Sonic publisher SEGA is to axe 73 jobs in the West as it looks to shift the business into a position to take advantage of more digital business opportunities, GamesIndustry.biz reports.
37 staff will lose their jobs in London, with the division continuing to focus on more traditional games publishing. The San Francisco department will refocus on digital markets, at the cost of 36 employees.
"We've been going through the planning process the past six months, taking a look at the future of the market and where we think our investments need to be," Mike Hayes, president of SEGA West, told Industrygamers.
"It's no surprise that the share of digital is growing as an overall part of the videogame business, so we decided we have to invest more in that specific area. And notably, we had to get our business groups appropriately sorted to provide the right focus."
"Traditionally, SEGA of America and SEGA Europe had been running a dual company where both would look at traditional goods and both would look at the digital side. What we decided to do is to make San Francisco the kind of hub for our digital efforts, and therefore make London the hub for the traditional packaged goods part."
He added: "I would stress, however, that this is very much administrative reorganisation, because clearly we want to be very successful with digital globally. Likewise, we want to continue to be successful with traditional goods. So the reorganisation allows us to be much more efficient in terms of our costs, but probably more importantly in the way that we can look at the future business."
Parent company SEGA Sammy said this month that it expected higher profits for the full year ended 31st March, 2010, but also pointed to weak software sales outside of Japan. However, Hayes claimed the cut in headcount was not a decision made in Japan.
"This was an initiative taken by the West," he said. "Of course, we're always under pressure from our head office - who isn't? But this is definitely something we looked at as a business as the Western business managers.
"We wanted to figure out how to be more effective in this incredibly growing marketplace and how to be more cost effective. It's something that the management teams in San Francisco and London have embarked upon."
Hayes indicated that the digital division will continue efforts on XBLA, PSN, iPhone and iPad, and also noted the success of downloads of PC games such as Football Manager. The company is also looking at gaining expertise in the social gaming category, but could not say how significant digital would be to the overall business.
"All we know is it will be a bigger part of the business as we move forward, but in terms of the goals and how much digital is going to be, that's something we're going to have to work on with this new group and figure out over the next few months. Do we want to move everything from traditional into digital? Absolutely not. We're taking what we feel is a very balanced approach; it'll be an evolution, not a revolution."