Sony to make $100m in cuts – Bain and Co. brought in to advise

Bain and Co. brought in to advise, job losses in entertainment business expected
Sony.

Sony has hired a management consultancy firm to advise on $100 million of imminent cuts. According to a report from Bloomberg, a source with knowledge of the proceedings has claimed that Bain & Co. will assist in making significant cuts across various divisions, including an undecided number of job losses.

The cuts are part of an ongoing process of streamlining within Sony, but they are also said to be a direct response to its disappointing second-quarter results, in which the company’s earnings forecast was slashed by 40 per cent. This led Moody’s Investor’s Service to threaten to downgrade Sony’s debt rating to “junk” unless improvements were made.

However, the cuts are likely to focus on Sony’s film, television and music divisions. Right now, the company’s gaming business is enjoying a period of great promise, after selling more than 1 million units of the PlayStation 4 on its US launch day.

 

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Activision Blizzard completes share buyback

Bobby Kotick points to China as focus of future growth.

Activision Blizzard and an investor group led by CEO Bobby Kotick has completed its share buyback from parent company Vivendi.

The deal was finalised the day after a Delaware court lifted an injunction that came into effect after another Activision Blizzard shareholder asked for a shareholder vote to approve the deal. Activision Blizzard now owns $5.83 billion of stock, with Kotick and his partners owning $2.34 billion. Vivendi’s stake has been reduced to 12 per cent.

“It reduces the uncertainty about our business and allows us to get back to focusing on making great games,” Kotick said in an interview with Bloomberg.

During its five years as a unit of Vivendi, Activision Blizzard was consistently one of its strongest performers in terms of revenue and profit. However, the same was not true of Vivendi’s other holdings, and the buyback will give Activision Blizzard the freedom to pursue opportunities for growth.

Kotick told Bloomberg that a focus for that growth will be the burgeoning games market in China. Tencent, China’s leading online company, is one of the partners in Kotick’s investment group.

 

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Jack Tretton: “The Battle for Next Generation’s Hearts and Minds is Being Waged in the West Right Now”

With both the PS4 and Xbox One set to release on the same month in most of the Western world, it’s clear that this November is going to be one of the most exciting months in the history of gaming.

SCEA’s Jack Tretton told Bloomberg that the PS4 will be “far and away the biggest launch” SCE’s ever had, saying:

[To give] a sense of the pent-up demand, we announced that we have pre-sold over a million units worldwide, and that is really only a fraction of what the actual demand is, but we’re going to be out in over 30 countries by the end of the year, so that’s indicative of the fact that it’ll be far and away the biggest launch in our corporate history.

Japan, however, may not get the PS4 this year, so Bloomberg asked Tretton why that was. He replied:

Japan is to be determined, it is obviously [an] extremely important market for us, it’s the home market, but the battle for next generation’s hearts and minds is being waged in the west right now, and I think it’s a recognition by us that this is the market we want to lead with.

Who is winning the battle, and who will win the war? Share your thoughts in the comments below.

 

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