We've been following this economic crisis and how its affecting the gaming and technology industries for quite some time now, but it's hard to think of a period where so much bad news on it has surfaced all at once, and after the holidays, no less.
To summarize, Microsoft, Electronic Arts (EA), and Nokia have all announced significant job cuts, with Sony expected to do the same (again). Additionally, THQ's earnings for last year were lower than expected, and at least in the UK, the retail games industry appears threatened. Two bits of all positive news on the subject today, though: Ubisoft is reporting major growth (€508 million, up 12.9 percent for Q3 2008-09), and Apple has shown the best quarterly revenue and earnings in the company's history ($1.61 and $10.17bn).
So first is first: Microsoft will be letting go 1,400 people immediately, with another 3,600 (phwew) going within the next 18 months. The news follows their 11 per cent year-on-year net profit decline ($4.17bn for 2008). Microsoft CEO Steve Ballmer said:
“While we're not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach. We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today."
While the corporation has stated they cannot comment on whether or not their Entertainment and Devices Division will be affected, revenue did grow 3% courtesy of strong holiday demand (a record 6 million units).
EA, meanwhile, will be laying off an undisclosed amount of employees at its Tiburon division, the folks behind The Sims and Madden franchises, following the previously announced 1,000 cuts and closing or consolidation of nine of its production facilities. The company would not say how many workers would be gone, or if severance packages were offered. Around 700 people are employed at Tiburon; EA says the reductions will not dramatically affect the work done there.
On to Nokia, who will be cutting 1,000 jobs, following a drop in net income of 69 per cent to €576m for the quarter ending December 31st – their worst Q4 results since 2001.
Sony has revised its earnings estimates for the current fiscal year, now expecting to post a lost of $2.9bn (more than double previous anticipations), and announcing another round of cost-cutting initiatives. Earlier it was announced 16,000 jobs would be lost, but now that number looks to increase, though no numbers are yet available. As with Microsoft, the games division is, according to Sony Computer Entertainment Europe president David Reeves, not going to be affected, contrary to what the corporation's presentation earlier this morning said.
Next is THQ, who see their Q3 2009 earnings per share estimate go from 11 cents to breakeven, and Q4 estimate from a loss of 14 cents to a loss of 20.
Finally is the retail sector, which is apparently being threatened, at least in the UK, where publishers are battling to avoid a nationwide games stock shortage; credit insurers are cutting cover against the largest retailers in the business, leaving publishers and platform holders to deal with hugely reduced credit limits or with cash in their exchanges with the chains. Some publishers have already cut off stock with some of the troubled outlets.
Oddly enough, according to Ubisoft's CEO Yves Guillemot, software sales growth was abound this holiday season in the UK at a 23 percent increase, with console sales also going upwards at 14 percent.