Sega Restructuring, Expecting Massive Losses

It would appear that after a very tough year for Sega, the legendary company will be streamlining its operations, shutting down productions, and laying off employees.

It has been a tough, tumultuous couple of weeks for video game developers all across the map. Zipper Interactive, the team that brought us SOCOM, MAG, and most recently Unit 13, saw its inevitable closure. Robert Bowling, without any preemptive indicators, parted ways with Activision and Infinity Ward. Even thatgamecompany, coming off the incredibly successful launch of Journey, saw co-founder Kellee Santiago and producer Robin Hunicke leave for greener pastures.

In a letter to investor’s last week, parent company Sega Sammy announced that it would be seeing significant losses for the fiscal year of 2011, totaling in at somewhere around 7.1 billion yen, or $86.5 million USD.

One of the major unfortunate side effects of this loss will be the shutting down of production on many new or less popular properties in favor of dedicating time to “strong IPs, such as ‘Sonic the Hedgehog,’, ‘Football Manager’, ‘Total War’ and ‘Aliens’ which are expected to continue posting solid earnings.

Although the loss of an unknown number of Sega projects is bad news, even worse is the probability that many Sega employees may be looking elsewhere for work very soon. According to the letter Sega Sammy posted:

“We will streamline organization in the U.S. and Europe home video game software. This will create a smaller company positioned for sustained profitability.”

Game sales have decreased drastically all year, and we are saddened to see the unavoidable outcome finally coming to fruition, especially at a company as well known and well established as Sega. The recent output from Sega has not brought with it much fanfare, but hopefully 2012 will bring with it a new wave of quality software from Sonic’s company.

Do you think Sega streamlining their operations might be best for their long term success, or might this be a foreboding event for widespread downsizing in the coming months and years? Let us know in the comments below.

Source: VG 24/7Sega Sammy

tags: PS3, Sega, Wii

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