Job losses and cancelled titles as SEGA streamlines Western operations
Corporation attempting to control losses with digital shift, portfolio trimming
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.
It is essential to have a finger on the pulse of the market and to deliver games that customers want.
Sega really are a prime takeover target. Someone like Zynga could make hay with all the IP available there.
Farmville with Aliens... ;) The in-app purchase would buy you a squad of colonial marines ;)
I would love to see some of these studio teams work on steam pc titles then the straight to mobile or psn/xbla.
Obviously they have dabbled recently and really should be proud of their work with Platinum but they really need to give their digital ventures a bit of time. Most of these are slow burn and are a great way for them to be making their back catalogue profitable again.
Generally I think they have the opportunity and the expertise to do something a bit braver in the digital space and start making a name for themselves.
EDIT: Also find this whole cull quite culturally interesting as SOE has long running been SEGA's most profitable arm yet no one in Japan is getting the chop...
Edited 1 times. Last edit by Patrick Frost on 30th March 2012 12:39pm
Over the next 15/20 years, this entire industry is going to gravitate east - this is just part of it. In that sense, I'm not surprised.
:(
Also, in fantasy land I have a totally implausible desire to see Valve buy Sega and make the Steambox Dreamcast. Sure it makes no sense, outside of my mind.
Edited 1 times. Last edit by Andrew Goodchild on 30th March 2012 6:56pm
Secondly, Bruce we get it by now. Yes you like Zynga stuff and similar stuff we get it. That`s good for you and many people like Zynga and social gaming and that kind of things. The day Zynga aquires a real game developer will be one of the sadets days in video gaming history since Sega left the hardware market. I would never ever want Zynga as the owners of IP`s like Yakuza, Sonic, Valkyria Chronicles and co.
You know what I think about Zynga? If I would have the choice of having no job or working for Zynga I would rather have no job because I would never ever work for them despite the high salary they offer.
Edited 3 times. Last edit by Private on 31st March 2012 2:54am
If one were to look at the core assets - there is a amazingly long list of first party and 3rd party titles published/developed by SEGA. Its just that in the west, we dont hear or are fully aware of the list...here is a small sample
Japan: Sonic & Co, Valkyria chronicles, Phantasy Star, Initial D, Yakuza, Vanquish, Sakura Wars, House of the Dead, Virtua Fighter, Shenmue, Nights, Panzer Dragoon, Virtual On, GunGrave, Space harrier
Virtua Tennis, Puyo puyo, Sega bass fishing, SEGA rally, OutRun, Virtual Cop
International: Total War series & Alien franchise
Anyway, hopefully Anarchy Reigns will be successful for them, but it can't see it doing anything more than modest numbers really. Nonetheless, I think the PlatinumGames partnership is one of the best things Sega has done in years and hopefully they'll continue to work together in the future.