In an effort to cut costs, Sega announced that they will be laying off 240 staff across three subsidiary companies as well as selling Relic Entertainment to an external private investor.
The job losses will be spread across three of Sega’s subsidiaries: Sega HARDLight (responsible for multiple Sonic The Hedgehog franchise games), Sega Europe, and Creative Assembly (developers of the popular Total War series).
Relic Games stated in a post on X that they plan to continue to support Company of Heroes 3 and that they view the transition from Sega subsidiary to an independent development studio as a positive one.
Important Update from Relic Entertainment pic.twitter.com/nCcF8olDaC
— Relic Entertainment (@relicgames) March 28, 2024
Why is Sega conducting layoffs and selling subsidiary companies?
According to the press release from Sega, it has been forced to perform layoffs due to the “rapidly changing” business environment, citing a “reactionary decline from the stay-at-home demand in COVID-19 and the economic downturn due to inflation,” meaning that “profitability has been lowered.”
Eurogamer was able to see an internal email from Jurgen Post, European managing director at Sega, which confirmed that some laid-off staff members found out about the layoffs from social media before they were informed personally.
“Due to the nature of this announcement and our legal obligations in Japan, we were unable to share any detail with you until now,” Post wrote. “That is far from ideal and means some of you may have read about this in the media or via social networks before seeing this email. If that is the case, I’m sorry.
“I want to sincerely apologize for the worry and understandable distress this news will cause, particularly for those directly affected,” Post continued. “These decisions have been incredibly tough to make, and they follow meticulous consideration and deliberation with leadership teams across the business.
“Change is necessary to secure the future of our games business, and to ensure that we are well-placed to deliver the best possible experiences to our players going forward.”
It has been a tumultuous day for the games industry. As well as Sega selling Relic, it was also announced that Embracer Group plans to sell Gearbox Entertainment to Take-Two Interactive. It’s a period of flux for the industry as a whole.
Featured image credit: Relic Entertainment
