Sony Pictures to cut 450 workers as DVD sales decline

Sony Pictures Entertainment is laying off 450 people, more than 6.5% of its workforce, as part of a studio-wide belt-tightening blamed on the growth of piracy and changing media consumption patterns, particularly the ongoing downturn in DVD sales.

In a memo to Sony Pictures’ roughly 6,800 employees Monday, Chairman Michael Lynton and Co-Chairman Amy Pascal said most of the layoffs would hit the home entertainment and information technology divisions in the U.S.

But all business units would be affected, they said, including motion pictures, television, digital production and corporate operations.

Along with the layoffs, the studio is eliminating about 100 open positions.


This will be the second time in a year that Sony Pictures has cut its workforce. Last March it laid off 250 people and scrapped 100 open positions.

“Our industry is affected by two things: It’s affected by the economy, of course, and it’s affected by technology,” Pascal said Monday in a video message to employees. “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.”

Industrywide, combined sales of DVDs and high-definition Blu-ray discs fell more than 13% in the U.S. last year. The drop for Sony Pictures was similar, a person close to the studio said. The Hollywood cash cow’s decline has had a major effect on every studio.

In December, Sony boasted that 2009 was its best box-office year, surpassing $3.5 billion in global receipts, with hits including “District 9" and “2012.” But rising ticket sales have not been enough to compensate for declining home entertainment revenue.


“Despite the records our studio set at the box office, we’re not immune from these forces,” Lynton and Pascal wrote to employees, referring to the shifts affecting the entertainment industry. “Costs needed to be controlled as part of a sustained and strategic effort to remake Sony Pictures for the future.”

Last fall, Sony Pictures cut back on its movie development as well, putting a near-freeze on spending until this April. Several other studios made similar moves, severely curtailing the market for screenplays and other source material.

Last week, Sony Pictures streamlined its home entertainment division to focus more heavily on digital distribution and to combine its domestic and international sales units.

Lynton and Pascal said that move, along with a shake-up of the information technology division, were “first steps toward the creation of a new operating model for our studio.”


Most of the people laid off are expected to be notified by early March.