Publisher Sega is to massively overhaul its Western operations in a move that will result in both a loss of jobs and a massive realignment toward the growing digital distribution market.
73 jobs are to be lost in total, with 37 losses at Sega’s London office and 36 in San Francisco. This represents around 12 per cent of Sega West’s workforce. In addition, the San Francisco office will become Sega’s new Digital Division, with London focusing on ‘traditional’ video games.
“It's no surprise that the share of digital is growing as an overall part of the video game business, so we decided we have to invest more in that specific area,” Sega West president Mike Hayes told Industry Gamers.
“And notably, we had to get our business groups appropriately sorted to provide the right focus. Traditionally, Sega of America and Sega Europe had been running a dual company where both would look at traditional goods and both would look at the digital side. What we decided to do is to make San Francisco the kind of hub for our digital efforts, and therefore make London the hub for the traditional packaged goods part.
“I would stress, however, that this is very much administrative reorganization, because clearly we want to be very successful with digital globally. Likewise, we want to continue to be successful with traditional goods. So the reorganization allows us to be much more efficient in terms of our costs, but probably more importantly in the way that we can look at the future business.”
Hayes went on to insist that the restructuring has been handled directly by the Western offices and has not been a response to any demands for cost-cutting from Japanese parent Sega Sammy Holdings.
An increased focus on mobile platforms such as the iPhone and iPad, on which Sega has already enjoyed great success, is pledged. Hayes also added that PC distribution channels such as Steam and Direct2Drive are accounting for an ever-growing slice of Sega’s revenues.
“What we've done so far is taken strong Sega IP and we've had lots of success,” he explained.
“Look at how well Super Monkey Ball has done on iPhone. And we've got lots of excitement around Sonic 4 that we're launching on XBLA and PSN later this year. The challenge for us now, is how to go beyond that in terms of doing more than just reinventing existing Sega IP. And that's really where a lot more of the focus and investment is going to be with this new digital division.”