Sony is in seriously deep shit.
You all know me as a fairly obvious Sony loyalist - and I still love my PS3. Damn thing's fun, even if the pickings are slim. My PSP goes everywhere I go. I love it. I say this because I don't want you to think this is fanboy rhetoric. I just want you to know what's going on.
Anyway, here's the situation...
PS3 hasn't been selling so hot. It's a fact that no one can reasonably contest. The system is sold at a monumental loss (several hundred dollars each, in fact) with the plan to make up the difference in software sales and royalties. Looking at the current situation (just go visit a Gamestop and check out the PS3 section), you can see the trouble with that in the short term.
Now one might say the long term plan is sound. Lose lots of money now, make it up later. Well there's another problem - many of the really huge 2007 titles are now 2008 titles. Killzone 2, Metal Gear Solid, etc - and many of the killer-app exclusives (Assassins Creed, Devil May Cry) are no longer exclusives. You can say Sony planned for that too. The best titles for any system, after all, are the first party titles. God of War 2 is one of SCEs biggest successes... and while games like Ratchet and LAIR have their own online followings, they are nevertheless niche titles... not GTA/GoW/Halo level blockbusters. Even Uncharted, which is amazing btw, is slipping under the radar.
Ok, now that you know all that... how are the short term losses looking now? Well, they're bloody astronomical. The short term losses are far beyond what anyone expected. The predictions of this situation were felt a few months ago when the entire company was placed on a hiring freeze. That is, no new employees can be hired no matter the losses. This is a pretty standard thing in big business when it looks like FYE goals are going to come up short. It happens every few years - especially when new hardware is launched... so there wasn't too much cause for concern.
But today was a massacre. SCE has laid off an undisclosed number of employees world wide. It's been a trickle here and there, but today the axe came down - suddenly, and without any warning. You can be assured a press release will be inbound sometime tomorrow with the usual buzzwords "Downsizing", "Stronger position going forward", etc... but what this means for anyone following the so-called "Console Wars" is that Sony is in seriously deep financial shit. They're a major company, they can take it, and they may yet weather this... but this should come as a staggering blow to consumer confidence. Sony is trying to cut their losses - and should those losses continue - what else might they cut?
This will be my last post as an industry insider.
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It's ok, he's in good hands.
