UPDATES Layoffs After Sony Pictures’ Best Box Office Ever Worldwide

As an insider told me just now, “This follows communications with the employees of Sony Pictures going back several months about the challenges facing the entertainment business and the need to adapt in order to be successful in the future.” Again, these layoffs follow Sony Pictures’ all-time best box office performance ever. Among the specifics I’ve learned:

  • Approximately 450 people are expected to be affected by these layoffs;
  • This represents just over 6 ½% of the current workforce (of about 6800 people);
  • Also about 100 currently open positions are expected to be closed;
  • The notifications are occurring in stages, with most being done by the first week in March.

This email went out to staff today:

From: Michael Lynton and Amy Pascal
Sent: Monday, February 01, 2010 2:58 PM
Subject: Transforming the Studio

Dear Colleagues,

Sony_pictures_logoIn 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”

In addition, there’s a video message on the employee website discussing the changes underway:

Michael Lynton: “Amy and I have spent a lot of time thinking and talking and worrying about the impact that this has on people, these layoffs; we understand that they’re very, very difficult. We also, though, have to look to the future and make sure that the people who we do work with every day have a very good work environment…and that the environment that we’ve created collectively, as a studio together, is the best possible one moving forward.”

Amy Pascal: “Our industry is affected by two things: it’s affected by the economy, of course, and it’s affected by technology….Over the last two years, it’s changed people’s DVD buying habits, which has had a huge effect on our company and the industry at large…..We are going through a painful time now, and the next couple of months are going to be challenging for everybody but…everything that makes Sony unique and special – that is not going to be lost in this.”

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