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Sega Lays Off 73 Employees, Focusing On Downloadable Games

by Tim Turi on Apr 22, 2010 at 01:17 PM

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As of today Sega laid off 73 employees across their London and San Francisco offices. This is all according to a restructuring plan aiming to shift the company’s distribution focus to churning out downloadable titles. Sega’s preparations for a digital future apparently does not mean it's deprioritizing its console game revenue.

Sega’s main San Francisco office was hit by 36 layoffs, and 37 at its London location. News of these layoffs follows the closure of Sega’s Iron Man 2 developer, Secret Level, also in San Francisco. The San Francisco location has been redubbed the Sega’s “Digital Division,” while the London office will take care of PC and console games, as well as administrative duties. Sega’s choice to have the London hub handle console and PC games could have something to do with the U.K.’s tax breaks for game developers.

"In recent years, digital platforms have taken an increasing share of video gaming revenues, and we believe this growth is set to continue," said a statement put out by Sega reported by 1up. "Sega has already enjoyed commercial success within this new and exciting gaming medium, and it is now the company's intention to fully embrace change and set a strategy not only to maximize revenues within the digital space but, through innovation and quality, take up a leadership position."

President of Sega West, Mike Hayes, also spoke about Sega’s episodic metamorphosis in the game industry from console manufacturer to digital pioneer, calling it “quite interesting.” He also said that despite the company’s apparent unsteadiness, Sega’s market share has grown over the past five years in Europe and America.

"[The new focus on digital media] is part of our ongoing expansion, which is great,” explained Hayes. “We have a very strong base now in the traditional business. We still want to grow, we still want to be very competitive, but in terms of development and growing our overall market share, part of that sort of journey for Sega, sort of like chapter two, is this big digital arena. It's new, it provides new outlets for us. We can do different things in terms of gaming experiences, which is interesting for us. So in a way it's sort of a part of the ongoing rebirth of Sega as a multi-platform agnostic publisher of games."

Hayes clarified that though Sega is focusing on digital games, console games are still the “bulk of dollars” for the publisher. “That's a really important part of the business for us and will remain so, we guess, for many years to come," he said.

This restructuring will have no effect on Sega’s console and PC games already in development.