Edge

Sega Sammy has warned investors that earnings and profits for the year ending March 31 will be hit by its underperforming games business, and is to cancel games and streamline its operations as a result.

The company expects net sales revenue for the fiscal year to be ¥46,000 lower than previously predicted. Overall net income, or profit, will be ¥20 billion (£153m), almost half the ¥40 billion it previously forecast.

The cause, Sega Sammy admits, is its consumer business, which will post an operating loss "due to the challenging economic climate and significant changes in the home videogame software market environment in the US and Europe."

To stimulate recovery and return the division to profit, Sega says it is "essential to streamline organisations in the field of home videogame software in the US and European markets while shifting to a structure that corresponds to [this] change in environment, including strengthening development in the field of digital content."

There will be job losses, resulting in "a smaller company positioned for sustained profitability." It is focusing more in its more reliable, long-running IPs including Sonic The Hedgehog, Football Manager, Total War and Aliens. Other, unspecified games will be cancelled entirely.

Sega Sammy plans to record unexpected, or "extraordinary" losses of ¥7.1 billion (£54.3m), of which ¥4.9 billion (£37.5m) will be costs associated with its restructure.

http://www.edge-online.com/news/sega-restructure-loss-making-games-business

You know, as much as I love Sega I can't say this isn't for the better. Sega reminds me in many ways of the current Sony. They produced brilliant consoles that were ahead of their times (even if their power sacrificed convenience and were unnecessarily expensive) as well as an amazing first party studio; however, they were simply plagued with poor business decisions and management.

Hopefully despite the restructuring they will still retain the freedom to take creative risks, just slightly more educated risks and focus their talents. They still have many great development teams they are simply inconsistent in their quality. I would much rather they took the time to create ten polished games that demonstrate their true ability than yearly iterations of sonic and lesser known titles

And here i thought SEGA was getting back into shape on the software front... back to producing only crappy Sonic games?

I suppose Binary Domain ended up not giving them much of a profit, but i think it was a very enjoyable game. Unfortunely western reviewers have been locking japanese developers out and judge design decisions has faults.
In another way, i guess it hurts to the japanese cause they do the same with the Xbox.

In the end, its bad for all gamers.

Heres hope this isnt as bad as it sounds for SEGA. I was enjoying their atempt at a comeback and i hope they keep bringing back their dreamcast/genesis/saturn classics.

"The Amusement Machine Business and Amusement Center Operations Business are expected to post strong results, while the Consumer Business is expected to record operating loss as indicated in "1. Reasons for recording extraordinary loss." Furthermore, the Company will post approximately 4.9 billion yen as costs in the fourth quarter as the Company book impairment loss on work in process of some titles currently being developed after reevaluating the profitability of game software to be sold from the end of the current period to the next period in consideration of the market environment." - source

Pachinko Machines making money, games not so much.

Just let Nintendo buy you sega.
It'll be good for business and a really strong message towards world peace. Think of the children.