Sega's financial problems.

[Tenck]

The Consumer Business centered on SEGA CORPORATION is expected to post operating loss in the year ending March 2012, given the severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software. Amid such business environment, the Company decided to implement structural reform of the Consumer Business at SEGA CORPORATION to strive for a shift to a structure corresponding to the market environment for the purpose of earnings recovery in the following period and after.

In accordance with the decision, the Company is expected to record extraordinary loss totaling around 7.1 billion yen, including costs in line with the streamlining of organizations and the canceling of development of some game software and costs for processing inventory. As for the Consumer Business in the following period and after, the Company projects decreases in operating expenses due to the reform.

Please refer to “Concerning Structural Reform of Consumer Business at SEGA CORPORATION” announced on the same day for details of the reform.

1. Reason
The Consumer Business centered on SEGA CORPORATION is expected to post operating loss in the year ending March 2012, due to the challenging economic climate and significant changes in the home video game software market environment in the U.S. and Europe.
Given this circumstance, the companies determined that in order to actualize earnings recovery of the Consumer Business in the following period and after and return to a growth path, it is essential to streamline organizations in the field of home video game software in the U.S. and European markets, while shifting to a structure that corresponds to change in environment, including strengthening development in the field of digital content.

2. Descriptions of measures

(1) streamline organizations
We will streamline organization in the U.S. and Europe home video game software. This will create a smaller company positioned for sustained profitability.

(2) Reduction of number of titles
We conducted detailed reviews of earnings projections for titles targeted toward the U.S. and European markets and decided to narrow down sales titles from the following period and after to strong IPs, such as “Sonic the Hedgehog,”, “Football Manager”, “Total War” and “Aliens” which are expected to continue posting solid earnings. In accordance with this, we are canceling the development of some game software titles.

(3) Booking impairment loss on work in process assets
We will book impairment loss on work in process assets concerning some titles after
reevaluating the profitability of work in process concerning game software which are going to be sold in the U.S. and European markets from the end of the current fiscal period to the following fiscal period.

(4) Processing of inventory
In accordance with the streamlining of organization in the U.S. and Europe markets, we will
estimate allowance for expenses among game software inventories, including inventory on the market that is currently circulating.

4. Future outlook

In the year ending March 2012, we are planning to record 7.1 billion yen in extraordinary loss as
expenses in accordance with the structural reform, which the cost is believed to be 4.9 billion yen.
Please refer to “Notice of Extraordinary Loss and Adjustment to the Forecast of Operating
Results” announced on the same day as its forecast for the full-year consolidated operating results
for the year ending March 2012.

We expect operating expenses for the Consumer Business in the following period to decrease due
to our latest efforts.

7.1 Billion Yen loss. While Shadi and Speedy cry themselves to sleep hoping it isn't true, let's hope Sega stops churning out garbage.

[Shinobi_Returns]

nah bro. Sanic 4 episode 2 will sell billions and billions because it'll be just as good as the first one with its amazing MIDI soundtrack and engagingly sloppy gameplay.

[Beat]

I wonder what titles will be cancelled?

[Miles Prower]

nah bro. Sanic 4 episode 2 will sell billions and billions because it'll be just as good as the first one with its amazing MIDI soundtrack and engagingly sloppy gameplay.

Yep, don't worry guys.
Ep 2 has got their backs covered.

[Darkism 13]

Remember 15 years ago when Sega of America (almost) knew what they were doing and it was Sega Japan that screwed everything up? Now it's the exact opposite. To me, Sega is like at goldmine that nobody seems to want to dig into. They have so many great IP's that reach very diverse age groups and that have been successful in the past. Instead, Sega of America tried to make themselves the next EA by doing a lot of what EA used to do. It didn't work and now they're brand, which used to be a powerful selling tool only appeals to older people who recognized the Sega brand as a unique brand in gaming.

I know Sega is not going to make a console again, but I think they've forgotten who they were and they need to get back to that again if they wish to be successful in the future. That means bringing out all the good IP's and the aggressive marketing. In fact, in today's market where game development is so expensive to the point where publishers are almost too afraid to make games anymore, Sega would be in the best position to be successful. A lot of their classic hits are arcade style games that aren't very long, but have tons of replay value. These games would be less expensive to make which would shift more money towards the marketing. But this is all just wishful thinking. Sega would never do that unless they had some Steve Jobs-like figure who happened to be a diehard Sega fan running Sega's American or European operations.

[au+]

Well, there goes the English version of PSO2.

And probably what was left of PSU. Eternal Christmas is here!

[Vyse]

Makes me sad :/ because it makes me think that now even less niche titles will make it over...

[ARingcade]

Kinda hurts me a little inside to read this and say "I'm not surprised".

[cochrane]

Not related to Nintendo. I'm moving this to General Sega Discussion.

[VampiricDragon]

good, the deserve this after not marketing the good titles and continually making bad titles like the ones they mentioned they want to do more of.
I hope they go bankrupt soon
"Sega is restructuring its European and US operations"
because they make crap games thats why
only there japanese branch is worth keeping and thank god they arent cancelling anything there
the newest shinign game was spectacular and I expect yakuza 5 to be too