Choosing to follow the plans detailed in their fiscal report after posting declined revenues and profits for the full 2011 fiscal year last month, Sega will be closing down a number of its offices in France, Germany, Australia, Spain and the Netherlands from July 1.
This is part of a bid to streamline the company whilst focusing firmly on their core brands of Aliens, Sonic, Total War, and Football Manager, along with their digital business.
Outside distributors will be taking over the sales in those areas, although the company’s UK headquarters have been unaffected and will remain open. 5 Star Games will be aiming to help with distribution in Australia, while Koch Media and Level03 Distribution will be dealing with the distribution of Sega’s products in Germany, Switzerland, Austria, and other European nations. It is said that London 2012: The Official Video Game of the Olympic Games will be the last retail game that Sega will directly distribute themselves in the above mentioned regions.
In a chat with GamesIndustry International, Sega Europe COO Jurgen Post clarified on this move to utilize third-party distributors:
“Level 03 distribution is basically the old management team in the Benelux setting up their own company and 5 Star is basically the old Sega managing director with some of the team setting up a distribution company in Australia… We’ll still have our offices in the territories and we’ll close them down towards the end of the year. So it’s not like we’re moving out straight away, we still want to continue relationships with retail, manage the stock and trade, and have smooth transition to third party distribution.”
An unknown amount of jobs will be cut as a result of the closures as Post would not give a confirmation, although there would be “some layoffs across the territories of course.”
Analysis: If it wasn’t clear enough when Sega posted their fiscal report, it is abundantly clear now. Sega isn’t doing too well right now and has really become a shell of the company many of us grew up with and loved. Acknowledging that the industry is moving and that the digital business, especially with the rise in mobile gaming, is where the real profits are is an accurate read by Sega. However, for them to focus so heavily on that part of the industry is discouraging for the core gamers who were raised on Sega titles.
However, my biggest qualm with all of this is the move to focus purely on four IPs. In an industry plagued with reskins, sequels, and very little innovation, I can’t say I look forward to it. But with Call of Duty reigning on top of the sales charts year in and year out, Sega’s comments that new IPs are simply too risky and unprofitable are warranted concerns.
In all honesty, it’s a shame because it wasn’t all that long ago that Sega was considered a real powerhouse in the industry. It’s strange to see how quickly things can change.