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Sony Computer Entertainment and Sony Australia could be forced to merge in an effort to cut costs. The move could result in several people being made redundant, with others forced to move to North Ryde where Sony Australia is located.Senior management at both Companies are refusing to comment. 

Late yesterday Sony said that it plans to consolidate its international distribution operations with those of its videogames unit this fiscal year to reduce overlapping costs.

The loss-making company has several operations in Australia, including movie and music as well as SCE, which distributes the PlayStation gaming products, and the mainstream Sony Australia operation.

Merging the SCE operation with Sony Australia makes sense, say insiders, as both companies have overlapping operations, including PR and marketing, distribution and sales. In most cases, they are selling a Sony product to the same retailers.

As at March 2009, SCE reported revenues for the 2008/2009 financial year of $287 million vs revenues for the prior year of $293.32 million. Profits for 2009 were $5.87 million vs profits for the prior year of $3.60 million.

In 2008/2009, Sony Australia increased revenues by 12 per cent at March 31 2009 to $924 million. In March 2008, Sony Australia reported revenues of $823 million.

The 4 per cent decline in revenue came as both Microsoft with the Xbox 360 and Nintendo with the Wii took market share away from Sony.

 

Total marketing expenditure was $18.38 million, up from $18.14 the previous year. The bulk of this was spent on TV and catalogue marketing with mass market retailers.

Allowances for returns increased from $9.9 Million to $11.6 million; however, SCE has refused to comment on whether this was for faulty “Yellow Light” consoles or problem Blu-ray players.

The Japanese company and Sony Computer Entertainment, which sells PlayStation 3 software and hardware, will combine distribution routes and jointly bid for contracts, spokeswoman Mami Imada said. 

The cost of distributing products for the group will probably rise 50 per cent next fiscal year, after falling 25 per cent to 150 billion yen ($1.6 billion) in the 12 months to March 31, Imada said.

Sony, forecasting its second annual loss, eliminated about 20,000 jobs and is cutting 330 billion yen in costs to bring its TV and game units back to profitability in the year ending March 2011.

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