Feldon 
Although it is my understanding that this has no immediate ramifications for Sony Online Entertainment, which has already undergone two rounds of belt-tightening, and recently signed an exclusive European distribution deal with ProSiebenSat.1 which no doubt had financial incentives behind it, this is news that several people have reported in so I’m reposting it.
UPDATE: Sony Corp has revised their expected financial losses for 2011 to $6.4 billion.
From ArsTechnica:
Sony Corp. is planning on cutting loose 10,000 of its employees in an effort to bring the company back to profitability, according to reports by the Japanese business newspaper Nikkei and the Associated Press.
The job cuts would amount to a global workforce reduction of 6%. Half of the layoffs will come from reshuffling related to Sony’s departure from the small LCD display business, and consolidation of its midsize display and chemical businesses. On April 1, Sony completed the spinoff and merger of its Mobile Display with the LCD and LED businesses of Hitachi and Toshiba to form Japan Display, an independent company that Sony holds a 10 percent stake in (with the Japanese government-financed Innovation Network Corporation of Japan holding the 70 percent majority stake).
Sony had forecast a $2.7 billion loss for its just-ended fiscal year; the company lost $2.1 billion in the last calendar quarter of 2011 alone, mostly because of its flagging television sales. Sony’s new CEO Kazuo Hirai promised “painful” measures to bring the company back to profitability when he assumed that post earlier this month.
Further Reading
- AP Report (via Chicago Tribune) (chicagotribune.com)
- Toronto Star (thestar.com)
- Bloomberg (bloomberg.com)
Perhaps the deal with ProSembian is because of this. Maybe they’ve given them some rights to promote and sell Sony TVs and such also but we’re only hearing the game portion of the agreement.
Being a Sony Employee must be one hell of a bull ride. That’s a lot of employees lost, and most of them probably thought they had a long lasting job. Now they will have to work for wall mart…
Basically, SOE sold user data to PSS1 to help turn a greater profit. They didn’t actually transfer that information, they simply require you to sign up for a new account based on IP discrimination, meaning both services now have captured your personal info that they can lose to hackers … or sign you up for unscrupulous email adverts you neither asked for nor wanted.
There were people employed at SOE purely for the European market who have since been laid off with no big announcement, so the Prosieben deal was fully commited to before the offical announcement.
That is a lot of money lost though, I’m not sure where Sony are going wrong here. Maybe its too high costs? I would really like to see a breakdown of profit/loss for each division and sub division, something we are likely to never see though.
Eschia – not sure what qualifications someone that has worked at Sony would have to make them fit for a job at a store that sells walls.
@Abatha
That’s what some people had been saying for awhile. Sony corporate did a deal with them for marketing of movies and such on TV as well as some other stuff. It’s believed by some that SOE simply got cought up in the deal as well. If that’s the case then SOE really had very little ground to stand on when negotiating with PSS1 because Sony corporate was the one to set it all up.
If that’s the case it’s also not surprising they wouldn’t talk about it either since the lawyers won’t let them talk about that sort of thing.
Either way we’ll never really know unless someone says something they arn’t supposed to.
@Vortix
I have personal info on probably nearly a dozen sites or more, all of which could be hacked at any time. It’s simply the danger of the internet. Don’t expect it to get any better any time soon, or probably ever. Email spam is a constant, thats what the filter is for.
@Steve
LOL I think you’re just kidding with me, but just in case you’re serious, wall mart doesn’t sell walls. It’s the name of a department store that sells many things, and hires just about anyone. It’s basically a fallback job for anyone who can’t get a real one.
Now that I’ve said that openly on the internet, if I’m ever unemployed, wall mart probably wont hire me for making them look desperate. 😀
@ Eschia – Wall mart might sell walls, but Walmart sure doesn’t … That’s what Steve was getting at.
I’ve been working with a small semiconductor company in Japan, some of those employees used to work at Sony and got out years ago when the signs were indicating things were going bad. This is just another round of cuts in a company that has been having trouble making money for years.
Sony customers could begin to see more deals like the one SoE is making now if things keep going the way they have been.
@Eschia
Steve was just pointing out that the company you intended is Walmart and that wall mart must be some place that sells walls.
I didn’t think there was a difference, since they separate the 2 words with a star anyway. Oh well.
Eschia,
Do you really not get that the name of the company is Walmart and not WALL MART (with two L’s)?
The company’s founder was Sam Walton, not Sam Wallton. His name is where Sam’s Club and Walmart come from.
P.S. Wal-mart was re-branded Walmart (with no hyphen or star) in 2008.
Dude I didn’t know about this other company alright? geeze…
Ok I get it. I misspelled it…
Like it matters.
Watch out!! The Walmart Police will come for you if you spell their Founder’s name wrong! ;p
@Eesscchhiiaa: They’re just havin’ a bit of fun with a misspelled word is all. 🙂
Reminds be of a fine poem I read years ago called “ode to the spelling checker“. Here’s an excerpt:
🙂
There is maybe a new problem for SOE.
http://www.gamesindustry.biz/articles/2012-04-06-activision-blizzard-sued-for-patent-infringement-of-virtual-worlds-usage
Activision/Blizzard is first because WoW is better known.
Here a bit more information
http://www.worlds.com/press-releases/Worlds_6th_patent%203-28-12.html
http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PG01&p=1&u=/netahtml/PTO/srchnum.html&r=1&f=G&l=50&s1=20090177980.PGNR.
Sony updated the forecast. It’s now 520 billion yen instead of 220 billion yen loss.
http://www.sony.net/SonyInfo/IR/financial/fr/11revision_sony.pdf
…OK, now you’ve given me an idea for a house setup: “The Freeport Wall Mart”, selling the finest in…er…walls.
Yay building block sets and random typos! Of such is creativity fueled…
They need to change their apporach to Customers. You can only mistreat your Customers for that long before it will come back and bite you. (unless you have monopol on service/product).
I for one took a vow to never buy any SOE game no matter how cool it will be. And that’s due to the way they handle EQ2 and its players. (will remind subscurbed to EQ2 but other then that no deal with SOE).
@adolf, it just not eq2, we can go back to 2006 and probably further to start pointing at other games they have given what I call the soe customer treatment. SWG, Vanguard, The Matrix. It is the culture of how the run things. I still have a hard time trying to equate what they say about how they want to treat their customers compared to how they actually do. They keep making the same inept mistakes time and again without learning that it comes down to how the customer perceived how they have been treated.
520 Billion Yen = 6,359,300,800 That’s a boatload of cash and if they lost that in one year alone I got to ask what in the world is going on. I don’t know any us company that could take that kind of loss and keep ticking. I now when I worked for a chain drug store, we were not allowed to keep more than 15 million in goods in the main warehouse, anything over that and folks started getting called into the presidents office. I just cant imagine how big of a P&L finance department they have, that’s a ton of accountants you would need. they just need to take our old saying if we don’t make a 35% profit margin on it then its not worth selling in our stores. Most retail is that way. Now I don’t know about manufacturing but you would think they would have the same model. You have to have ROI (return on investment)
This is more than just unhappy customers this stinks of mismanagement at the highest of levels. It would be nice to see a P&L (Proffitt and Loss Statement) I would love to sit down and find out exactly where the problems are.
@Badcat
There are companies that make 4 to 5 billion in a single year in profits, they could lose 6 billion in a year and mostly shrug it off as long as the next years went back to normal as most of those companies will have enough money laid up to ahndle a year of loss. Apple could shrug off a 6 billion loss as insignificant, if i remember right they have 15 billion just sitting around in case of problems.
Now i’m not saying they could do that year after year but there are certainly companies that could shrug that sort of a loss off in a year and move on.
I believe that Sony does need a change in leadership. I think they got complacent and thought they could just keep on trucking as usual and things would just work out. If they get someone who can really shake them up and get them back on track they could easily get back to profitability and running well. But it’s probably going to take someone who will really give them a kick in the pants.
I also wouldn’t rack it up to unhappy customers as Sony makes good products so it’s not like they make horrible equipment that people don’t want.
At the risk of delving into fanboy wars, Sony totally missed the point on the PlayStation 3. They built a technically expensive console and then added an even more expensive Blu-Ray drive, and finally a not-cheap PS2 emulation chip. Even at the original list price of what $699 for each PS3? they were still losing a ton of money for each unit sold. They sold them at a loss for years. PS3 was not just a loss-leader, it was a loss for years when it should have been a cash machine.
Meanwhile, Microsoft focused on making an affordable XBox 360 and put all their attention on a unified irresistible online experience (XBox Live). Microsoft’s gaming division made some smart choices, kept costs under control, and presented a streamlined service. No wonder they won. I wish the same could be said for their Windows division.
@feldon they made a lot of bad choices with the ps3. My oldest child well I cant that anymore now that she is 22. She had the ps2 for years. I few years back she decided that she wanted the Ps3. Turns out only certain models had that chip, and that chip did not always work. So We actually had to get a second ps3 for her after hers got the red light of death. So she has her old ps2 and her ps3. So she can play all the games she likes. Im not a console gamer, but my kids are. I have the xbox 360 it gets turned on once and a blue moon.
I don’t understand how they can continue to make lost leaders like that, and now the price of the ps3 is about 400 bucks I got one for my youngest whos 11 at Christmas.
It is decisions like that that can run you into the ground, That is costing them tons of money but there’s got to be other stuff, and if they operate their game division like that then they probably operate the entire company that way. At some point they got to wake up and go hey you cant sale the unit for less than the sum of what the parts cost.
Blue ray players are also cheep. I got a Sony blue ray at sam’s it is connected to the Internet and the software looks just like the ps3, only it does not play games. Cost me 100 bucks, I know it cost more to make it then what it sold for. But they are trying to be competitive with the other manufactures.
At some point Sony is going to have to change the way the run things from the top down,they cant continue running things the way they are and keep sticking their head in the sand and ignore whats going on. Otherwise they are going to go belly up.
While I hate how Sony/SOE runs business, I can’t help throwing my wallet at EQ(s) and Planetside2. As a case study however, I am on Riot Games and HiRez’s jock. Errr…. I admire their business models.
Riot Games for its tactical use of free to play, polished releases and updates, re-use of a “made-up” game format, and seemingly happy player base.
Hi-Rez for its experimental usage and application of a the Unreal Engine in varying genres, its attempts (and adjustments) in pay-to-play and free-to-play, their customer support, and re-birthing of an old IP (Tribes) all in what I consider a non-game developer town, Atlanta, Georgia.
Anyway, laying-off people is always undesirable. Small business/job creation ftw!!
I got one of the earliest PS3’s so it has the backwards compatability with PS2 games. It’s an awesome system and i love it even though i’ve been spending more and more time playing games on my computer.
I have a friend who refuses to buy a PS3 simply because they have taken so much off of it compared to the first releases. Sure buying one of the first ones cost me quite a bit but it was worth it for me.
http://www.forbes.com/sites/davidthier/2012/04/12/sonys-new-plan-leans-on-games-to-turn-around-6-4-billion-loss/