Some bittersweet news has recently come from Sega Sammy Holdings’ Board of Directors meeting. In an investor notice to shareholders, the publicly traded publisher-developer has identified a need to “review and restructure” the company, and seems to be making an effort to shore itself up in difficult financial times. As the home console and arcade markets struggle in Japan, its subsidiary, Sega Corporation, is cutting at least three hundred jobs in its arcade sector, and will move towards publishing more mobile and PC content.
In the investor notice, Sega Sammy detailed how it would go about implementing what it refers to as “group structure reform”:
The Company […] has held discussions to review the earnings structure of the entire Group from a mid to long-term point of view. The Group announced […] appointment of personnel in charge of structure reform in SEGA, and has developed a structure to enable investment of management resources in growth areas, which include new fields such as Digital Games and Resort Business, while addressing issues in existing businesses. As part of these measures, SEGA has positioned Digital Games, centered around smartphone and PC online gaming, as a growth area and has determined to implement the following measures […]
Sega plans on moving their North American publishing headquarters from San Fransisco to SoCal and, in a rather distressing move, downsizing staff there as well. A reduction in employees in both their Arcade business in Japan and their American branch is rather telling—and may prove either a boon or bane to the efforts of fans trying to get more SEGA titles overseas. The investor notice continues:
Details of Measures for Structure Reform in SEGA
a. Enhancing efficiency in domestic (Japanese) businesses
SEGA will review its business structures mainly in Amusement Businesses (arcade machines) and will narrow down product lineup and withdraw or consolidate and downsize some of the services.
c. Enhancing efficiency in overseas businesses
Local organizations managing (publishing staff, not development staff) packaged game software in Western markets will be streamlined. In the U.S., Sega of America, Inc. based in San Francisco will be relocated to Southern California by this summer and its existing office in San Francisco will be closed thereafter, which results in reducing fixed expenses, mainly in corporate functions. In addition, the Sonic and merchandising businesses will be reinforced to establish a structure which can generate stable profits.
A decision to focus more on PC publishing is a long time coming, of course, with Sega always performing well with published titles like the Total War series. Another positive can be found in their decision to heavily focus on Sonic merchandise in the States, which franchise has always been a solid seller.
While corporate restructuring is a long and arduous process that doesn’t guarantee fiscal success, it is important to note that Sega seems to have every intention to hold onto and curate its IPs, and current operations in both development and publishing won’t stop. A shift towards better curation in its publishing arm might go a long way toward saving the company.