The internet has been buzzing here and there about rumours that Sony might be in a position that’s going to affect a lot of people very shortly. Ahead of the release of their annual examination of the past business year, Sony warns that it might post a possible $6.4 billion in losses and much more woes for their employees.
So there’s a trend we see now, where the gaming industry is being hit incredibly hard by the economic recession, even though we’re officially supposed to be out of it. European-based GAME stores had to close 227 outlets and retrench over 2000 employees because of changes to the models they used for acquiring stock from publishers. The publishers are clearly feeling the pinch and had to start asking for money up-front instead of doing consignment orders, forcing companies like GAME whose business models rely on the consignment of goods into a rough corner. Games are an expensive hobby, guys. Its not like foodstuffs, its not something people can’t live without. More and more, we see people taking their titles out the bargain bin instead of buying them at launch, forcing publishers and developers to raise their prices that much higher to cover their costs.
Money’s tight for everyone, and none more evident now than for Sony. The TV, mobile phone and Playstation giant may post a $6.8 billion deficit in profits, forcing it to scale down operations in Sony TV and the audio entertainment segment. Its estimated that the TV branch of the company may have accumulated debts and losses amounting to over $10 billion in the past decade. Its now rumored that this may cause Sony to cut executive bonuses and force the HR department to retrench up to 10,000 employees in various sectors.
Its interesting to note that very few technology companies are making a profit or breaking even. Nokia is shedding even more employee weight to further slipstream things (read: get ready for a Microsoft takeover), Kodak of all things has gone the way of the dodo, AMD recently pulled themselves out of the doldrums and Intel last year posted a profit so huge they could buy their own country with their spare cash. They showed the finger to the entire industry when settling with AMD on their lawsuit regarding x86 and x86-64 licenses and then proceeded to reveal that they’re richer than everyone else anyway.
Its almost unfair, really. Apple is even expected to be the first trillion-dollar company this year. In the world. Ever. This puts Sony’s woes in a completely different spotlight altogether and highlights some of their recent attempts at pulling in more profit from the SEN (formerly the PSN) with Playstation Plus. Microsoft’s Live store has been pulling in a decent profit for the company each quarter, and the numbers of new subscribers daily only serves to cement the fact that Xbox appears to be the easier console to pick up for gamers.
Traditionally the Japanese giant always was ahead of their competitors with the PS One and PS2 (the fact that the PS2 still enjoys healthy sales nine years later is a testament to how well Sony can pull things off), but right now things are looking very unsteady. True, console sales are still healthy, and they’re finally making a small profit on every unit sold. SEN over the years has really proven itself to be a great alternative to Xbox Live. However, weaker developmental efforts caused Sony to lose money in the PSP Go and now the Vita, the sales of which are far less than predicted. Just like Nintendo’s 3DS, it seems people aren’t interested in mobile gaming like they used to be anymore.
Sony has to hope that the combined efforts of their Vaio Ultrabooks, AMD’s Trinity APU, their new Android ICS mobiles, the PS Vita and the upcoming Playstation Orbis will be enough to keep the company above water.
Update – In a statement to the media, CEO Kazuo Hirai has promised Sony fans that there are plans to change the company around and bring it back into profitability. Sony will focus on mobile products, gaming, digital imaging and the medical business, and no mention has been made on how the company will approach the ailing TV division. With their buyout of Ericsson last year they’re certainly in a position to improve, and only time will tell if they’ve got the right minds on the job to make things happen.