SCi will restrucutre around a new 'studio-led' business model, which means a reduction in workforce and cancellation of 14 projects.
Newly installed SCi CEO Phil Rogers this morning announced the plan following the conclusion of his company business review.
SCi, which owns publishing label Eidos and a raft of studios, said it lost £81.4m in the six months up to December 31st - a big hike over the comparable loss of £17.9m in the same period a year previously.
To curtail further losses, Rogers said: "SCi is in need of immediate change. Following our business review over the last six weeks, we are initiating a clear action plan based on three fundamental strands of activity: a radical change in our structure to a studio-led business, a top to bottom programme of product improvement and efficiency and a considerable cost reduction plan.
"To get SCi on track we have to act rapidly and effect change quickly. We must allow the world-class people that we have within the Group to focus on strong, profitable titles which will create the value our shareholders deserve. I am confident our staff share this vision and excitement for the future, and determination to build a working environment where our innovation and creativity can be commercially realised."
The firm will now set about a 'fundamental change in business structure' which involves decentralising control of its development studios, creating a new label called Eidos PLAY which merges its casual and new media resources, and taking a more flexible and efficient approach to distribution.
SCi's new business will operate with a maximum of 800 people - meaning that 25 per cent of the firm's workforce will lose their jobs.
"Our cornerstone franchises [...] should not be diluted by more run-of-the-mill games," said the official statement from the firm.
As further part of the cost cutting and improvement program, the company will cancel 14 projects in development, charge its studios with focusing on quality, and move its production services teams (covering the likes of localisation and QA) to Montreal from London to take advantage of tax breaks and cost benefits.
The statement added: "As illustrated by today's interim results our quality has slipped below acceptable standards and, through disappointing game development and working within an ineffective operating structure, we are failing to realise the commercial return our creative ability and our shareholders demand. Our infrastructure is too big and expensive for the scale of the business."