Sega is downsizing its home video game business in the U.S. and Europe in a restructuring that will result in game cancellations and an unspecified number of layoffs.
Parent company Sega Sammy announced its plans for the "structural reform" in a statement to investors on Friday. The company estimates that it will record an "extraordinary loss" totaling of 7.1 billion yen ($86.4 million) for the financial year ending March 31.
"Due to the challenging economic climate and significant changes within the interactive gaming industry, Sega has made the decision to consolidate its publishing business in order to focus on developing digital content and driving its existing intellectual property such as Sonic the Hedgehog, Total War, Football Manager and the Aliens franchise," Sega said in a statement, according to VentureBeat.
Sega plans to restructure many of its internal functions, a move that will result in "a number of redundancies," the company added. Sega did not specify which games it plans to cancel development on, or how many layoffs are on tap. In its note to investors, Sega said the change will result in a smaller company in a better position for "sustained profitability."
Meanwhile, video game sales in the U.S. have been looking down for months, falling 20 percent in February — the third straight month to see a decline, according to market research firm NPD Group. Overall U.S. video game sales hit $1.06 billion during February, down from $1.33 billion the same month last year. In January, sales dropped 34 percent from the same month a year earlier to $750.6 million. And, despite the holidays, video game sales during December fell 21 percent to $3.99 billion.
For more from Angela, follow her on Twitter @amoscaritolo.
