The pinkslips cometh

[FlashTHD]

Yes, another massive chunk of money lined up and set to slip away from Sega-Sammy's hands. What else is new? Now it's getting to the point where they're weeding some staff out of the games division, aka Sega.
http://www.reuters.com/article/rbssCons ... 2820080208

TOKYO, Feb 8 (Reuters) - Sega Sammy Holdings (6460.T: Quote, Profile, Research) warned on Friday that it expects to lose 26 billion yen ($242 million) this business year amid slow sales of pachinko machines and said it would cut 400 jobs at its game software unit.

Sega Sammy, the holding company for video game software maker Sega Corp and "pachinko" and "pachislot" gambling machine maker Sammy Corp, also slashed its dividend forecast for the year to March by a quarter to 45 yen.

The forecast for a group net loss of 26 billion yen in the year to March marks a sharp reversal from its prior estimate for a profit of 1 billion yen. It cut its sales forecast by 12 percent to 475 billion yen.

Pachinko is a vertical form of pinball while pachislot is a high-tech variation of a slot machine. The two, a form of legal gambling, are part of one of Japan's largest industries with annual revenues of some 30 trillion yen.

The pachinko market has been hit by tighter regulations on the industry, while the outlook for the game arcade market has been dented by the soaring popularity of Nintendo Co Ltd's (7974.OS: Quote, Profile, Research) Wii game console that users play at home.

Sega Sammy predicted its pachinko machine segment would see operating profit fall 85 percent to 11 billion yen, and forecast its arcade division to post a loss of 11.4 billion yen, against a 132 million yen profit in the prior business year.

The net loss forecast reflects the pushing back of planned sales of real estate to the next business year and retirement benefits to the 400 employees being cut at Sega, equivalent to about 5 percent of its group workforce.

Sega Sammy said it plans to close Sega Amusements Singapore Pte Ltd and restructure globally in order to deal with its poor performance of game machines for arcades overseas.

In November, it announced a plan to close or sell 80 of its 430 arcades by March.

Prior to the announcement, shares of Sega Sammy ended at 1,100 yen, down 5.9 percent, reaching its lowest closing price since the company was formed in October 2004 after the merger of Sega and Sammy. The shares underperformed against benchmark Topix 's 1.4 percent fall.

If I read this right, then it would appear they do value their gambling business more than the software wing. And what other three-initial company name, friends, nearly died under the same circumstances?

As for the arcade closings, Namco-Bandai was pointing the finger at the same place the other day about a bunch of places they had to shut down.

[Isuka]

And what other three-initial company name, friends, nearly died under the same circumstances?

You mean, that one which was bought by koreans and also saw the worst iterations of its franchises that same year?

Man, it looks that both divisions are taking a big hit, but they won't gun down anyone from the gambling department. And what's with people not playing at the arcades because of the Wii?

[Yami CJMErl]

So in other words, any in-house Sonic games are only gong to get worse?

[FlashTHD]

And what's with people not playing at the arcades because of the Wii?

I s'pose it's scapegoating, but it's a big tempting target. That thing is suckering in huge stampedes of casual players. For that matter, go to Kotaku and compare the Simple 2000 charts every week. Depressing.

So in other words, any in-house Sonic games are only gong to get worse?

To say for sure we'd have to know what divisions these 400 people used to be employees of. I'd think nobody important that they have left, but who knows what it'll matter. The concern here is what side of the operation Masanao Maeda and the gang are the most confident in.

[DackAttac]

So in other words, any in-house Sonic games are only gong to get worse?

...Is that really even possible?

[FlashTHD]

So in other words, any in-house Sonic games are only gong to get worse?

...Is that really even possible?

Sure thing, NOW THAT YOU ASKED

[Radrappy]

It's almost enough to make you wish Sega and Namco would've been able to work things out and merge like they almost did.

Now what would that have been like? Certainly better than what we've got here.

[Isuka]

Maybe we would be seeing rushed, poorly done Klonoa games with a 30+ character roster and fighting bears in Virtua Fighter.
We'll never know for sure.

[G.Silver]

I think Sega beat Namco to the fighting bear punch with Fighter's Megamix.

[Isuka]

Yeah, SEGA also beat them at the fighting Hornet (they never even had a playable Rivelta Mercurio), though Suzuki was sane enough to not build the main series gameplay around this totally realistic concept. :P

[Forza Johnman]

I think Sega beat Namco to the fighting bear punch with Fighting Vipers.

I don't know what to put here without sounding like a smarty-arse.

I can't quite understand where the whole thing has gone to shit.

Sega (IIRC, freshly in the black after its ex SOJ President gives the company a large sum of money shortly before he died. I might be wrong about being in the black but I'm pretty sure a large donation was put into the coffers.) merges with a cash rich pachinko manufacture. Its hardly a recipe for disaster, is it?

[P.P.A.]

Wasn't it that SEGA planned on merging with Sammy but then pulled back the offer, after which Sammy got pissed and violently forced the merger?

[FlashTHD]

Wasn't it that SEGA planned or merging with Sammy but then pulled back the offer, after which Sammy got pissed and violently forced the merge?

That's how it went alright. Now about that, where did I hear it was supposed to be offensive in japanese business practices to drop a merger like that?

[Isuka]

Supposedly, SEGA also tried a merger with Bandai when they still weren't already merged with Namco, and Bandai itself dropped it for some reason (I think it happened around the Dreamcast demise, if not earlier).

[RocketPunch]

In spite of what our intellects tell us, our instincts know that this is where it all went wrong.

[FlashTHD]

In spite of what our intellects tell us, our instincts know that this is where it all went wrong.

Kotaku much?

[Radrappy]

In spite of what our intellects tell us, our instincts know that this is where it all went wrong.

Agreed 100%. Sorry, Wooduck.

In all seriousness though, seeing as most of the income lost was due to declining pachinko and arcade machines, the quality/success of home console software seems irrelevant right now. Even if Sonic games were largely successful and respected, the money issue probably wouldn't be any different. People sure would care more though, that's for sure.

[Isuka]

Whether they are actually right or not, I just can't get over how unprofessional Kotaku is.

[FlashTHD]

Whether they are actually right or not, I just can't get over how unprofessional Kotaku is.

They're alright, except about anything Sonic where they're indeed as full of fail as the rest. Get this: I read once on the CulT that, before it was Jeremy Parish putting down Sonic 3, it was K's Luke Plunkett. Meanwhile, their commenters are often a sad case all-round.

[Xyton]

If they're laying people off, I can see one of a few possibilities happening: The best outcome would if Sonic was given to someone that remembers how to make a really high-quality game and we'll get something awesome. Of course, that's the optimist in me speaking and I don't exactly expect that to happen. Ever. :( Still, though, I think it's only just slightly more likely that the games'll get significantly worse.... They don't have a whole lot more down to go without becoming unplayable (in a literal sense), and I'd like to think Sega's QA department would at least make sure the buttons did things. Sonic '06 was pretty bad, but at least it looked pretty. Maybe they saw the testers play it and thought all was well, though that's just the optimist in me talking again. :P They could also just can making Sonic games, but... yeah. I don't really see that happening. I believe it was someone on these boards who once said Sega could make "Sonic Extreme Brass-Polishing Adventure" and it would sell millions. ^_x; Ergo, I expect to continue to see slew of mediocre games churned out. At least the Rush series is fun. ;P

[Isuka]

I believe that the next slew of first-party Sonic titles will be much the same as the last ones, but there'll be Burger King and Coke billboards all over the place.
That's the optimist in me speaking.

[RocketPunch]

I believe that the next slew of first-party Sonic titles will be much the same as the last ones, but there'll be Burger King and Coke billboards all over the place.
That's the optimist in me speaking.

That's actually not that far-fetched when you look back on the whole Soap shoes/SA2 tie-in.

[Dr. SEGA Monkey]

There's also that Sonic Adventure AT&T thing. I actually still have it downloaded on my VMU. It was basically a Speed Highway time attack thing, but it had AT&T billbords all over the place. Didn't bother me at all....except for the fact that one billboard blocked you from reaching the last half of the level.

[FlashTHD]

Half a billion in losses this time.

Back in October, it was becoming clear that all was not entirely well within the franchise of Sega Sammy. The company, which makes the majority of its money from pachinko machines, downsized its profit and net sales forecasts for the financial year.

Although the official figures, released today, aren't quite as low as forecast (!), they're not far off. For Sega Sammy's financial year from April 1, 2007, through to March 31, 2008, net sales were down 13 percent over the previous year to ¥458.9 billion ($4.4 billion). Both operating and net income were in the red, with the company's operating loss hitting ¥5.8 billion ($55 million) and net loss at ¥52.5 billion ($500 million).

Sega Sammy pointed out a number of reasons behind the numbers. Its pachinko business in Japan continued to decline, with machine sales falling by 24,000 units to 108,000 units, and it had postponed a number of major pachinko machine titles until fiscal 2008.

The minus figures also included impairment losses for Chinese businesses, and a cancellation fee for ceasing development of an entertainment complex in Minato-ku. The company also dissolved Sega Amusements Singapore along with Sega Korea, in order to "increase operating efficiency in the amusement machine sales business."

Game sales were up overseas, but down in Japan--2007 saw the release of Sega titles including Condemned 2: Bloodshot, Mario & Sonic at the Olympic Games, and Viking: Battle for Asgard. The company sold just under 27 million games in total during fiscal 2007, an increase of 5.7 million over the previous fiscal year. Nonetheless, only a small amount of these sales came from its home nation. In Japan, 2.6 million games were offloaded onto the public, compared with 12 million in the US, 12.3 million in Europe, and 70,000 in other regions.

Sega stated that Mario & Sonic at the Olympic Games was a best-seller overseas, whereas the third part in the Yakuza action adventure series, Ryu ga Gotoku Kenzan, fared well in Japan.

Despite the year's losses, the company remained upbeat about the outlook for fiscal 2008. It believes that the group will return to profitability, forecasting consolidated net sales of ¥470 billion ($4.5 billion), consolidated operating income of ¥15 billion ($143 million), and net income of ¥5 billion ($48 million). Sega Sammy concluded that it expected its game sales to once again "show healthy growth" overseas, although it made no new announcements regarding upcoming games.

Does that last bit not clue them in to anything? Like, maybe, Sammy is a wasteful rusty anchor of a company to be doing business with?

Anyone know how much they were losing on a regular basis compared to after the merge?

[Isuka]

I believe Bandai thought the same thing about SEGA itself back in 1997.

For some reason, I'm not completely worried about this, at least not in the same way as I did back when SEGA was getting beaten into the ground in 2000 due to unrealistic expectations and flat out lies about the upcoming PlayStation 2.