Are Sega In Financial Trouble?
Today Sega has announced major cut backs to both jobs and games in both the United States and Europe to stream-line the brand.
announced major cut backs to both jobs and games in both the United States and Europe; unfortunately Sega's last earnings report showed a decline in income of 47.4% and as a result Sega will be "streamlining" their brand. There is no announcement of how many jobs will be lost or even where they will be lost but Sega will "create a smaller company positioned for sustained profitability." In addition, Sega will be focusing on core titles that have shown in the past to be profitable in the United States and Europe "including Sonic, Football Manager, Total War, and Aliens". Sega did not mention what games were going to be cancelled although we should probably consider any game that was not mentioned in the refocusing strategy as being cancelled. This has not been a good year to be a video game publisher, with THQ going through the exact same restructuring plan that Sega is now having to execute in hopes of saving their respective companies. The problem stems from the increase cost in producing games this generation, one bad game can cost a video game company million upon millions of dollars. What is worse, the game doesn't even have to be bad for it to fail; in this generation if you create a middle of the pack game chances are sales will be mediocre as well. You literally have to create a highly rated triple A game to survive and even that is no guarantee of success.