Sony to Lay Off 6.5% of Its Workforce

Cuts will affect 450 staffers across all studio divisons, with majority focused on home entertainment and IT

Sony is preparing to lay off 450 staffers in March, or approximately 6.5% of its workforce.

The cuts will affect each of the studio’s U.S.-based divisions, with the majority occurring in home entertainment and IT.

In a memo released to staff Monday, studio co-chairs Amy Pascal and Michael Lynton said the cuts were needed to keep pace with ongoing changes in the realms of distribution and marketing.

"The need is clear: from the growth of online piracy, to the social media effect on the performance of films, to the way people have changed how they watch television and acquire DVDs," the memo stated. "The business is going through a rough period of triall and transition, and we have an obligation to take the steps necessary to get through it."

The cuts, which also include the closing of about 100 open positions, come after Sony’s theatrical division posted record worldwide revenue at the box office for 2009.

"Despite the records our studio set at the box office, we’re not immune from these forces," the memo stated, adding that the layoffs will come in several stages. Most affected staffers will be notified during the first week of March.

Just eleven months ago, Sony laid off 250 staffers and closed another 100 open positions.

Here’s the memo to Sony staff:

Dear Colleagues,

In our article in The SPE Reel in December, we spoke about the shifting landscape of entertainment and its impact on the economic model at the heart of this industry.  Despite the records our studio set at the box office, we’re not immune from these forces, and we said then that costs needed to be controlled as part of a sustained and strategic effort to remake Sony Pictures for the future.

Since that time, in all-hands meetings and small groups, our division heads and executive team have been in touch with many of you to talk in more detail about the transformation of the studio and the kinds of changes being considered.

Last week, the first steps towards the creation of a new operating model for our studio were taken in our home entertainment division and the IT department.

Today, we want to let you know, in a timely manner, what will be involved in the crucial — and difficult — next phase of this process.

In several stages, we will have a workforce reduction, with most of the notifications taking place by the first week in March.  It will affect each of the studio’s divisions, with the majority occurring in home entertainment and IT, and in the United States.

We do not have final numbers or specific dates for all reductions now, because decisions regarding proposals for certain international offices are pending.  Local laws will be governing a consultation process with employees in those locations.

The decision to take this step was difficult.  But it’s being done in the context of a strategy designed to help us safeguard our competitiveness and chart our own course through these troubled waters.

The need is clear:  from the growth of online piracy, to the social media effect on the performance of films, to the way people have changed how they watch television and acquire DVDs.  The business is going through a rough period of trial and transition, and we have an obligation to take the steps necessary to get through it. 

As we said in December, we are grateful to everyone at Sony Pictures for helping us meet the challenges of this time in our history from a position of strength.  And we are confident that the changes we’re making, as difficult as they are, will keep us on a path toward greater success in the future.

Michael and Amy