Video game firm Sega’s parent, Sega Sammy Holdings, has reported a net loss of 52.47 billion Japanese Yen ($499 million) for the 12 months to March 31st, 2008.

The figure compares unfavourably to the firm’s net income from FY 2006-2007 of 43.46 billion Yen ($413.4m).

Revenue also dropped sharply – down 69.2 billion Yen ($658m) to 458.9 billion Yen ($4.3 bn). The company posted 528.2 Yen billion ($5.02 billion) revenues in the previous year.

However, Sega Sammy’s video game software sales hit 26.9 million units, an increase of 5.7 million from the previous fiscal year – driven by the likes of Sonic & Mario At The Olympic Games.

However, GameDaily reports that Japanese sales were not as strong as other territories, and the division posted a loss of 5.9 billion Ten ($56.3m).

However, higher fuel costs and availability of next-gen consoles damaged the firm’s pachinko and arcade divisions.

Sega's entertainment group is now expected to cut about 400 jobs and close around 110 facilities.

"As rebuilding our consumer video game business is crucial, we now need to review our game title strategy more flexibly to adapt ourselves to changes in the trend of the market," said Koichiro Ueda, head of Sega's public relations department,

Sega Sammy is projecting sales of 470 billion Yen ($4.48bn) with net income of 5 billion Yen ($47.4m) for the current fiscal year ending in March 2009.