Game Cancellations and Company Streamlining On the Way
Today, Sega Sammy Holdings announced that they will be restructuring Sega Corporation’s operations in the United States and Europe as they are expecting a one-time loss of around $72 million. The coming reform is intended to reshape Sega’s internal company structure while putting even more of a focus on their digital sales presence. This will lead to smaller internal teams, fewer games released per year, and several canceled titles. The company released a statement that reads as follows:
The Sega consumer business is expected to post operating loss due to the challenging economic climate and significant changes in the home video game software market environment in the US and Europe.
It is essential to streamline [our] organisation in the field of home video game software, while shifting to a structure that corresponds to a change in environment, including strengthening development in the field of digital content.
We decided to narrow down sales titles to strong IPs such as Sonic the Hedgehog, Football Manager, Total War and Aliens which are expected to continue posting solid earnings. In accordance with this, we are cancelling the development of some game software titles.
Exactly how many games will be impacted by this downsizing is not currently known. As it stands, though, the blue blur will not be severely impacted by this shakeup. Investors don’t seem convinced that this action will be helpful, however, as Sega Sammy’s stock has been consistently down since the announcement. At the time of this article’s publication, the stock fell by two percent to $5.12 per share. We will continue to monitor Sega’s situation and pass along information as we receive it.