Sega closing locations, canceling games, laying off employees

  • Chicago (IL) - Yesterday, Sega's Japanese main branch said that the company will be closing 110 arcades, canceling some games currently in development and potentially lay off 18 percent of its staff. The game publisher said these cost cutting attempts are due to expected record losses of 25 billion yen ($238 million) during their fiscal year, which ends on March 31.

    Sega operates and owns 450 gaming arcades in Japan and now intends to close 110 of them (24.4%) the company has deemed to show poor future potential and profitability. The company hopes this move will make the arcade segment more profitable as the economy gets tougher over this next year.

    The company also plans to reduce their research and development budget by 20 percent, doing away with some titles currently in development, and then developing other titles internally rather than outsourcing as the company usually does.

    Lastly, in an effort to reduce the company's permanent staff, Sega has said that it would "solicit the voluntary retirement" of 560 of its 3,127 employees. In Japan, layoffs don't generally happen as it's a lengthy process taking weeks of consultation with employees and then convincing them that resigning is really in their best interests.

    This news comes after the US branch of Sega, based in San Francisco, CA, laid off 30 employees just last month.