Corporation attempting to control losses with digital shift, portfolio trimming
SEGA Sammy Holdings
SEGA has announced that it will be streamlining its EU and US operations, resulting in job losses and the cancellation of some titles.
The move comes in response to increased loss predictions for the forthcoming year-end financials, with net income projections slashed by almost 50 per cent to ¥18 billion from ¥38 billion for the year ending March 31, 2012.
For the same period in the year previous, SEGA Sammy recorded profits of ¥41.5 billion.
No indication of how many jobs will be lost at the publisher, but it seems that those which are cut will be taken from areas of the business focused predominantly on the EU and US market. The changes, intended to "create a smaller company positioned for sustained profitability," have been blamed on unfavourable market conditions in the West.
"Consumer Business centered on SEGA Corporation is expected to post operating loss in the year ending March 2012, due to the challenging economic climate and significant changes in the home video game software market environment in the U.S. and Europe," reads a SEGA press release.
"It is essential to streamline organizations in the field of home video game software in the U.S. and European markets, while shifting to a structure that corresponds to change in environment, including strengthening development in the field of digital content."
SEGA Press Release
"Given this circumstance, the companies determined that in order to actualize earnings recovery of the Consumer Business in the following period and after and return to a growth path, it is essential to streamline organizations in the field of home video game software in the U.S. and European markets, while shifting to a structure that corresponds to change in environment, including strengthening development in the field of digital content."
Games which are designed to appeal to European and American customers will be reduced, also, with only proven IP seeing continued development.
"We conducted detailed reviews of earnings projections for titles targeted toward the U.S. and European markets and decided to narrow down sales titles from the following period and after to strong IPs, such as 'Sonic the Hedgehog,' 'Football Manager', 'Total War' and 'Aliens' which are expected to continue posting solid earnings," continues the release.
"In accordance with this, we are canceling the development of some game software titles."
Although SEGA is still predicting a small profit for the year total, it does expect an "extraordinary loss" of ¥7.1 billion for the period as a result of the adverse conditions, of which ¥4.9 billion will be costs from the restructuring itself.
SEGA has been contacted for further details on how many jobs may be lost and which titles have been cancelled.
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