Sega in trouble: JPY7.1 billion loss expected, many games to be cancelled

Sega Sammy

Bad news for Sega fans: Sega Sammy announced yesterday via a press release that it expects Sega’s operating losses for the previous fiscal year to be about JPY7.1 billion (US$85.7 million). The challenging market and the changing video game market in the US and Europe are given as reasons for this loss.

The company will streamline its organization in the US and Europe and also “create a smaller company positioned for sustained profitability”.

Translation: Sega is in deep financial trouble and as a result, there will also be a reduction of the number of titles that Sega will be putting out in the future. Current IPs such as Sonic the Hedgehog, Football Manager, Total War, and Aliens will still be developed, as Sega expects them to generate solid profits. As such, other games currently in development will have to be cancelled.

It seems that Sega is in the process of evaluating which games they should continue developing in order to secure a healthy profit and which ones to drop to save costs.

According to The Verge, some of Sega’s currently announced games in development include: Binary Domain (for Windows), London 2012, Virtua Fighter 5: Final Showdown, Jet Set Radio, Sonic the Hedgehog 4: Episode 2, Anarchy Reins, Aliens: Colonial Marines, Phantasy Star Online 2, Super Monkey Ball: Banana Splitz, Doctor Who: The Adventure Games, Yakuza 5, and Hell Yeah! Wrath of the Dead Rabbit.

With the talk of losses, Sega Sammy as a whole will still see a estimated net income of JPY20 billion (US$241.4 million). Much of that profit comes from the company’s Pachislot and Pachinko Machines Business, Amusement Machine Business and Amusement Center Operations Business.

Sega was incorporated into Sammy in 2004, which resulted in the creation of the company, Sega Sammy.

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