Will Labor Issues Ding Sony PlayStation Sales?

PlayStation 4 Hardware

Following more ugly news about labor conditions in Chinese factories, Sony (NYSE:SNE) found itself on the receiving end of criticism surrounding the production of PlayStation 4 consoles. Quartz picked up a Chinese media report that said interns were being abused while working on the PS4 in Foxconn (FXCOF.PK) factories, news that could affect other U.S. corporations and ultimately ding PS4 sales, which begin November 15.

From the different reports circulating about internship policies at Foxconn — a supplier of Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) products as well as Sony — it appears management overworking students in exchange for course credit at school. While such practices are relatively common at internships, students working 11-hour shifts and regular overtime to help produce PS4 systems was excessive. Those who threatened to quit risked missing graduation on time, as college credit would not be granted.

Sony is in the midst of a production push ahead of the next-generation PlayStation launch. Microsoft, about to launch its rival Xbox One on November 22, also employs Foxconn factories to supply its popular video game consoles. However, the latest scandal involving Foxconn labor conditions focuses solely on Sony.

Sony has a lot riding on the release of the PlayStation, which will be hotly contesting with Microsoft’s Xbox One in the run-up to Thanksgiving. Early orders have been promising for both gaming consoles, and analysts are having trouble predicting which one will catch fire and become the dominant system of the coming period.

Western observers have been wary of Foxconn factories since a report of attempted mass suicides surfaced in 2010. Apple took a major publicity hit then, and these reports of intern abuse could hit Sony hard at this crucial period leading to the PS4 launch. Both Sony and Microsoft have released statements saying they care about employees around the world, The Washington Post reports, but the implications for Sony could end up damaging PlayStation sales in coming months.

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