Sega West Restructuring - Layoffs and New Focus on Digital Distribution

News recently broke that Sega West has undergone some significant restructuring in both North America and Europe. As part of its business reorganization, Sega West has reduced it's overall workforce by about 12 percent; resulting in layoffs of 36 employees from its San Francisco offices and 37 from its London division. According to sources reporting on the event, Sega is hoping the changes will allow them to better focus on their new digital division, which will be headquartered at their San Francisco office. Sega Europe will now be their hub for more traditional video game mediums.

"We've been going through the planning process the past 6 months, taking a look at the future of the market and where we think our investments need to be. It's no surprise that the share of digital is growing as an overall part of the video game business, so we decided we have to invest more in that specific area,” says Mike Hayes, President of Sega West, in a comment to IndustryGamers.

Hayes goes on to talk about the company's growing interest in digital platforms, such as Facebook, iPhone, iPad, Xbox Live Arcade (XBLA) and Playstation Network (PSN). He also mentions that their current challenge will be doing more than just reinventing existing Sega IP. On that note, Hayes indicated that we should be seeing some original IP product announcements over the next few months.

So, what does this all mean for the Phantasy Star franchise and other classic IPs? Only time will tell. Sonic 4 is still coming down the pipeline for XBLA and PSN this year, and the Supplemental Update for Phantasy Star Universe: Ambition of the Illuminus is on the schedule as well for the Xbox 360. While it sounds like Sega West is very focused on branching out to new platforms with original IP, it stands to reason that we'll likely see a number of old favorites being reborn on these digital platforms as well.

On a final note, our thoughts and best wishes go out to the Sega employees who were affected by these changes. Thankfully, it looks as though our friends on SoA's blog and community team have not been included in these cuts.