Sony announced that it expected to suffer its largest annual loss in company history for the fiscal year that ended on March 31, estimating that it incurred a net loss of ¥520 billion ($6.4 billion USD). This more than doubles previous projections for the company, which has recently been struck hard by a large tax hit.
This news follows the company’s Monday announcement that it would cut 10,000 jobs, or roughly 6% of its entire global work force.
Masaru Kato, Sony’s chief financial officer, said the following in a press conference.
We consider the current situation to be very serious. We will take resolute measures to transform our business without protecting any sacred cows.
In response to these losses, new president Kazuo Hirai announced his new plan to reorganize the company. Envisioning “One Sony,” Hirai’s new plan will reintegrate the various Sony groups—such as Consumer Products & Services Group and Home Entertainment Business Group, which were the former controllers of the Playstation and personal audio businsesses, respectively—into one central corporate structure. The plan will also reshuffle Sony’s high command to focus on advancing the company’s interests as a whole instead of developing certain company products alone.
Hirai has further insisted that he is willing to make “hard decisions” to keep the company afloat.
Analysis: A lot has changed since the days when the PlayStation was the industry standard. Sony’s grip on the gaming industry has slipped considerably. Think about it: how many of you owned a PlayStation 2? And how many of you now own a PlayStation 3? It’s a smaller number in comparison.
The slow growth and late acceptance of the platform, mostly due to the prohibitively expensive launch price of the system, was a fatal misstep by Sony. They misjudged the consumer market, which allowed Microsoft to rob a large portion of their market share.
Is it too late for the company to come back? It might be. With the PlayStation 3 becoming in many ways marginalized by the success of the XBox 360, and with the company’s reputation being deeply damaged by its huge database compromise last year, many gamers have grown frustrated with the company and moved onto greener pastures.
It will take something big to regain consumer confidence and convince gamers to return to Sony. With the company reeling from its largest ever net loss, they might just not have the resources available to do that anymore.