Sega to Drop Games and Employees During Extreme Restructuring

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