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SEGA Warns Of "Extraordinary Loss," Will Can Several Titles

Jonathan Lester
Financials, Layoffs, Sega

SEGA Warns Of "Extraordinary Loss," Will Can Several Titles

Games Division To Be Streamlined, Layoffs Expected

Uh-oh. In a statement to investors this morning, SEGA has warned that the latest financial quarter will mark an "extraordinary loss" for the company due to the games division under-performing at retail. To combat this oncoming financial blow, SEGA plans to streamline operations as quickly as possible.

Holding company Sega Sammy made the dire warning in a publicly-available statement, and expressed the intention to 'structurally reform' SEGA's gaming division. In raw numbers, net income will be less than half of the initial forecast, with losses expected at £54.3 million.

It is hereby notified that SEGA SAMMY HOLDINGS INC. (the “Company”) is expected to record extraordinary loss in the year ending March 2012 as described below, in accordance with its determination at the meeting of the Board of Directors held on March 30, 2012 to implement structural reform of the Consumer Business of its subsidiary SEGA CORPORATION.

SEGA blames this state of affairs on "the severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software." In an effort to reduce outgoings, they will cancel several titles currently in development and lay off an as-yet unannounced proportion of the workforce to create a "smaller company."

In accordance with the decision, the Company is expected to record extraordinary loss totaling around 7.1 billion yen, including costs in line with the streamlining of organizations and the canceling of development of some game software and costs for processing inventory.

As for the Consumer Business in the following period and after, the Company projects decreases in operating expenses due to the reform.

With UK-based SEGA studios Creative Assembly and Sports Interactive inspiring massive sales with the Total War and Football Manager franchises respectively, it's unlikely that the British workforce will be badly affected. However, we'll let you know as soon as SEGA formalises their streamlining plans... and we find out what titles they've cancelled.

Add a comment 1 comment
DivideByZero  Mar. 30, 2012 at 12:59

SEGA, in my oppinion, do not make good games anymore.

They are one of the middle ground games companies. Too big to be indie and too small to be a AAA power house. There games are middle ground too, but usually at full price.

Sure, they have the odd gem, but few and far between.

Sad times though.


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