertainment: GTA and Colin McRae are European (British) - GTA won a General Design Award going up against things like Car designs. Half Lifes German I beleave so that comment is incorrect...

[Ryan Smith @ Jun 7th 2007 9:40AM]

I read some of these comments because I was on the toilet, you guys need to get a life. What do you care, I would rather have 3 companies all competing evenly, that gives the best competition. I feel bad for those that lost thier jobs, you guys probably don't have one yet so you don't know what it feels like for a company to be doing poorly.

[Jamar @ Jun 7th 2007 9:45AM]

A casual gamer is me, then. I have a Wii, and despite being very interested in the PS3 (go look up Railfan to see why) it's not worth it for me to buy a $700 console (I live in China; all consoles sold here are pre-modded or come with modding service and have prices to show that) just for 1 game (which would cost me all of $1 here). And as for the 360- they're definitely aiming for hardcore gamers there (I'm not- the fact that the only PS3 game that interests me is a train sim should clue you in to that). Now if only Virtual console worked on my Wii...

[Elliot J @ Jun 7th 2007 9:57AM]

Why are people bringing Microsoft and the 360 into this? This article is about Sony... not sure if you guys don't know how to read or what.

[Phil @ Jun 7th 2007 10:23AM]

Ryan Smith @ Jun 7th 2007 9:40AM
I read some of these comments because I was on the toilet, you guys need to get a life. What do you care, I would rather have 3 companies all competing evenly, that gives the best competition. I feel bad for those that lost thier jobs, you guys probably don't have one yet so you don't know what it feels like for a company to be doing poorly.


Erm, I'm 32 years old, i'm a qualified chartered accountant and i'm married.

It's lunchtime and it's raining outside.....nothing better to do to be honest.....how about you? :-)

[Mak @ Jun 8th 2007 3:45AM]

noob: "I buy a new console everytime a new one comes out."

Yep, and you are the ideal Microsoft consumer. They want to sell you a new Xbox every other year..

The PS3 is designed to last for the next 8 years, not 2 year stints before it's made obsolete by the next version of XBox.. I wouldn't be suprised, if Microsoft start using years to designate Xbox versions, like they do with software. Office 2007, Xbox 2008...

[noob @ Jun 8th 2007 9:15AM]

I will happily buy a new MS console when it comes out.

and yes I am a consumer. I keep the economy afloat for the rest of you.

[nigel @ Jun 7th 2007 10:56AM]

Mak, you are an idiot.

[sonytool @ Jun 7th 2007 11:11AM]

I wonder if Sony is still in denial. I am so glad Sony got knocked off thier high horse, they were so freakin' arrogant. this is what happens when Microsoft understands the American and European consumer, Nintendo gets the japanese and wide appeal of us and europe and sony is left holding thier blue ray disc in thier hand.

classic.

[Mak @ Jun 7th 2007 6:00AM]

Microsoft don't understand European consumers at all. That is why 360 sales are poor over here (not as poor as Japan, but not brilliant either).

The only reason Microsoft are selling consoles in the US market, is patriotism, because people believe buying Microsoft helps the American ecomomy. It does not, it pays wages in Mexio, China and Eastern Europe...

It's clear Microsoft have no understanding of the Gaming console market, they have already demonstrated this, by releasing a Core system with no HDD, which cripples the Premium, obsoleted the Premium in favor in the Elite, released bolt on extras like the HD-DVD, which cannot be uses for games. The list goes on...

[ssuk @ Jun 7th 2007 9:33AM]

What are you talking about? PS3 isn't popular here AT ALL. Everyone has realised how much we've been messed over with the PS3 and hence it's sheer unpopularity.

[Chancho @ Jun 7th 2007 11:49AM]

I still can believe people paid up to $5000 for a PS3 when it was launched. Insane! I guess if you have the money to burn... I don't think paying $600 for a PS3 is reasonable at this time. Especially when you know there are still some kinks to work out on the first generation PS3's.

I'm sure Sony will get that money back when the good games come out.

We'll see...

[MasterFramer @ Jun 7th 2007 12:47PM]

Mak... Microsoft Xbox Division will be profitable this next quarter. Do some research before you spout off bullshit...

[Phil @ Jun 7th 2007 1:46PM]

I understand some peoples view about the 10 year lifespan and wot not and wanting to have the latest and greatest.

But the 10 year lifespan model regarding Playstation 3 is'nt unreasonable. Is'nt the PS2 7-8 years old now? Is'nt it STILL selling rather well?

People have to understand that the MASS market DO NOT 'catch-up' until a few years down the line. So to those who say that the 'next gen war' is over, are living in dreamland! tut tut

[Matt B @ Jun 7th 2007 1:45PM]

All of you that think the PS3 has failed need some glasses since you are obviously shortsighted.

At least for me, I felt like I ripped Sony off by only having to pay $600.

[Teetdogs @ Jun 7th 2007 1:55PM]

I hate to tell you that alot of your exclusives aren't all that exclusive, MGS 4 is in serious talks about putting it on the 360 and the next final fantasy will probably be released on the PS2 as well so that leaves you with Grand Turismo which will not sell bucket loads of 600 dollar systems. sorry to burst your bubble. that said I still wouldn't mind having a PS3 but not for 600 bucks.

[Phil @ Jun 7th 2007 4:51PM]

Oh dear.....Playstation £ WILL sell by the bucket-load honestly! Good grief, if you think 11 million XBox360's is a lot, then you really are totally short-sighted.

[Teetdogs @ Jun 7th 2007 5:02PM]

All i said is that Grand Turismo by itself Will not Sell Ps3s by the bucket load maybe you should learn to READ

[charlie @ Jun 7th 2007 2:53PM]

I konw the topic is about sony, but this whole blu-ray and hd-dvd thing is ridiculous. LG-and other companies have taken a good step t'ward the next-gen hi-def dvd. Why on earth would anyone refuse and offer like hd-dvd and blu-ray all in one. Movies that only comes out for blu-ray and some for hd-dvd can now be watched on the same player. So this is my personal opinion, while LG and other compaines take that step and fuse hd and blu together there will be no format war, and down the line other major companies will follow and there will be a few but not alot of single stand alones. THAT MY PERSONAL OPINION. ANYONE ELSE AGREE. 1 FOR AGREE- 2 FOR DISAGREE