SEGA has cancelled the Creative Assembly-developed multiplayer first-person shooter HYENAS, as well as some other unannounced titles that were in development by its European entity, the company announced.
According to the company, the cancelations are in response to the lower profitability of the European region, which led to a title portfolio review of each development base in Europe.
Get the full press release below.
SEGA SAMMY HOLDINGS INC. (the Company) hereby notifies that it has resolved to implement structural reforms in the Consumer area, mainly at its European bases at the Board of Directors meeting held on September 28, 2023 and in accordance with this decision, the Company expects to record a loss for the fiscal year ending March 31, 2024.
Background of Implementation of Structural Reforms
The Company group has set the Consumer area as one of its growth areas and has achieved rapid earnings growth in recent years by promoting the global branding of its existing IPs and other measures. On the other hand, the business environment surrounding the Consumer area has been rapidly changing, including reactionary decline from the stay-at-home demand in COVID-19 and the economic downturn due to inflation in European region, and profitability has been lowered mainly in European bases.
To promptly adapt to these changes in the environment and improve profitability, we have decided to implement structural reforms aimed at increasing efficiency, mainly at our European bases and reviewed the title portfolio in those bases. Then we have made the difficult decision to cancel some titles under the development as well as to reduce the fixed expenses.
Details of Implementation
The Company will implement the following items regarding structural reform in our European bases which are determined at this time.
- 1) Cancelation of titles under development – In response to the lower profitability of the European region, we have reviewed the title portfolio of each development base in Europe and the resulting action will be to cancel HYENAS and some unannounced titles under development. Accordingly, we will implement a write-down of work-in-progress for titles under development.
- 2) Reduction of fixed expenses – We will implement reduction of various fixed expenses at several group companies in relevant region, centered on the Creative Assembly Ltd. We expect to incur one-time expenses related to reduction of fixed expenses.
We will continue to consider measures to improve profitability in European bases apart from above. We will announce the specific details and impact from them as soon as we make decision.
Future Outlook
As a result of implementation of the structural reform described above in Consumer area, we expect to record losses of approximately 14.3 billion yen for the fiscal year ending March 31, 2024, but there are no changes to the full-year consolidated operating results forecast for the fiscal year ending March 31, 2024 at this time. In the Consumer area, several new titles, including mainstay IPs, will be released from the third quarter onwards and the Amusement Machine Sales area, where the prize category is performing well, and the Animation and Toy area are performing solidly. In addition, the Pachislot and Pachinko Machines Business continues to perform well, centered on the pachislot machines, and in the Resort Business, occupancy at various facilities is also continuing to be solid. The full-year consolidated operating results forecast for the fiscal year ending March 31, 2024 will be revised as necessary, after closely observing these conditions as well.
Update at 10:00 a.m.: Here is a message from Creative Assembly on HYENAS‘ cancellation and the job losses that may occur as a result.
We have made the incredibly difficult decision to begin a redundancy consultation process in some areas of our UK operations, alongside ending development of HYENAS:
This may, unfortunately, result in job losses.
We fully understand that this has a significant impact on our people whether they are directly affected or not—which we are truly sorry for.
We have always aimed to operate as a “people-first” studio; that is foundational to our values and culture. While we must go through this incredibly difficult process, we will prioritize supporting our people at every step.
For those whose jobs are at risk we will work to re-allocate them into other available roles within Creative Assembly wherever possible, and ultimately minimize any job losses.
Our commitment to our projects and players has not changed; we will deliver more incredible experiences to our players all over the world for decades to come.
While this is a difficult moment across CA, we look forward to sharing more about our plans in the future.