• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

Sega announces extraordinary loss of 7.1 bn yen, layoffs, restructures, cancels games

duckroll

Member
http://www.segasammy.co.jp/english/pdf/release/20120330gyoseki_e_final.pdf
http://www.segasammy.co.jp/english/pdf/release/20120330sega_kaikaku_e_final.pdf

The Consumer Business centered on SEGA CORPORATION is expected to post operating loss in the year ending March 2012, given the severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software. Amid such business environment, the Company decided to implement structural reform of the Consumer Business at SEGA CORPORATION to strive for a shift to a structure corresponding to the market environment for the purpose of earnings recovery in the following period and after.

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.

Please refer to “Concerning Structural Reform of Consumer Business at SEGA CORPORATION” announced on the same day for details of the reform.

1. Reason
The 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.
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.

2. Descriptions of measures

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

(2) Reduction of number of titles
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. In accordance with this, we are canceling the development of some game software titles.

(3) Booking impairment loss on work in process assets
We will book impairment loss on work in process assets concerning some titles after
reevaluating the profitability of work in process concerning game software which are going to be sold in the U.S. and European markets from the end of the current fiscal period to the following fiscal period.

(4) Processing of inventory
In accordance with the streamlining of organization in the U.S. and Europe markets, we will
estimate allowance for expenses among game software inventories, including inventory on the market that is currently circulating.

4. Future outlook

In the year ending March 2012, we are planning to record 7.1 billion yen in extraordinary loss as
expenses in accordance with the structural reform, which the cost is believed to be 4.9 billion yen.
Please refer to “Notice of Extraordinary Loss and Adjustment to the Forecast of Operating
Results” announced on the same day as its forecast for the full-year consolidated operating results
for the year ending March 2012.

We expect operating expenses for the Consumer Business in the following period to decrease due
to our latest efforts.
 

cw_sasuke

If all DLC came tied to $13 figurines, I'd consider all DLC to be free
...i thought they were the one makin at least some money ? Suprising.
 

EatChildren

Currently polling second in Australia's federal election (first in the Gold Coast), this feral may one day be your Bogan King.
If Bayonetta 2 is kaput I'm nuking the internet.
 

duckroll

Member
You heard it hear first, any Sega game which isn't “Sonic the Hedgehog,”, “Football Manager”, “Total War” and “Aliens”, has been canned.
 

Bebpo

Banned
I thought they just posted huge profits last quarter while all their companion Japanese game companies posted huge losses. (and secretly we discovered 95% of the profit was from pachinko, and Sega's game division was just barely profitable).
 

Dalthien

Member
I thought they just posted huge profits last quarter while all their companion Japanese game companies posted huge losses. (and secretly we discovered 95% of the profit was from pachinko, and Sega's game division was just barely profitable).

To this day, I have still never understood why Sammy wanted anything at all to do with Sega.
 

PKrockin

Member
Maybe this wouldn't have happened had you released Shenmue, Skies of Arcadia, and Jet Grind Radio on PSN/XBLA, genius.

i know.
 

Pie and Beans

Look for me on the local news, I'll be the guy arrested for trying to burn down a Nintendo exec's house.
And yet they choose to not release a whole swarthe of already developed and finished japanese content to make money in the west or even make deals with third parties to do so and generate revenue. Segaaaaaaaaaaaa~

PSO2 as f2p seems like something of a massive gamble at this point as well.
 

Nirolak

Mrgrgr
No not Phantasy Star Online 2 too!
Unlike Bayonetta, I'd consider that one to be a Japanese focused brand, whereas they're mostly cutting their unprofitable brands that have to sell in the West (since they only spend like $5 on their Japanese market games).
 
Gaming industry isn't looking good after today and yesterday's news.

More THQ layoffs, Best Buy closing 50 stores across the US due to weak gaming sales and televisions, and now this.
 

Bebpo

Banned
You know, at some point every single gaming company that isn't Activision or maybe EA is going to go out of business at this rate.

Rebuild the industry from the ashes I guess?
 

trinest

Member
You know, at some point every single gaming company that isn't Activision or maybe EA is going to go out of business at this rate.

Rebuild the industry from the ashes I guess?

When that happens however the industry will only crash quicker.
 
Makes me sad to see what has become of one of the great games companies of my childhood.

A Football Manager game for the Wii U could make megabux though.
 

HylianTom

Banned
When that happens however the industry will only crash quicker.

A potential industry crash (or my favorite company going bye-bye) is enough reason for me to collect games, even if I don't play 'em for months or years. There's a 25-year backlog just waiting for me to unwrap them.

To steal an old NBC summer marketing line that they used for summer re-runs: "If I haven't played it, it's new to me!"
 

Beth Cyra

Member
This is the end of Platinum games isn't it?

Sega doesn't own Plat.

Though I want to see who is willing to publish there games next. Outside of Bayo nothing has done that well. I guess they have MGS Revengence but I want to see who steps up for more new IP's from them.
 
Top Bottom