Sega Sammy announced a restructuring at its gaming divisions in Europe, which is expected to result in losses for the Japanese company. As part of the process, some games currently in development will be canceled.
Sega announced “structural reforms” at a board meeting on September 28. The restructuring will impact the company’s Consumer area, which includes video games.
Speaking about the reasons for this decision to review its gaming business, Sega cited “reactionary decline from the stay-at-home demand in COVID-19 and the economic downturn due to inflation in European region.” As a result, profitability has lowered in this region.
Due to the structural reforms, Sega expects to record a loss of ¥14.3 billion ($95.7 million) for the current fiscal year ending March 31, 2024.
These reforms will include:
- Cancellation of games under development: Creative Assembly’s multiplayer shooter HYENAS and some unannounced titles;
- Reduction of “various fixed expenses” centered on its UK-based subsidiary Creative Assembly.
“We will continue to consider measures to improve profitability in European bases apart from above,” Sega said. “We will announce the specific details and impact from them as soon as we make decision.”
Creative Assembly was acquired by Sega in 2005. Under the Japanese publisher, the studio made several attempts to expand into the console market, but its long-running Total War series has always remained its main focus. In October 2023, Creative Assembly will release a new title in the franchise, Total War: Pharaoh.
Hyenas, announced last year and initially planned as a premium game, was about to come out in 2023. Last month, Sega called it a “challenging title,” saying it was also “making final adjustments to its business model.” However, it is unclear whether the company decided to turn this multiplayer extraction shooter into a free-to-play title before eventually canceling it.
According to IGN, the entire Hyenas studio now faces redundancy. Staff also expect “massive cuts” across the company. However, the extent of possible job cuts still remains unclear.
UPDATE (September 29): Creative Assembly confirmed that the cancellation of Hyenas may result in layoffs. However, the company wants to “ultimately minimise any job losses” and, if possible, re-allocate certain employees into other roles within CA. “We fully indestand that this has a signficant impact on our people whether they are directly affected or not — which we are truly sorry for,” a statement reads.
Following an internal announcement to our employees, please see the below statement: pic.twitter.com/b6LPonVagV
— Creative Assembly (@CAGames) September 28, 2023
Earlier this year, Sega also laid off 121 employees at Relic Entertainment, its Vancouver-based subsidiary best known for strategy games like Dawn of War, Company of Heroes, and Age of Empires IV.