Sonic house solicits voluntary retirement from 18 percent of workforce, plans to close 110 arcades; full-year earnings revised downward.
Another day, another massive round of layoffs for the gaming industry. In tandem with grim fiscal results earlier this year, third-party publishers such as Electronic Arts and THQ as well as first-party hardware makers such as Microsoft have cut head count in bids to staunch hemorrhaging losses. Today, Sega Sammy stepped up to the plate, announcing as part of its disappointing nine-month earnings report that it will cut 560 jobs, or 18 percent of its workforce.
Sega Sammy plans to enact its head-count reduction by calling for an early retirement of the specified number of employees. The company expects to issue this call in two weeks, and plans to conclude its cuts by March 31, 2009, the end of its current fiscal year. It also plans to close an additional 110 amusement facilities, as well as scale back its research-and-development expenditures by 20 percent compared to last year.
Sega Sammy's deep cuts come in the face of slipping revenues and mounting losses. For the first nine months of its current fiscal year, Sega Sammy posted shrinking revenues of ¥309 billion ($3.41 billion), which was down from ¥342 billion ($3.78 billion) during the year-ago period. Losses hit ¥10 billion ($119 million) for the nine-month period, which was actually an improvement over the ¥15 billion ($174 million) Sega lost during the same period last year.
"During the first three quarters of the fiscal year ending March 31, 2009, the Japanese economy faced more severe hardships as pressure on corporate earnings from the ongoing and sharp rise in the yen, the country's worsening job picture, and other factors amid continued turmoil in the global financial markets, raised concerns that the real economy would slow further," Sega Sammy said in a statement.
Though Sega Sammy's primary area of business remains its profitable pachinko machines, the company also draws a significant amount of its revenue from its less-than-profitable video game division. During the reporting period, the segment posted an operating loss of ¥5 billion ($62.4 million) on revenues of ¥96 billion ($1.06 billion) for the period. Sega Sammy said that game sales were led by current fiscal-year releases Sonic Unleashed and Football Manager 2009, as well as continued sales of Mario & Sonic at the Olympic Games.
Sega Sammy doesn't expect its fiscal fourth quarter to prop up flagging financial results for the full year. As part of its earnings announcement today, Sega Sammy revised its full-year sales outlook downward 7.4 percent to ¥435 billion ($4.77 billion), with losses expected to total ¥26.5 billion ($290 million).
Kyoto-based Wii maker plans to consolidate product development efforts in 40,000 square foot campus near current headquarters.
As part of its nine-month earnings report in January, Nintendo severely disappointed investors by revising its full-year earnings downward 9 percent and cutting its profit projections by an onerous 36 percent. The thing is, even despite the hit, Nintendo still expects to pull in a record-setting gob of cash for the year, to the tune of ¥230 billion ($2.54 billion) on revenues of ¥1.82 trillion ($20.1 billion).
Sufficiently flush with money, the Kyoto, Japan-based game maker has revealed plans to build a new research and development office near its current headquarters. As reported by Japanese financial news service Nikkei Net, the facility will be constructed in close proximity to its current headquarters on a 40,000 square meter lot Nintendo purchased for ¥12.8 billion ($141.6 million) in December.
After a poor showing from the GameCube, Nintendo's R&D department turned the tide during the current hardware generation, thanks to the innovative input methods of the Wii and DS. Through December, Nintendo's console had sold 44.96 million units globally since launching in late 2006, while the DS had sold 96.22 million units over the course of its three iterations since the original system launched in 2004.
Nintendo representatives informed Nikkei that the new facility will be devoted to creating new game consoles as well as software for the Wii and DS. Previously, Nintendo's R&D department operated out of two different facilities, and the new setup is intended to help the teams more effectively collaborate, a Nintendo representative said. Nikkei notes that Nintendo has not yet determined when it plans to integrate the two facilities.
According to an oft-quoted--and oft-abused--axiom, one has to spend money to make money. Given that the US gaming industry posted record retail sales of $22 billion last year, it stands to reason that tens--if not hundreds--of millions of marketing dollars were spent to reach that figure. However, given that historically no study has quantified the game-industry's overall advertising expenditures, it has remained a mystery exactly how much publishers and platform holders spend hawking their wares.
Today, that changed. The Nielsen Company, the industry research firm best-known for issuing the television ratings that make or break shows, revealed its estimate of US expenditures on advertising and marketing games. The company puts the figure at $823 million for 2008, a little less than 4 percent of the total game-industry market.
Nielsen was assisted in its calculations by the game-industry intelligence firm Electronic Entertainment Design and Research. The figure was announced as part of a new collaboration between the two companies which will integrate Nielsen's Monitor-Plus advertising-tracking service with EEDAR's Game DNA historical database of game features. Information gleaned from the joint effort will be available in subsequent studies from both companies
Executive producer Pete Wanat says studios spend too much time and money shoehorning feature into games that don't need it.
When Wanted: Weapons of Fate arrives for the PlayStation 3, Xbox 360, and PC next month, gamers who pick up the interactive sequel to last year's action film will get the chance to try out their bullet-curving technique on the game's many assassin adversaries. However, they won't be able to twist lead into one another, given that the third-person shooter lacks a multiplayer mode.
During an appearance on the latest installment of GameSpot's HotSpot podcast, Universal Pictures Digital Platforms Group's Pete Wanat--the executive producer on Weapons of Fate--explained the reasons behind that decision. Wanat said that most people who play multiplayer games just play the best of the bunch, and that developers spend too much effort putting multiplayer modes into games that don't need them.
"For the most part, we waste our money and our time building multiplayer levels," Wanat said. "And why do we do this? Because a couple years ago the press was all about saying, 'This game has to have multiplayer, there's no replayability.' F*** that. That's a bad joke."
Wanat added that oftentimes the pressure to make a multiplayer version of a game comes from a publisher's marketing department. Just having that feature on the back of a box, the argument goes, makes it easier to sell a game.
"What it does is it hurts the single-player game," Wanat said. "You don't get to add multiplayer [at] no cost. If you're going to make a multiplayer version, you take people, time, and money away from the single-player experience. And that all goes to hurt the single player. ... Not everybody is Bungie. Not everybody can have 100 guys working on their multiplayer. The Call of Duty 4 guys? If they want to do multiplayer, then do multiplayer. We'll play the f*** out of multiplayer in Call of Dut
"I do not know what I may appear to the world; but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me." - Issac Newton
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