PlayStation is laying off 900 staff across Naughty Dog, Insomniac and other studios

It’s another bleak day for the gaming industry as there’s more news of mass layoffs. This time around, its PlayStation that’s gutting its studios. Sony Interactive Entertainment (SIE) says it’s laying off around 900 staff from its PlayStation division, roughly 8 percent of that department’s headcount.

Insomniac (Spider-Man and Ratchet and Clank), Naughty Dog (The Last of Us) and Guerrilla (Horizon) are all affected by the cuts. Those studios are behind some of PlayStation's most important franchises. For instance, within three and a half months, Marvel's Spider-Man 2 had sold 10 million units.

Sony's London Studio, which had been working on a co-op multiplayer game for PlayStation 5, is shutting down entirely, while Firesprite will also lose some staff. In addition, PlayStation will lay off workers from its Technology, Creative, and Support teams.

PlayStation employees in the US who are losing their jobs will be informed today. Sony will adhere to local laws and regulations for carrying out layoffs in other territories — the company says people in all of its global regions will be affected.

"After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company," outgoing SIE president and CEO Jim Ryan told staff in an email. "We had to step back, look at our business holistically, and move forward focusing on the long-term sustainability of the company and delivering the best experiences possible for our community. The goal is to streamline our resources to ensure our continued success and ability to deliver experiences gamers and creators have come to expect from us."

Meanwhile, Hermen Hulst, the head of PlayStation Studios, said that SIE leadership evaluated its studios and portfolio and looked at projects that are in various stages of development. Some of those projects have now been canceled. Hulst didn't provide more details, but the projects that have been canned surely include the one that London Studio was working on. According to Bloomberg, a live-service Twisted Metal game that was in early development at Firesprite is among the canceled projects.

"I want to be clear that the decision to stop work on these projects is not a reflection on the talent or passion of team members," Hulst wrote in a memo. "Our philosophy has always been to allow creative experimentation. Sometimes, great ideas don’t become great games. Sometimes, a project is started with the best intentions before shifts within the market or industry result in a change of plan."

Hulst also noted that SIE is re-assessing its approach to delivering the kinds of expensive blockbuster single-player games that PlayStation has become known for over the last decade or so, and balancing that out with its desire to create long-tail multiplayer games. "Delivering the immersive, narrative-driven stories that PlayStation Studios is known for, at the quality bar that we aspire to, requires a re-evaluation of how we operate," Hulst wrote. "Delivering and sustaining social, online experiences — allowing PlayStation gamers to explore our worlds in different ways — as well as launching games on additional devices such as PC and mobile, requires a different approach and different resources."

Sony is working on multiple live-service games and had planned to release 10 of them by 2026. At least one of those — The Last of Us Online — was shelved. However, the company has seen some success on the live-service front, with Helldivers 2 becoming one of the biggest hits of the year so far.

However, it emerged this month that Sony doesn't plan to release any sequels for its major first-party franchises until at least April next year. It's relying on third-party titles such as Final Fantasy 7 Rebirth and the Elden Ring expansion to help cover the gaps in its own pipeline. The company also lowered its PS5 sales forecast for the current fiscal year, which ends on March 31. It expects to sell 21 million consoles in fiscal 2023, down from the previous estimate of 25 million.

This slate of layoffs brings the total number of job losses in the games industry so far this year to more than 7,000 (we haven't even reached March yet). That's on top of the more than 9,000 people who were laid off from the industry in 2023.

Microsoft conducted sweeping cuts in its gaming division in January, laying off around 1,900 people. Riot Games, Unity, Twitch (which is games-adjacent instead of a gaming company), Supermassive Games, Dead by Daylight developer Behaviour Interactive and Sega of America are also among those who have carried out layoffs.

Update 2/27 10:53AM ET: Added a note about a Twisted Metal project reportedly being one of the canceled games.