Sega Sammy's said this morning it's planning for a "extraordinary" loss of ¥7.1 billion due to the business's games arm underperforming, with a restructure set to take place and games to be canned.
In a warning to investors this morning, it noted its financials for the year ending March 31 would streamline operations as a result.
Overall net income will be half of what was expected at ¥20 billion (£153 million), while losses as a whole will be ¥7.1 billion (£54.3 million), with ¥4.9 billion (£37.5 million) of the cost to be for the restructure.
The move is due to "the severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software," it said this morning.
"Amid such business environment, the Company decided to implement structural reform of the Consumer Business at Sega Corporation to strive for a shift to a structure corresponding to the market environment for the purpose of earnings recovery in the following period and after.
"In accordance with the decision, the Company is expected to record extraordinary loss totaling around 7.1 billion yen, including costs in line with the streamlining of organizations and the canceling of development of some game software and costs for processing inventory.
"As for the Consumer Business in the following period and after, the Company projects decreases in operating expenses due to the reform."
Sega will now rely on current IPs such as Sonic the Hedgehog, Football Manager, Total War and Aliens, with development on other titles to be cancelled. It's not known what the cancelled games are, however.
There'll also be job losses, according to Sega, so it can carry "a smaller company positioned for sustained profitability".