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@Friendly What i think you are forgetting is that companies are around to make money. I dont understand your comment at the end - why would Sony willingly keep people around that they didnt need? Would you pay employees that are not producing?

London got closed because they didnt make money. Sony didnt get rid of individuals that were high performing. Layoffs suck - it hurts families but unfortunately its important for future health.

As much as I dont want to pull this card - I do this for a living. As much as the executives got Sony into this position - they are sitting on razer thin margins - every analyst agrees with that. Regardless of the margins your business runs on - you're not Sony. 6% EBIDTA can crash down to 0 quick in the event of rising cost. Inflation is more than 6% right now - its not healthy.

If I worked at Sony and I was busting my ass every day and I saw other employees not working very hard and getting paid and not producing anything profitable - thus putting more pressure on me - I'd be pissed. Money doesnt grow on trees and if a company wants to retain talent they have to trim the fat.

At 6% margin you have pissed off shareholders, you are not able to take loans out from the bank to grow, and you are one bad bet away from being in the red.

@Dodoo as much as this all sucks - I think it will be good for the industry in the long run. Companies are realizing that they cant continue to put money into non-profitable / bloated games. They cant keep a bunch of people employed whenever they dont product things that sell.

Part of the issue with things not selling is that there is just too many games that get released. The flood of games makes it impossible for certain things to succeed. To me this looks like a major market correction - the execs made bad decisions and flew too close to the sun while throwing money at acquisition and hiring a ton of people. Cutting down on the extra fat isnt going to reduce the amount of revenue that comes into these companies - they'll be more profitable and hopefully keep talented people around. Less games is actually better for the industry - I think this will be good for everyone in the long run.

I could be wrong - but sometimes you have to take a few steps back and reevaluate in order to be successful.

@Friendly agree or not - their profit margins were down 6% last year vs 2022 and a 6% current profit margin is a bad place to sit for a publicly traded company. Also keep in mind Sony has business segments outside of PlayStation. They are still a manufacturing company - not a services/ software company.

6% EBITDA, once again for a company that does any type of manufacturing is very slim. Common agreement in the financial world is 10% is considered healthy…sony fell below that in 2023. Not sure the nature of your company once again - but the situations are obviously different. Sony operating on a 3% margin like your company would be seen as catastrophic…my initial reaction to 3% at your company was wrong - don’t know the business but I assure you Sony is struggling at 6%.

@Friendly wait - I might have misunderstood your comment. Do you guys manufacture anything or do you sell engineering services? If it’s the ladder then that makes sense as you have less overhead.

Sony manufactures products with fixed selling prices. If the price of super conductors or something they don’t have control goes up by 10-15% they could be screwed. You can’t live on 3% margins whenever you are buying components for manufacturing from somewhere else.

Also 6% margins for Sony is scary whenever they saw a 6% drop in EBITDA last year…another 6% drop…not good

@Secryt the verge atricle lumped gamepass core subs in with standard gamepass subs. The real number is 25 million and has stagnated. Regardless of if it’s currently profitable it’s not sustainable.

$7 billion in top line sales isn’t enough to sustain the amount of development teams they have. Whenever they release a product they get no influx of capital because big releases don’t drive new subs. They’ve built themselves into a stagnant business model

@Friendly if you work for a company operating on 3% EBITDA you need to find a new job. I’d be scared.

My company just went through a massive restructuring because we had a year of 5%. We are back up to 10-12% which is healthy for $500 million company. 3% margin is one bad decision away from bankruptcy…

@itsfoz the math of gamepass doesn’t work man. 25,000,000 subs at $11 a month= gross profit to all Microsoft studios of $3.3 billion. Remove development costs and the cost to secure third party titles. Most of Xbox revenue comes from that.

God of war ragnarok alone brought in NET PROFIT of almost $1 billion.

God of War Ragnarok - a stand alone title was more profitable than gamepass. This is why Sony won’t go to day one subscription. It’ll never happen.

@Tecinthebrain more profit before overhead. They are making more gross profit but their EBITDA numbers are down across the board - which is a better metric for business health and sustainability. Most are essentially down 6-7% year over year.

@wiiware a little of both I’d say. If I were to bet three things are going to happen.

1. More layoffs and exploration of ways to cut costs through AI, asset flips, cutting content and a push back to the office for many dev teams that arnt.

2. More investment on known IP and games that are safe bets. More sequels to popular games, more licensed games and less innovation as publishers dont want to take risk.

3. Rising game prices and more micro transactions filling games to help recoup dev costs.

We are already seeing these trends - but it’ll get worse.

@ATaco I don’t disagree at all. I hope I’m not coming off as defending corporate interests because I’m not at all. I’m personally pretty high up at a large company so just giving some business insight based on how many companies operate. It’s not good and unfortunately the games industry has become victim to this because people saw money was there.

It sucks…just trying to educate why this is happening right now.

@Ken_Kaniff read my comments above. Most companies operating expenses are out of control. Over hired In 2020 and 2021 - inflation and cost of doing business is crushing. Gamers don’t want to spend more on games and the cost to make them is climbing. All of the major developers are seeing their EBIDTA numbers drop which indicates business health.

Can’t keep people around whenever they are working on stuff that won’t make a profit.

A average game has to sell north of 1.5 million copies to break even.

Things are going to get worse.

@Deoxyr1bose I’m not saying the executives that made the decisions shouldn’t get canned. They probably should - their assessments of the situation was stupid.

Pay cuts don’t really do much though. Cutting 600+ employees plus benefits is probably saving EA around $60 million. Executive pay cuts can’t ever free up that much cash…

They SHOULD take one in order to keep their current employees from going nuts and they should spread some of the savings out to their employees that stay…but who knows if they actually will.

Not defending the corporations…just giving a peak into corporate workings.

Edited for spelling.

@JSnow2 EA saw a -6.89% drop in EBITDA in 2023.

Sony saw a -6.77% drop in EBITDA in 2023.

Can’t expect companies to keep employees around when business health is declining…

The issue is that post 2020 these companies - and many software companies outside of the games industry over hired. As companies look at the future forecasts they can’t keep people employed and working on projects that won’t be profitable.

The executives should have known 2020 and 2021 were anomalies - but it’s better for them to cut employee bloat now before they start to sink. People losing their jobs sucks but if you don’t want game prices to go up or an influx of crappy half baked products flooding the market this is probably good for the future health of the industry..

@Steel76 I’m not defending what Sony - but unfortunately that’s not going to happen. It’s a business and they want to maximize profits. They got away from making those types of games because it wasn’t profitable. Those games don’t sell well and having people work on something that likely won’t make money isn’t a sustainable way to run a business.

It’s why Insomniac is essentially going to be a Marvel studio now - those games sell.

Once again - not defending what they are doing. I don’t like it..but it’s the reality of the situation.

This is the result of rising game development costs. Less expensive to remake something, sells better because it’s a known commodity.

Too much risk with spending $100-200 million on a new IP. We saw what happened with Star Field and other new IPs that don’t sell as well. Spend less, quicker cycle, easy money.

It’s going to be licensed games, remakes, established IPs for a while with a few new ideas sprinkled in.

I always read all of the comments about remote play and input lag. I use a backbone and the PS remote play app and it usually works flawlessly. I’m not sure if I’m just lucky or if I am just an idiot when it comes to input lag and don’t notice it. I’m excited for this release. I’ll try to pick one up around Christmas

@Grimwood I bet you’re a lot of fun at parties

@Exlee300p as a fellow conservative I kindly ask you to shut up dude. This has nothing to do with Liberals - stop pushing an agenda.

@RedShirtRod Microsoft allowed that to happen because of 3 reasons - 1. Companies like mad cats entered an agreement with Microsoft to split profits. 2. Microsoft didn’t have a patent on the faceplate. 3. Mad Cats found a legal way around the Microsoft patent.

@huyi It’s not greed - it’s protection. What obviously happened here is Sony enforced their cease and desist on imagery on the PS5 while they got their ducks in a row to protect a design patent on their faceplates. If Sony has a patent they need to enforce it - doesn’t matter if it’s a mega organization or a small company patent law is there to protect people and companies from counterfeiting. The company they shut down was likely doing something illegal - good on Sony for enforcing.