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It hasn’t been the brightest time for Sega. On Wednesday, the once-monolithic video game developer announced that it has sold off the management of the nearly 200 arcades it manages in Japan, citing the negative effects the coronavirus pandemic has had on that sector of the entertainment industry. Now comes shrinking of the human resources variety, as parent company Sega Sammy Holdings is looking for hundreds of employees willing to quit their jobs.
The move comes in the wake of Sega Sammy’s mid-year financial report (the company’s business year begins in the spring), which revealed a 21.7 billion-yen ($206.7 million) loss for the company. That’s an especially painful blow after a 9.8 billion-yen profit for that same period in 2019, and so Sega Sammy is now hoping 650 employees will volunteer to leave the company. “In order to return to profitability and achieve sustained development, we need to reduce costs, especially fixed costs,” the company said as part of the announcement, “and we believe this is a necessary measure to build a more efficient organization.”
If the company finds as many volunteers as it’s seeking, it would represent a roughly seven-percent reduction from the current number of 9,051 employees. As an additional cost-cutting measure Sega Sammy will be reducing its executives’ salaries by up to 30 percent for the next five months (i.e. until the end of the current business year), with larger reductions being placed on higher-ranked executives.
Employees who volunteer to leave the company won’t be walking away empty-handed, however. They’ll be provided with severance packages and also reemployment assistance for those who’ll be seeking new jobs elsewhere instead of retiring entirely. Sega Sammy expects the total cost of providing this aid to come to roughly 10 billion yen, should it find a full group of 650 volunteers. Those opting for the severance package have until December 25 to make their decision, and would leave the company at the end of February.
Japanese companies generally try to avoid downsizing their workforces (the country’s notorious amount of overtime are partially a result of not hiring more people than a company needs, so that it won’t need to let anyone go during a minor recession), and Sega Sammy’s decision coming during Sega’s 60th anniversary celebration is an ironically sad note, but the company feels it’s the best way to make sure they’ll be able to continue celebrating longevity milestones in the future.
Sources: Sega Sammy Holdings via IT Media, Kyodo
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- External Link
- https://soranews24.com/2020/11/06/segas-troubles-continue-as-parent-company-asks-hundreds-of-employees-to-to-quit-their-jobs/
15 Comments
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SwissToni
Having seen the writing on the wall, VR with a package tends to attract those who can find other work, leaving the less capable behind. So beyond cutting costs there needs to be a plan for generating new business. Wonder what that is?
Do the hustle
What do they mean, asked to quit? Is that even legal? If they are to lose their jobs the company has to make them redundant and pay them out.
James
@Do the hustle
Well it isn't illegal to ask employees to quit, however they do need 650 people to quit my guess is if they don't get that number then we could be saying goodbye to sega completely.
TARA TAN KITAOKA
A unhealthy company.
Sven Asai
The meaning of aging and shrinking is , you guess it, aging and shrinking.
JeffLee
These Japanese companies are going to go from bad to worse, financially, due to their half-hearted, limp-wristed efforts at restructuring. At the end of the day, the government will have to pick up the tab in many of the cases.
The ironic thing is that the labor market is still pretty tight.
lostrune2
With this and no longer the arcade business and mainly just video game business, the remaining Sega Sammy becomes more amenable for a game publisher to acquire
kurisupisu
Japan is really hurting-no longer the place it was back in the 1980s
JFX
I worked at Sega (in Tokyo) for over 8 years. They do this from time to time. Every time they do it they lose people who are employable elsewhere and their employee base is increasingly made up of unemployables. I understand why they do it. It's the Japanese system. But the company just becomes more of a zombie every time they do.
kurisupisu
Nintendo makes smashing profits and Sega doesn’t?
Replace the upper management first eh?