Sega will cut jobs and cancel titles as it attempts to "streamline" the home video games business in Europe and the US.
Parent company Sega Sammy released a statement announcing the "structural reform" today. It comes as Sega braces investors for an "extraordinary loss" for the full financial year ending 31st March 2012.
"The Consumer Business centred on Sega Corporation is expected to post operating loss in the year ending March 2012, due to the challenging economic climate and significant changes in the home video game software market environment in the US and Europe.
"Given this circumstance, the companies determined that in order to actualise earnings recovery of the Consumer Business in the following period and after and return to a growth path, it is essential to streamline organisations in the field of home video game software in the US and European markets, while shifting to a structure that corresponds to change in environment, including strengthening development in the field of digital content."
Games that will be cancelled weren't named. Eurogamer has asked Sega for clarification.
"[We] decided to narrow down sales titles from the following period and after to strong IPs such as Sonic the Hedgehog, Football Manager, Total War and Aliens."Sega Sammy
Sega Sammy said this on the matter: "We conducted detailed reviews of earnings projections for titles targeted toward the US and European markets and decided to narrow down sales titles from the following period and after to strong IPs, such as Sonic the Hedgehog, Football Manager, Total War and Aliens, which are expected to continue posting solid earnings.
"In accordance with this, we are cancelling the development of some game software titles."
Sega's "extraordinary loss" for the year will be 7.1 billion yen (-£54 million). The majority of that, 4.9 billion yen, has been incurred by the streamlining operation.