Closing a number of Sega's territorial offices has been a ‘painful' but ‘logical' process, Sega Europe's COO Jurgen Post has told MCV.
Today, the publisher confirmed it will shut offices in France, Germany, Spain, Australia and Benelux and hand sales and marketing duties over to local companies.
The shift comes as Sega puts digital content first, with just a handful of boxed product releases a year, after failing to break new IPs into the retail channel.
It's painful, it's not an easy process, and we have had to make a lot of changes,” said Post.
But we had to do it. We have been looking at past results, and as we all know the market is tough at the moment, it's polarising so the bigger games are getting bigger and it's harder to break new IP.
The business is shifting so fast we had to make the decision. It was inevitable: we couldn't continue like we were before.”
Post told MCV that Sega will now focus on its ‘four IPs pillars' of Football Manager, Sonic, Total War and Aliens: 65 per cent of our business is generated by those four key IPs. So that is what we will concentrate on.
And within them we will diversify, we really want to go broader with those titles - as we are doing already with things like Football Manager is successful on PC but also now iOS and Android, and Sonic in its many forms.”
Sega has not been alone in slimming down its operation. THQ has also recently done the same across Europe – and like Sega it has handed key territories over to distribution force Koch Media.
Said Post: In a way it's logical. All publishers are focusing on less IP and if you only have a couple of titles, some things have to change.
However, if you are a distributor, if you can combine all of those together, all of a sudden you have a great business model. I think it's good for the strong distributors at the moment.”
Ultimately, the switch comes down to correctly cultivating Sega's line up of games. The publisher has tried many times over with new IPs and non-Sega brands, and has been disappointed with the results.
We've tried with a lot of products to break new IP or new brands into the market but we haven't succeeded,” said Post.
Some categories are just not working in the market anymore. Titles like Iron Man 2 or other film licences, they don't work.
Then we tried with new IP; again it's very tough to get into the market so we basically decided to stop that kind of project because it just takes so much money out of the company. You have to invest in the development and then you have to invest in the marketing and even then it's still a big gamble.
With the market shifting at the moment and new platforms coming in, it was just the best time to slow down a little bit and focus on what we do best, and that's those four pillars.
You have to embrace the new world, and you can't continue doing everything like you were doing it in the past. If you only stick to what you know, you will have a very short success.”