Sega drops jobs, cancels games as losses mount
April 2, 2012 // 12:19 p.m.
Sega has confirmed that it is to cut jobs and cease development on non-core titles as it looks to deal with a drop in income of almost 50 per cent for the financial year.
The company has confirmed that it is undergo a restructuring exercise which will see considerable job losses in Europe and the US, although it isn't quantifying exactly how many positions are at risk.
As a further part of its attempts to stem its losses, the company has declared non-core IP a casualty. Instead of developing new games, Sega will be concentrating on driving its established properties including Sonic the Hedgehog, Total War, Football Manager and the Aliens franchise.
Finally, the company is looking to get out of the retail business in favour of creating downloadable titles for sale on services like Xbox Live Arcade, PlayStation Store, the Nintendo eStore and Valve's Steam platform. As a result, you can expect to see significantly fewer Sega games on shop shelves in the near future.
'This realignment of the business around existing and digital IP is a necessity to ensure that Sega continues to invest and enhance its digital business offering, whilst reducing its reliance on traditional packaged goods,' a company spokesperson explained in a statement to press.
'As a result of the Sega Sammy Board decision to consolidate the business, many of our internal functions will be re-structured and this could result in a number of redundancies within the publishing business across the Western organisation. The company will be entering into a re-structure phase to reflect the unprecedented change in our industry and to move the company forward appropriately.
'The changes will position Sega as a content led organisation, maximising sales with a strong and balanced IP portfolio across both packaged and digital distribution. The management team are confident that the proposed restructure will benefit the company and make it fit for purpose within the changing nature of the industry over the coming years.'
The news comes as Sega reports a drop in profits from a projected ¥38 billion to just ¥20 billion (around £286 million to £151 million) for the completed financial year. The restructuring exercise, coupled with penalties for cancellation of titles currently in development, is estimated to be costing the company around ¥7.1 billion (around £53 million.)