Sega Sammy has warned investors that earnings and profits for the year ending March 31 will be hit by its underperforming games business, and is to cancel games and streamline its operations as a result.
The company expects net sales revenue for the fiscal year to be ¥46,000 lower than previously predicted. Overall net income, or profit, will be ¥20 billion (£153m), almost half the ¥40 billion it previously forecast.
The cause, Sega Sammy admits, is its consumer business, which will post an operating loss "due to the challenging economic climate and significant changes in the home videogame software market environment in the US and Europe."
To stimulate recovery and return the division to profit, Sega says it is "essential to streamline organisations in the field of home videogame software in the US and European markets while shifting to a structure that corresponds to [this] change in environment, including strengthening development in the field of digital content."
There will be job losses, resulting in "a smaller company positioned for sustained profitability." It is focusing more in its more reliable, long-running IPs including Sonic The Hedgehog, Football Manager, Total War and Aliens. Other, unspecified games will be cancelled entirely.
Sega Sammy plans to record unexpected, or "extraordinary" losses of ¥7.1 billion (£54.3m), of which ¥4.9 billion (£37.5m) will be costs associated with its restructure.