Sega Sammy today halved its forecast for the company's current fiscal year, due to the state of the economic environment in the U.S. and Europe, and the "rapid change" in the video game market environment.
As a result, the company has announced plans for layoffs within its U.S. and European home video game business, with a reduction in future video game releases on the cards. Sega Sammy said the move will create a smaller company positioned for sustained profitability.
Sega has canceled development on a number of software titles, although it did not state exactly which games have been canceled -- rather, it said that games based on strong IPs such as Sonic the Hedgehog, Football Manager, Total War and Aliens have not been canceled.
Gamasutra has contacted Sega to clarify which games it plans to cancel development on.
Sega Sammy estimates that it will record total losses of ¥7.1 billion ($86.4 million) as part of this structural reform.
For the fiscal year ended March 31, 2012, the company has reduced its fiscal forecasted revenue to ¥394 billion ($4.8 billion), down from the previously estimated ¥440 billion ($5.4 billion), and profits of ¥20 billion ($243.5 million), down from the originally estimated ¥38 billion ($462.6 million).