Sony announced widespread layoffs across its PlayStation gaming division on Tuesday, cutting roughly 8% of the workforce in a bid to bolster profitability.

The reductions will impact around 900 employees globally and strike across Sony’s vast network of PlayStation studios, including renowned developers like Insomniac Games, Naughty Dog, Guerrilla Games, and Firesprite. Employees were notified in an internal email from PlayStation chief Jim Ryan calling the cuts “extremely hard” but necessary to keep the business sustainable long-term.

The overhaul comes on the heels of Sony missing internal targets for PlayStation 5 sales amid stiff market headwinds. While demand for the console remains high, component shortages and logistics disruptions have hampered Sony’s production plans. Last quarter, the company also reported near decade-low game margins, suggesting rising development costs are squeezing profitability.

“After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company,” Ryan wrote to staff. “We had to step back, look at our business holistically, and move forward focusing on the long-term sustainability of the company and delivering the best experiences possible for our community.”

The reductions will see Sony shutter some operations entirely, including its PlayStation VR-focused London Studio. Some job functions are being relocated to lower-cost regions in a bid to rein in expenses. Sony also plans to throw more resources behind PC and mobile gaming efforts – a strategic pivot Ryan says “requires a different approach and different resources.”

The overhaul at Sony represents the latest in a wave of job cuts buffeting the video game industry despite strong revenues and player engagement. Last month, Unity Technologies and Microsoft both announced deep reductions in their gaming divisions to trim costs.

While Sony’s PlayStation 5 console remains popular, the company is clearly signaling that preserving profitability is equally important as pursuing market share – even if it comes at the expense of valued creative talent across the PlayStation family. Tuesday’s grim news serves as an inflection point in Sony’s decades-long gaming dynasty.

Here’s the full email statement from Ryan:

Subject: Important Update Regarding Organizational Restructuring 

Team, 

It is important to provide you with updates about the business as often as possible. Today, I am writing with sad news. Through discussions over the past few months about the evolving economic landscape, changes in the way we develop, distribute, and launch products, and ensuring our organization is future ready in this rapidly changing industry, we have concluded that tough decisions have become inevitable. The leadership team and I made the incredibly difficult decision to restructure operations, which regrettably includes a reduction in our workforce impacting very talented individuals who have contributed to our success.  

After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company. We had to step back, look at our business holistically, and move forward focusing on the long-term sustainability of the company and delivering the best experiences possible for our community. The goal is to streamline our resources to ensure our continued success and ability to deliver experiences gamers and creators have come to expect from us.  

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 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 the UK, it is proposed:  
  • That PlayStation Studios’ London Studio will close in its entirety;
  • That there will be reductions in Firesprite studio;  
  • And that there will be reductions in various functions across SIE in the UK.

The proposed changes mean that we will enter a period of collective consultation before any final decisions are taken. All employees who are part of the collective consultation will be made aware of the next steps today.  

• In Japan, we will implement a next career support program. Details will be communicated separately.  
• In other countries, we will begin conversations with those who are potentially at risk or impacted as a result of this proposed course of action.  

For those who will be leaving SIE: You are leaving this company with our deepest respect and appreciation for all your efforts during your tenure. 

For those who will be staying at SIE: We will be saying goodbye to friends and colleagues that we cherish during this process, and this will be painful. Your resilience, sensitivity, and adaptiveness will be critical in the weeks and months to come.     

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. 

Thank you for your understanding during this difficult period. Please be kind to yourselves and to each other. 

Jim