Sega to Drop Games and Employees During Extreme Restructuring

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Sega to Drop Games and Employees During Extreme Restructuring

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Under the shadow of hundreds of millions in losses, Sega will place its fate in the white-gloved hands of Sonic the Hedgehog.

In response to a massive 47.4% drop in projected income during the fiscal year ending March 31st, Sega's board of directors has enacted a drastic plan to maneuver the company back toward fiscal stability. The company's new strategy will involve shrinking the scope of its operation in an effort to "create a smaller company positioned for sustained profitability." As part of this effort, Sega will halt development on a number of games and, in turn, presumably reduce the number of its employees to accommodate the plan.

Sega will immediately redirect its focus to a select stable of franchises including Sonic, Football Manager, Total War, and Aliens. While these series aren't expected to be the company's exclusive focus, it stands to reason that anything not appearing on the aforementioned list may have been cancelled. The board has yet to announce specifically which other titles are being cut, however.

Cancelling development and closing down operations isn't going to save Sega any capital in the short term, though, as the projected cost of creating this "smaller company" is approximately $86.5 million. That cost, in addition to the existing expected loss of income, puts Sega on track to drop company profits from about $462 million to $243 million. Details on specific cuts to development and employees are expected soon.

Source: Joystiq

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I'm not saying shelving sonic would be a good idea, but unless they come up with a good game for him, keeping that franchise running isn't going to help in the long run either.

Anyone who's been paying attention to SEGA in recent years has to have seen this coming and I doubt it will end here. Ever since the Dreamcast tanked SEGA's been suffering from loss after loss and as far as I understand their only real areas of profit are in their arcade titles (in Asia mostly) and the Sonic fanbase. In the end this probably is in the company's best interest as depressing as it is. Play to their strengths and cut their losses before its too late.

shadowmagus:
I'm not saying shelving sonic would be a good idea, but unless they come up with a good game for him, keeping that franchise running isn't going to help in the long run either.

2D or not 2D, that is the question.

How long has it been since Sonic was actually a real money making franchise, and not some zombie they drag out for E3?

How has Sega fallen so far, yet there nearly as large as EA.

Wow... it's like people on the Escapist forgot the Sonic Colors and Generations happened. Sonic isn't lost in the desert anymore, and if Sega can make more games like generations, hopefully things will start to pick up for them.

It's a real shame. Sega has become one of my favourite publishers. They seem to be a lot more willing to bank on new IPs, rather thank just sticking to the same old franchises, and they've published some of my all time favourite games. Oh Otogi, how I love you so...

As long as Three Rings Entertainment doesn't suffer from this, I'm happy.
I want my Dr.Who MMO and I still play Spiral Knights.

"That cost, in addition to the existing expected loss of income, puts Sega on track to drop company profits from about $462 million to $243 million."

Is that worded correctly? We are not talking total sales before costs or something?
'Crap, we made less then half a billion in profit this year; we better lay off our work force.' ??

Dyspayr:
"That cost, in addition to the existing expected loss of income, puts Sega on track to drop company profits from about $462 million to $243 million."

Is that worded correctly? We are not talking total sales before costs or something?
'Crap, we made less then half a billion in profit this year; we better lay off our work force.' ??

If a companies profit drops by nearly half year on year then yes YOU HAVE TO FIX IT NOW. It's too late to fix it when you stop making money.

Dyspayr:
"That cost, in addition to the existing expected loss of income, puts Sega on track to drop company profits from about $462 million to $243 million."

Is that worded correctly? We are not talking total sales before costs or something?
'Crap, we made less then half a billion in profit this year; we better lay off our work force.' ??

The reasons corporations do this even if they're still technically in the black is that they need to commit to long term spending agreements in the course of operating their business. Financial Projections are the main tool for figuring out what a company will be able to afford in the future.

When these projections don't pan out, a company has to cut spending somewhere. Backing out of pre-existing contracts is usually out of the question. Sadly, cutting payroll is the easiest way to quickly reduce expenses, thanks to most western countries considering salaried employment to be "at will"

EDIT: This isn't meant to excuse the practice, just pointing out why it happens

They best still be porting Jet Set Radio to Psn/xbox live/steam. I was really really REALLY looking forward to replaying that.

Mike Kayatta:
Under the shadow of hundreds of millions in losses, Sega will place its fate in the white-gloved hands of Sonic the Hedgehog.

Shall I warm up the funeral bagpipes with "Amazing Grace," then? Oh, and MacTavish there can segue into a mean cover of Bjork's "It's Oh So Quiet" if needed.

It's too bad Sega's been having this many problems. My question is what will happen to the AM2 R&D departments? Is Virtua Fighter considered one of their "stable" series, or do they believe bowing out to Street Fighter, Soul Calibur and Tekken is their best bet here? That's a shame if the latter is true.

Anyone losing jobs in the industry is a terrible thing, even if some people think they deserve it. I don't think Sega does deserve it, even. Sonic Generations was a good idea for trying to reintroduce new gamers to the Sonic games of old, and Total War: Shogun 2 is an amazing game despite the continued need for tweaking (though it seems to have gotten stable).

Hopefully the restructuring will also allow them to experiment with new IPs in the near future.

j-e-f-f-e-r-s:
Wow... it's like people on the Escapist forgot the Sonic Colors and Generations happened. Sonic isn't lost in the desert anymore, and if Sega can make more games like generations, hopefully things will start to pick up for them.

It's a real shame. Sega has become one of my favourite publishers. They seem to be a lot more willing to bank on new IPs, rather thank just sticking to the same old franchises, and they've published some of my all time favourite games. Oh Otogi, how I love you so...

I agree. Generations IS actually a pretty good game.

I also think, as bad as the later Sonic games were, that they still continued to sell. I'm pretty sure money comes before reputability when your company is in danger of bankruptcy.

I'm just glad the Total War franchise will continue. I've been playing them since the first Shogun, but I've always wondered how profitable they are. Obviously a lot of money is put into graphics and technology; but the games being PC only and grand strategy cast doubt in my mind as to how profitable they were, as they're tailored for a somewhat niche audience. I'm glad to see they appear to provide substantial revenue.

j-e-f-f-e-r-s:
Wow... it's like people on the Escapist forgot the Sonic Colors and Generations happened. Sonic isn't lost in the desert anymore, and if Sega can make more games like generations, hopefully things will start to pick up for them.

Well to be fair Sonic Generations was just a whole bunch of levels from previous games slapped together with a weak story. It was good but it wasn't OMG good. Sonic 4 was supposed to do that but look what happened there...

Thank god for Total War though. That game is one of the last wartime strategy franchises that's still successful and for good reason. Aliens and Football Manager should've been stopped really. Yakuza has been doing decently, but we still want Shenmue 3. Apparently Binary Domain is a good game so it's not all bad with Sega.

I think Sega just took on way too many sports and movie tie in liscences.

It's a real shame. Sega has become one of my favourite publishers. They seem to be a lot more willing to bank on new IPs, rather thank just sticking to the same old franchises, and they've published some of my all time favourite games. Oh Otogi, how I love you so...

I find it odd that you'd rather have Sega sticking to old franchises instead of doing new things. I and most gamers think that there aren't enough new IPs these days. I personally would hate to see Sega ride on just old franchises. They'd become another Nintendo and we really don't need that right now.

How about they generate a good Sonic game then, if they're placing all their hope in one basket.

Sega, I am disappoint.

But... but...

Bayonetta 2...

At least let Platinum do their own thing...

j-e-f-f-e-r-s:
Wow... it's like people on the Escapist forgot the Sonic Colors and Generations happened. Sonic isn't lost in the desert anymore, and if Sega can make more games like generations, hopefully things will start to pick up for them.

It's a real shame. Sega has become one of my favourite publishers. They seem to be a lot more willing to bank on new IPs, rather thank just sticking to the same old franchises, and they've published some of my all time favourite games. Oh Otogi, how I love you so...

I certainly liked Colors and I really, really loved Generations and I'm in my second playthrough now with a possible third afterwards, it's a seriously awesome game and I just can't get enough from it. I'd love if they added some more levels as DLC, I'd definitively throw my money to Sega.

As for the losses... damn... it's a real shame, they've done a great job as publishers and I hope they don't tank anytime soon.

Also, I hope this doesn't affect the Jet Grind Radio port or the Three Rings studio, I still play Spiral Knights from time to time.

Does this mean no Bayonetta 2 or any sequels to the other good games SEGA has been releasing recently? That sucks, but it's not like it's surprising. I hope this will help them, I don't want SEGA to have to go through such hardships once again. Still, maybe it's time for Nintendo to buy them, in the end I get the feeling it'd be for the best.

Sega needs to be, like, bought by someone who actually knows what the hell they're doing.

This is getting depressing.

I really hope this doesn't end up hurting Platinum Games... they're the only ones associated with Sega releasing anything I give a damn about anymore. Anyone losing jobs is unfortunate, and I wish them the best as well.

Oh yay, more shitty, shoveled out Sonic games on the way.

SupahGamuh:

j-e-f-f-e-r-s:
Wow... it's like people on the Escapist forgot the Sonic Colors and Generations happened. Sonic isn't lost in the desert anymore, and if Sega can make more games like generations, hopefully things will start to pick up for them.

It's a real shame. Sega has become one of my favourite publishers. They seem to be a lot more willing to bank on new IPs, rather thank just sticking to the same old franchises, and they've published some of my all time favourite games. Oh Otogi, how I love you so...

I certainly liked Colors and I really, really loved Generations and I'm in my second playthrough now with a possible third afterwards, it's a seriously awesome game and I just can't get enough from it. I'd love if they added some more levels as DLC, I'd definitively throw my money to Sega.

As for the losses... damn... it's a real shame, they've done a great job as publishers and I hope they don't tank anytime soon.

Also, I hope this doesn't affect the Jet Grind Radio port or the Three Rings studio, I still play Spiral Knights from time to time.

Here's the thing about Sonic.. so few people really care any more. Yes, the past couple Sonics haven't been abortions, but his audience isn't near as big as Sega and the fanboys like to believe. It's certainly not big enough to sustain the company, unless they pump out tons of cheaply made games for that audience to eat up.

There goes the Dr. Who game.

You hear something? It sounds like millions of fans burning their perfectly good money.

Kinda sad for me since I supported SEGA in the Console Wars in the 90s. I even have a 32X.
Anyway, this is going to be rough on the employees, and I wouldn't be surprised to see SEGA start selling off its copyrights.

Kumagawa Misogi:
How has Sega fallen so far, yet there nearly as large as EA.

Speaking of EA, this is their fault, they took Bioware from Sega, and look what's
happening to them because of that.

Fawxy:
Sega needs to be, like, bought by someone who actually knows what the hell they're doing.

This is getting depressing.

I.E. Nintendo.

penguindude42:

Kumagawa Misogi:
How has Sega fallen so far, yet there nearly as large as EA.

Speaking of EA, this is their fault, they took Bioware from Sega, and look what's
happening to them because of that.

Wait, what? Took Bioware from... huh?

whew im relieved the total war franchise is safe. i saw an interview with one of the designers saying that empire total war is a huge sleeper hit for them thats still selling great a year on

Fappy:
as far as I understand their only real areas of profit are in their arcade titles (in Asia mostly) and the Sonic fanbase.

Forgot about the total war fanbase. I'm pretty sure the total war games have been a bigger success than the sonic games.

Sion_Barzahd:

Fappy:
as far as I understand their only real areas of profit are in their arcade titles (in Asia mostly) and the Sonic fanbase.

Forgot about the total war fanbase. I'm pretty sure the total war games have been a bigger success than the sonic games.

True. I always forget SEGA made them.

I know they mentioned this already, but

IF THE TOTAL WAR SERIES GETS TOUCHED BECAUSE OF THIS, I WILL BLOW SHIT UP.

penguindude42:

Kumagawa Misogi:
How has Sega fallen so far, yet there nearly as large as EA.

Speaking of EA, this is their fault, they took Bioware from Sega, and look what's
happening to them because of that.

Fawxy:
Sega needs to be, like, bought by someone who actually knows what the hell they're doing.

This is getting depressing.

I.E. Nintendo.

I don't think Nintendo can afford the 5 1/2 billion dollars that would cost.

Infact I think only Microsoft could afford that out of the company's involved in the gaming world.

Egh I wouldn't shelve Sonic, It's really tough to let go of a character who practically catapulted you to success at one point, and Colours and Generations were really ... Well good. Not risk takers by any means but definitely the trims of a new Sonic Team dipping their toes into the water and seeing if what they're doing is safe. And well, yep, it is, as long as they let the Happy Tree friends writers write a little more of that dialogue like in colours, anyone griping about those cut scenes can go sit in the corner with their emo-teddy, I thought they were great change in tone. I've missed Sonic and Tails goofing around. Shadow the Hedgehog through to Sonic and the Black Knight era is over and we now need to move on and forget it happened. Preferably with brain soap.

But this was a long time coming. The same as Blizzard, the fat has needed to be trimmed for some time and restructuring is just a part of this, and I hope once the chaos is over with they'll start rebuilding. Once again as someone unemployed I'm really cheesed off for those that have lost their job, but the same my inner objectivity says: "Well... it was probably necessary." There was a unidentifiable tumor at Sega for a while making bad decision after bad decision and this is probably their chemotherapy. I just hope it gives new blood a chance to make the IP they have and will have shine better.

"Sega will immediately redirect its focus to a select stable of franchises including Sonic"

How about ditching Sonic and investing in something that hasn't been largely irrelevant since the 90s? They can't be doing that good with the series.

Hopefully we'll still see a sequel to Bayonetta, and HoTD: Overkill(Someday? Maybe? Please? Just for me?), and I'll be sad if I can't get Jet Set Radio for my Xbox; I never did get to play any of those games, not having a Dreamcast or Original Xbox, but they looked like they'd be right up my alley.

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