A Major 'Re-Evaluation' At PlayStation
The PS5 maker announced mass layoffs, project cancellations, and a studio closure as it copes with the $300 million reality of Spider-Man 2
The PlayStation 5 has sold tremendously despite never getting a price cut. It’s featured a dependable lineup of high-quality exclusive games and big multiplatform hits. But even good hardware and great games apparently wasn’t enough to save 900 jobs across PlayStation Studios. Sony’s strategy over the past decade has hit a ceiling and its employees are now paying the price.
Sony announced “difficult news about our workforce” today in an email from outgoing PlayStation CEO Jim Ryan, the boss fans love to hate. It was also accompanied by an “important update from PlayStation Studios” by the head of content, Herman Hulst. Here are the grim highlights:
Reduction of our overall headcount globally by about 8% or about 900 people
PlayStation Studios’ London Studio will close in its entirety
Cuts across Insomniac Games, Naughty Dog, Guerrilla Games, and Firesprite
Smaller reductions across other studios and support teams
Some projects have been cancelled
Ryan pitched the “restructuring” as “proposed changes” that are still subject to “collective consultation” but I assume that just means who exactly is getting cut and who will or won’t have the option to transition to a different role within the company hasn’t been decided yet. I think it’s also notable that Sony made him deliver this bad news after disappearing from the company’s public facing communications since his retirement next month was announced last fall.
All of this was foreshadowed in an ominous earnings call earlier this month in which Hiroki Totoki, Sony’s chairman, COO, and interim head of PlayStation, told investors that the organization had a problem with translating their creative output into “sustainable profitability for increasing margins.” When it came to Bungie in particular, he cited issues with the “use money, the schedule of development and how to fulfil one’s accountability towards development.”
Spider-Man 2 offers a perfect example of the duality of PlayStation right now. It’s critically-acclaimed and has now sold over 10 million copies. But it also cost over $300 million to make, took longer than expected, and included ballooning scope when it came to the cinematics and script, according to internal materials released as part of the malicious Insomniac Games hack last December. Those same corporate emails and slide shows, which I first reported on over at Kotaku, also alluded to a studio closure and as many as 50-75 layoffs within Insomniac Games as a result of Sony trying to reign in costs.
At the time I’d heard from a source that London Studio and Media Molecule were the most likely candidates for an entire closure. While Media Molecule had already announced the end of updates to its game tools game Dreams and suffered layoffs in the fall, London Studio was working on a new multiplayer live service urban fantasy game after pivoting away from VR games following the release of 2019’s Blood and Truth and Erica. Another source told me at the time that the game had been progressing very slowly due in part to the studio switching to a completely new genre. Despite years in production, they didn’t expect it to “see the light of day anytime soon.”
But Sony had also given the studio a lot of freedom and latitude, they said. It was not as if there were certain metrics or milestones London Studio had been failing to meet. Instead, it sounded like it was simply doing its best to make good on Sony’s new strategy to ship over 10 live service games by 2025 and beyond. “I have nothing to say,” one current London Studio developer tweeted today. “I’m in tears. I am looking for a new job I guess so please reach out. I’m numb and once settled I may have more to say.” Jim Ryan, meanwhile, apparently met with the studio just last week. A photograph taken at the time shows him posing with members of the team and a smile on his face.
Now it appears a new reality is setting in. Herman Hulst, who unlike Ryan is not leaving next month, announced the company is taking a hard look at its current strategy for delivering the types of blockbusters that defined the PS4 and now the PS5. “Delivering the immersive, narrative-driven stories that PlayStation Studios is known for, at the quality bar that we aspire to, requires a re-evaluation of how we operate,” her wrote.
Hulst continued:
Delivering and sustaining social, online experiences – allowing PlayStation gamers to explore our worlds in different ways – as well as launching games on additional devices such as PC and Mobile, requires a different approach and different resources.
To take on these challenges, PlayStation Studios had to grow. We have brought brilliant and successful Studios into our family. We have invested in new technology and partnerships. We have recruited talent from across our industry and beyond.
But growth itself is not an ambition. PlayStation Studios is committed to continually discovering ways to work together; collaborating and combining our efforts to ensure that we are able to craft games that push the boundaries of play and deliver what you expect from us.
We looked at our studios and our portfolio, evaluating projects in various stages of development, and have decided that some of those projects will not move forward.
The most obvious example of this recalibration was the cancellation of Naughty Dog’s The Last of Us Online last fall, which reportedly happened after feedback from Bungie. The studio’s note about ending production spoke about not wanting to become completely devoted to maintaining a live service game, which doesn’t seem like the kind of thing a studio just magically realizes several years into an expensive production. While the decision to cancel the game may have been the right one, it was still costly and people definitely lost their jobs because of it.
“Our philosophy has always been to allow creative experimentation,” Hulst wrote today. “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.” Of course, one company’s “change of plan” is another person’s life completely uprooted and thrown into a jobless panic.
Former PlayStation executive Shawn Layden has been warning about rising game budgets and development timelines for years, and it’s always been a two-pronged problem. Not only are the games harder and more expensive to make, they also aren’t finding new audiences. People who have already decided they don’t want to play the new Call of Duty or God of War will not be swayed by bigger and better versions of those things. And Sony’s latest earnings have born this out. The company now says it will fall well below its goal of 25 million PS5s sold this fiscal year. It also expects the total number of sales next year to be even lower, pointing to a console with a bigger price tag than its predecessor and also won’t be able to outsell it.
Jim Ryan expressed his frustration with exactly this situation back in 2021. “I think some of the art that our studios are making is some of the finest entertainment that has been made anywhere in the world,” he said in an interview with GamesIndustry.biz. “And to kind-of gate the audience for the wonderful art, wonderful entertainment that our studios are making...to gate the audience for that at 20 or 30 million, frustrates me. I would love to see a world where hundreds of millions of people can enjoy those games.”
I criticized him at the time for championing a future he didn’t seem intent on actually building. Instead of expanding and diversifying the number and types of games PlayStation offered in the PS5-era, the company retreated into fewer and bigger sequels of existing hardcore franchises under Ryan’s leadership. It’s possible his true bet for brining in new players lies with the live service pivot teased years ago, but simply pushing existing big-budget cinematic teams (Naughty Dog, Guerilla Games) to make live service spin-offs was clearly not going to create a Fortnite or Roblox, and nothing revealed during the May PlayStation showcase last year gestured at a new type of game that could break through the console’s current ceiling. Helldivers 2 has certainly accomplished that on PC. Maybe there will be more of them. But not in time to save those currently being laid off.
Some quick news:
The next Pokémon game has been revealed and it’s called Pokémon Legends A-Z but it won’t arrive until 2025. Fans have been begging Game Freak to take more time in-between releases. We’ll see if it pays off, or this is just a way to boost sales next year of Nintendo’s now unofficially delayed Switch 2.
A sealed first printing of The Legend of Zelda for the NES in immaculate condition sold for $288,000 at auction, and impressive amount but still much less than the $700,000 a similar copy fetched during the immediate post-pandemic collector boom.
Palworld’s devs apologize for mistakenly fixing a bug that let players capture the Pokémon-with-guns game’s Tower Bosses.
Final Fantasy VII Remake received and unexpectedly weird patch ahead of the sequels’ launch on February 29 that gave Tifa a black undershirt in a flashback to fix continuity issues and, more importantly, completely butchered the last line of the game.
Fans of the upcoming Unicorn Overlord RPG are also losing their minds arguing about the game’s localization and now even the director of Final Fantasy Tactics has weighed in.
Destiny 2 fans are freaking out about whether pre-orders for The Final Shape finale are at massively lagging behind last year’s Lightfall expansion.
Former Xbox console-exclusive Pentiment will briefly be superior on PS5 where a 120FPS will be available first due to an unforseen bug.
A beautiful Japanese retro game store built up over 10 years has been ravaged by a fire. There are pictures and they are tragic.
Helldivers 2 players are debating who the biggest enemy in the game is: easy mission farmers or the terrible battle pass unlock structure. Why not both?
A new worst thing ever: a January 6 capitol riots-themed pinball machine that was showed off at the crypto-fascist summit CPAC.