Days after Microsoft declared the Xbox 360 outsold the PlayStation 3 three-to-one during "Black Friday" sales in the United States, Sony has announced cutbacks. The Tokyo-based electronics giant will slash 8,000 jobs and close several of its manufacturing facilities in a bid to save $1.1 billion (£745 million) by the end of next financial year. The job losses will come out of core Sony electronics divisions, though no official breakdown has been revealed.
As well as job cuts, Sony is also looking to reduce investment by 30 percent in electronics operations by withdrawing from unprofitable and non-core businesses. The electronics giant also confirmed it was to close around 10 percent of its 57 manufacturing sites, with all restructuring said to be completed by March 31, 2010. It will also raise the pricing of some of its products to alleviate the impact of the stronger yen.
The cuts follow on from more bad news from Asian electronics rival Samsung, which hours before Sony's announcement said it was to cut its sales targets and spending, after lower-than-expected fourth-quarter revenues and a drop in expected demand for 2009.
Sony Computer Entertainment Europe did not comment on whether the cutbacks would affect the price of the PlayStation 3, which remains the most expensive--and technologically advanced--console on the market. When queried by GameSpot, a SCEE rep said only, "We will always carefully review and make structural changes, if necessary, in order to further expand and strengthen the PlayStation business around the world."
The Sony announcement reflects recent bad news in the games industry, which has been shaken by EA's $310 million quarterly loss and dismissal of 600 employees, and Eidos, which lost a quarter of its workforce in February this year (when still known as SCi Entertainment). Midway Games has also been hit hard, with a controlling interest in the firm being recently sold for a mere $100,000 to a private investor. Last week, the once-mighty Mortal Kombat publisher revealed $240 million in debt, $150 million of which it may have to repay in as little as 50 days.
[UPDATE] The Associated Press is now reporting that Sony will eliminate at least 8,000 "temporary positions" by 2010, bringing the total cuts to 16,000. The news service also quoted Pennsylvania governor Ed Rendell as saying that one of the facilities slated for closure is in his state in the Northeastern US. According to local publication the Triangle Business Journal, the Westmoreland County facility, which manufactured flat-screen televisions, employed 560 people.