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VG24/7: Sony doubles down on games, confirms 10,000 lay-offs

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G

Globox_82

Banned
Sony doubles down on games, confirms 10,000 lay-offs

New CEO Kazuo Hirai has revealed Sony’s strategic plans to dig back out of several successive loss years, focusing on core businesses and making significant cuts.

“Sony is positioning digital imaging, game and mobile as the three main focus areas of its electronics business and plans to concentrate investment and technology development resources in these areas,” the company said in a press release.

“By growing these three businesses, Sony aims to generate approximately 70% of total sales and 85% of operating income for the entire electronics business from these categories by FY14.”

In the gaming stream, Sony highlighted the PlayStation 3, Vita and PlayStation Network as its core platforms, failing to mention the aging but still viable PSP whatsoever, in conjunction with “accessories and peripherals”.

“The Company also aims to increase sales by enriching its catalog of downloadable game titles and subscription services available through the PSN platform, and also by expanding the lineup of PlayStation Suite compatible devices and content,” it said.

“Sony will target game business sales of one trillion yen and operating income margin of 8% by FY14.”

In addition to refocusing on three successful streams, Sony intends to ‘turn around’ its ailing TV line; expand into emerging global markets; and launch new businesses.

Finally, it intends to ‘realign the business portfolio and optimize resources’ – restructuring headquarters and subsidiaries.

“As a result of these measures, Sony estimates that the headcount across the entire Sony Group will be reduced by approximately 10,000 in FY12,” the company confirmed.

The total number of layoffs includes staff expected to end up part of external companies and subsidiaries as Sony realigns its corporate structure, and will “consider various measures to secure continuity of employment for employees at their new destinations”.

The restructuring is expected to cost ¥75 billion yen during FY12, but Sony is targeting sales of ¥6 trillion with an operating income margin of 5% in its electronics business, in FY14.

http://www.vg247.com/2012/04/12/sony-to-double-down-on-games-confirms-10000-lay-offs/

----------------

Maybe we get that high end PS4 afterall
 
M

M.D

Member
WSJ is doing a liveblog. Hirai is taking questions

Link

Some quotes

Someone asks: What do you think is Sony's No. 1 problem, and why does Sony need to continue to make televisions? Mr. Hirai says the company's speed is too slow, that decisions have to become actions faster.

Someone asks a good question about how Mr. Hirai's presentation seems to suggest that televisions are no longer a "core" business to Sony. Mr. Hirai responds with an "all options are on the table" answer in terms of manufacturing next-generation televisions

Someone asks: What do you think is Sony's No. 1 problem, and why does Sony need to continue to make televisions? Mr. Hirai says the company's speed is too slow, that decisions have to become actions faster.

The latest question is: Is there a possibility to create a grand alliance in televisions with Panasonic and Sharp, with the government playing a role? In response, Mr. Hirai says Sony is considering all possibilities but declined to comment further.

Mr. Hirai explains the "One Sony, One Management" slogan. He says there may be debate, but once something is decided, it will become action right away. He says there will be no second-guessing afterward.

In response to question about what happens if the TV business doesn't become profitable in two years, Mr. Hirai says a good company considers contingencies for a variety of outcomes.
 
B

bigtroyjon

Member
Press Release

Part about Games
Game - In the game business, Sony continues to deliver exhilarating entertainment experiences through PlayStation®3, PlayStation®Vita, and its unique combination of hardware, software, PlayStation®Network ("PSN"), and range of accessories and peripherals. These will form the foundations on which Sony will target further sales and profit expansion in the game business. The Company also aims to increase sales by enriching its catalog of downloadable game titles and subscription services available through the PSN platform, and also by expanding the lineup of PlayStation®Suite compatible devices and content. Sony will target game business sales of one trillion yen and operating income margin of 8% by FY14.
Click to expand...

Basically they say nothing about what they are actually going to do. Looks like they are projecting about $1 billion profit in 2014 which seems to suggest a PS4 that will be making money quickly.

Edit- And what in the hell does VG247 mean by doubling down on games?
 
S

SolidSnakex

Member
antonz said:
Where do you get that from this? If anything it stresses theneed for the Division to not be a money sink which means no more PS3 type debacles
Click to expand...

We've known for some time that they aren't going to make another PS3-type system (in terms of how much they lose per system). But that doesn't meant that they can't make a powerful system. The Vita is powerful, but it's nowhere near the PS3 in terms of how much money they lose per unit.
 
Y

yencid

Member
in addition to refocusing on three successful streams, Sony intends to ‘turn around’ its ailing TV line; expand into emerging global markets; and launch new businesses.
Click to expand...

HOW
 
C

CoffeeJanitor

Member
SolidSnakex said:
We've known for some time that they aren't going to make another PS3-type system (in terms of how much they lose per system). But that doesn't meant that they can't make a powerful system. The Vita is powerful, but it's nowhere near the PS3 in terms of how much money they lose per unit.
Click to expand...

I think that is partly because of how quickly mobile technology has progressed. I doubt they will be able to make a massive jump next gen without taking a loss.
 
T

timetokill

Banned
Well, good luck, I guess.

I still think they should have exited the handheld arena and focused on the console space. With the Vita slipping to a comatose sub-10k this week in Japan, and nothing of note on the way for the platform, I just don't see how they plan to really compete in that space when they keep hemorrhaging money like they do, as well as planning for a new console launch.

Good call to cut down on size, though they should probably just cut TVs altogether rather than trying to "turn it around."

But as ever, we'll see.
 
K

Kaako

Felium Defensor
Will be tough times ahead, best of luck.
I just want the PS4 specs to be somewhat beastly at least.
 
G

gofreak

GAF's Bob Woodward
They haven't given game specific figures for ages, just saying it's been profitable for the last x quarters, but you could derive operating income for last year from this chart:

SVMzz.png


i.e. around $400m+?

Notable they don't mention FY12 or FY13...i.e. PS3->PS4 transition years, likely loss making.


Also:

Bz0Kr.png


Vita-phone(s), mark it.
 
S

SolidSnakex

Member
CoffeeJanitor said:
I think that is partly because of how quickly mobile technology has progressed. I doubt they will be able to make a massive jump next gen without taking a loss.
Click to expand...

I guess that it just depends on how much they're willing to lose per unit. Going the Wii route would be very dangerous. They'd probably make some money, but it would be without question the least successful PS console in terms of overall sales. Well, unless they manage to figure out a hook like Nintendo did with the Wiimote. But I doubt that'll happen. There's no way that they're going to be able to sell their base on a system that might be a slight step up from the PS3.
 
A

a Master Ninja

Member
“Sony is positioning digital imaging, game and mobile as the three main focus areas of its electronics business
Click to expand...
Gaming, specifically their home consoles, are relatively safe. Digital imaging too, for the most part. I have ZERO faith in Sony's mobile department, though.
 
E

Erethian

Member
SolidSnakex said:
We've known for some time that they aren't going to make another PS3-type system (in terms of how much they lose per system). But that doesn't meant that they can't make a powerful system. The Vita is powerful, but it's nowhere near the PS3 in terms of how much money they lose per unit.
Click to expand...

It's easy to avoid heavy losses on hardware when you price a system out of being competitive. Sony needs a $400 next-gen console with minimal losses, but preferably it'd be $350 for the most expensive SKU.
 
M

Mario007

Member
a Master Ninja said:
Gaming, specifically their home consoles, are relatively safe. Digital imaging too, for the most part. I have ZERO faith in Sony's mobile department, though.
Click to expand...

Why? Xperia S is actually in high demand, being sold out for months in many countries, notably including UK. They also mention that Viao, Sony Mobile and Sony Tablet will share R&D which is very good news.
 
P

perfectchaos007

Member
a Master Ninja said:
Gaming, specifically their home consoles, are relatively safe. Digital imaging too, for the most part. I have ZERO faith in Sony's mobile department, though.
Click to expand...

I feel that taking on Apple and what they have established in the mobile department would be like a new search engine taking on Google. High risk, slim chance for reward
 
M

Mario007

Member
perfectchaos007 said:
I feel that taking on Apple and what they have established in the mobile department would be like a new search engine taking on Google. High risk, slim chance for reward
Click to expand...

They're not taking on Apple in mobile, rather they're trying to take on hTC and LG in the Android sphere. If they build themselves up like Samsung did, then they could maybe take on Apple. Sony have the advantage of its media services but they have to start offering some stuff from Sony Music and Pictures on their phones (which they seem to want to do). Maybe in 2 years, with Xperia SIII Sony can try to compete with Apple.
 
R

Rhindle

Member
So you've got a handheld platform that is tanking, and a console business that's about to launch a new hardware cycle - which if history is any guide will generate substantial losses for the first several years. And THAT'S the division you're counting on to be the profit leader for your company?

Boy are these guys in trouble.
 
A

a Master Ninja

Member
Sony needs to stand out from the plethora of all the other Android hardware manufacturers and make people actually care about getting a Sony Android smartphone. I'm skeptical they can achieve this. Then again, if you asked the average Android owner about who manufactured their phone, I wonder how many would get it right.
Averon said:
Sony new line of Xperia phones are good, though. The Xperia S is the best phone they made in years, in my opinion. Last I heard it's selling pretty well in Japan and Europe.
Click to expand...
I'm rooting for you, Kaz.
 
D

Dalthien

Member
bigtroyjon said:
The profit target for 2014 would suggest to me hardware that they are making a profit on almost immediately so I doubt it's bleeding edge.
Click to expand...

Seriously. There's absolutely no way they're bumping their margin up to 8% with a loss-leading PS4.

Rhindle said:
So you've got a handheld platform that is tanking, and a console business that's about to launch a new hardware cycle - which if history is any guide will generate substantial losses for the first several years. And THAT'S the division you're counting on to be the profit leader for your company?

Boy are these guys in trouble.
Click to expand...
Yeah, it really doesn't make any sense unless they are taking a very different approach with the PS4 than they've taken with any of their other platforms.
 
A

Averon

Member
a Master Ninja said:
Gaming, specifically their home consoles, are relatively safe. Digital imaging too, for the most part. I have ZERO faith in Sony's mobile department, though.
Click to expand...

Sony new line of Xperia phones are good, though. The Xperia S is the best phone they made in years, in my opinion. Last I heard it's selling pretty well in Japan and Europe.
 
M

Mario007

Member
Rhindle said:
So you've got a handheld platform that is tanking, and a console business that's about to launch a new hardware cycle - which if history is any guide will generate substantial losses for the first several years. And THAT'S the division you're counting on to be the profit leader for your company?

Boy are these guys in trouble.
Click to expand...

They are counting on them to be a profit leader in 3 years. That's about the time when you transition from current gen to next gen.

But it can also point to a ps3 slim for around 150 euros being launched soonish enough as that should bring in lots of profit and units sold.
 
lowrider007

lowrider007

Licorice-flavoured booze?
Averon said:
Sony new line of Xperia phones are good, though. The Xperia S is the best phone they made in years, in my opinion. Last I heard it's selling pretty well in Japan and Europe.
Click to expand...

It's a nice phone (Xperia S) but once again the software side lets them down, this is the latest phone and and it comes with ginger bread rather than ice cream sandwich which is due to come.
 
M

Mako_Drug

Member
Rhindle said:
So you've got a handheld platform that is tanking, and a console business that's about to launch a new hardware cycle - which if history is any guide will generate substantial losses for the first several years. And THAT'S the division you're counting on to be the profit leader for your company?

Boy are these guys in trouble.
Click to expand...

Hopefully they have a larger margin on PS3 hardware now and do a serious price cut before PS4, stimulate that market and get a lot of profit from that.
 
B

bigtroyjon

Member
Dalthien said:
Seriously. There's absolutely no way they're bumping their margin up to 8% with a loss-leading PS4.


Yeah, it really doesn't make any sense unless they are taking a very different approach with the PS4 than they've taken with any of their other platforms.
Click to expand...

I quickly went and looked back at the PS2 years(so I might be wrong, it was a quick look) and they had one single year with a profit margin at 8% or better. I think people might want to start preparing themselves for the Playstation Wii
 
A

Averon

Member
lowrider007 said:
It's a nice phone but once again the software side lets them down, this is the latest phone and and it comes with ginger bread rather than ice cream sandwich which is due to come.
Click to expand...

That is true. I've said before that Sony needs to move software development out of Japan. They are too slow.

I'm rooting for you, Kaz.
Click to expand...

Ha! I may sound like shrill, but it is a nice phone.
 
G

gofreak

GAF's Bob Woodward
Rhindle said:
So you've got a handheld platform that is tanking, and a console business that's about to launch a new hardware cycle - which if history is any guide will generate substantial losses for the first several years.
Click to expand...

Several years? Or two or three? Vita launched while the game business remained profitable. Now I don't think the game business will remain profitable in PS4's launch phase - the slides above omit a FY12 and FY13 guidance for a reason, methinks - but if Vita's anything to go by, the per unit hardware loss is likely to be relatively modest, and the r&d costs extremely modest, compared to PS3 anyway. Vita's r&d appears to have been extremely economical, and didn't get in the way of the game business's recovery.

This isn't a commentary on power, by the way. A relatively small hardware loss on a $300-400 system (i.e. for a budget in the $400-500 range), that isn't carrying large optical drive costs and that is made of relatively commodity parts should still be able to pack a punch IMO. You don't need massive bespoke R&D investment to get powerful parts...commodity parts are way more powerful than they can afford to put in for other reasons (thermal, power) anyway. The key is the per unit budget and where it's being allocated.
 
R

Rhindle

Member
Mako_Drug said:
Hopefully they have a larger margin on PS3 hardware now and do a serious price cut before PS4, stimulate that market and get a lot of profit from that.
Click to expand...
But we're talking two years after the next gen hardware launch. There's no way PS3 sales are going to be a substantial contributor by that point.

In the usual console hardware cycle, you might AT BEST hope to be breaking even two years into the cycle. So all signs point to them trying to design the PS4 for profitability from Day 1.

The question is what they think the selling point is going to be for an underspecced PS4.
 
A

Acheron

Banned
Mobile sure. But those game boxes aren't in for a good future, they need to complete the transition into content hubs that have games rather than gaming focused devices. If they don't do that they're going to get slapped out.
 
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