Sega Streamlining Operations And Cutting Games

It looks as though SEGA might just be on it’s last leg as a developer with clout in the gaming industry. Today it was announced that Sega Sammy’s gaming division is posting an operating loss of approx. $86 million. To combat the loss they have decided to streamline operations and to cancel games. They arre going to focus on core titles that they think are strong, like “Sonic the Hedgehog,”, “Football Manager”, “Total War” and “Aliens.”

I for one am now worried that we will get no “Bayonetta” or “Devil May Cry” sequels. Also, never expect a true =, non-psp, seqel to the extremely good “Valkeria Chronicles.” This is exre,]mely disappointing in a number of other ways too, mostly because most of the “Sonic” games are just plain terrible.

Here is an excerpt form the SEGA SAMMY HOLDINGS INC. board of directors meeting that was held on March 30, 2012:

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. – 2 –

(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.