Sega is expecting a loss of 54m (7.1bn) as it restructures its US and European operations.
Parent company Sega Sammy Holdings has today said it will carry out a ‘structural reform' of Sega's consumer business. It said it will ‘streamline' its US and European video game operations and create a smaller company positioned for sustained profitability”.
As part of the changes, Sega will reduce the number of games it produces and cut the development of several titles, while focusing more on digital content.
However, Sega still expects to post profits of 152m for the 12 months ending March 2012, but it will see a one-off "extraordinary loss" of 54m. This money will be spent on cutting back and restructuring.
A statement read: The Sega consumer business is expected to post operating loss due to the challenging economic climate and significant changes in the home video game software market environment in the US and Europe.
It is essential to streamline [our] organisation in the field of home video game software, while shifting to a structure that corresponds to a change in environment, including strengthening development in the field of digital content.
We decided to narrow down sales titles 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 cancelling the development of some game software titles.”