Sega Sells Relic, Cuts European Staff and Cancels Projects

Sega sells Relic Entertainment and announces a restructuring of its European division. Around 240 jobs will be cut, and several projects will be cancelled.

Sega Sammy Holdings has announced the sale of Relic Entertainment. The Canadian studio, best known for Company of Heroes, Dawn of War and Age of Empires 4 for Microsoft, will leave the group. Together with an external investor, the Canadian company will continue to operate as an independent studio. "The transferee is a holding company to be newly established by the UK investment company Emona Capital LLP, but details will not be disclosed due to the request of the transferee," Sega said. As a result, a business restructuring loss of approximately 4.7 billion yen, or about 28.8 million euros, is expected to be recorded as an extraordinary loss. Relic plans to continue working on its previous projects, including Company of Heroes 3. The company became part of Sega at the beginning of 2013. The Japanese publisher bought the shares for just under 26 million dollar following the bankruptcy of parent company THQ.

A structural reform of its European division has also been confirmed by Sega. As a result of a review of the medium-term line-up of its European studios, Sega has decided to write down the value of some of the titles in development. This is expected to result in a loss of 5.6 billion yen as cost of sales, or nearly 34.3 million euros.

At the same time, the development structure and medium-term line-up in Europe were reviewed. The company decided to reduce headcount by approximately 240 positions at several locations in the European region in order to optimise fixed costs. According to GI.biz, the job cuts will mainly affect Creative Assembly and Sega Europe, and to a lesser extent Sega Hardlight. Two Point Studios and Sports Interactive are not expected to be affected. As a result, a loss of approximately 1.5 billion yen is expected to be recorded as an extraordinary loss, or approximately 9.2 million euros. As of September 2023, several projects have already been cancelled, including Hyenas, and nearly 250 people have been made redundant.

The following reasons were given for the measures taken: "The business environment surrounding the Consumer area, especially in European region, has been rapidly changing, including reactionary decline from the stay-at-home demand in Covid-19 and the economic downturn due to inflation, etc., and profitability has been lowered."

Sega: "We expect to newly record loss of approximately 5.6 billion yen (34.3 million Euros) as cost of sales and extraordinary losses of approximately 6.2 billion yen (38 million Euros) for the fiscal year ending March 2024. Also, as the effect of the implementation of structural reform combined with those announced at September 28, 2023, annual cash outflow is expected to be curbed by approximately 10.0 billion yen (61.2 million Euros)."

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