The maker of the PlayStation has announced plans to lay off 900 workers, 8% of the group’s total employees, as the industry faces an ongoing crunch. As part of those cuts, Sony plans to close its London Studio entirely.

In addition, the company plans to lay off workers at its Insomniac, Naughty Dog, and Guerrilla studios, who are responsible for the PlayStation’s most successful recent franchises—Spider-Man, The Last of Us, and Horizon.

“After careful consideration and many leadership discussions over several months, it has become clear changes need to be made to continue to grow the business and develop the company,” wrote Jim Ryan, president and CEO of Sony Interactive Entertainment, in a email to staff. “We had to step back, look at our business holistically, and move forward focusing on the long-term sustainability of the company…The goal is to streamline our resources to ensure our continued success and ability to deliver experiences gamers and creators have come to expect from us…This will be painful.”

Ryan will leave his position in March, a move that was previously announced.

The layoff plans come two weeks after Sony lowered the sales forecast for the PlayStation 5 for the current fiscal year, saying it now expects to sell 21 million units—a 16% reduction from its previous forecast of 25 million.

Holiday sales of the PS5 were weaker than expected, even with seasonal price cuts and promotions. In addition, Sony does not expect to release any major first-party titles before March 2025.

The PS VR2, the company’s second stab at the virtual reality market (after a successful first product), has not won over consumers and was widely outsold by Meta’s Quest headset over the holiday period. The London Studio has been the heart of VR development, so its shutdown signals Sony’s pullback from trying to be a big player in that market. (London Studio was also behind the PS4’s EyeToy peripheral and was working on a cooperative game set in a fantasy version of London.)

Sony is hardly alone in its staff cuts. A slowdown in interest in games as the current crop of consoles reaches the midway point in their life cycle, along with fast-rising budgets for title development, has resulted in more than 6,000 layoffs throughout the industry this year alone. A wave of consolidation is underway, with the biggest example being Microsoft’s acquisition of Activision Blizzard. Embrace Group, a Swedish video game holding company that owns several prominent developers, from Borderlands developer Gearbox Entertainment to Tomb Raider maker Crystal Dynamics, has canceled 29 upcoming games to date and said it will likely sell off more of its holdings in the coming months.

While the PlayStation’s near-term prospects are less than rosy with no big first-party games looming, 2025 could be a stronger year for Sony, as Take-Two will release Grand Theft Auto VI, which should give console makers a big boost as mainstream players who haven’t yet upgraded to a PS5 could be incentivized.

“While these are challenging times, it is not indicative of a lack of strength of our company, our brand, or our industry,” wrote Ryan. “Our goal is to remain agile and adaptable and to continue to focus on delivering the best gaming experiences possible now and in the future.”