Sega To Lay Off 650 People And Cut Executive Bonuses Due To COVID

Sega Corporation is planning on downsizing due to the effects of the COVID-19 pandemic. The Japanese company has announced that it will lay off up to 650 employees and institute executive pay cuts.

The video game developer announced it had sold off the management of roughly 200 arcades in Japan to Genda Inc., an amusement equipment rental business. It will be withdrawing from the domestic arcade management business on December 30 as a result of the negative effects the COVID-19 pandemic on the entertainment industry. In addition, parent company Sega Sammy Holdings is asking more than 600 of employees to voluntarily quit their jobs.

On November 4, 2020, it was announced that Sega Sammy has sold 85.1% to Genda Inc. as it makes its exodus from the arcade management industry.

Sega Sammy’s mid-year financial report revealed a 21.7 billion-yen ($206.7) million loss in revenue for the company, compared to the 9.8 billion-yen profit for that same period in 2019. “In order to return to profitability and achieve sustained development, we need to reduce costs, especially fixed costs,” the company said in a statement, “and we believe this is a necessary measure to build a more efficient organization.”

Laying off 650 employees would represent a nearly seven percent reduction of its staff of 9,051 employees. Additionally, Sega Sammy hopes to reduce executives’ salaries by up to 30 percent for the next five months, including larger reductions for higher-ranking executives.

Employees who volunteer to leave will be provided severance packages and reemployment assistance. Sega Sammy expects to spend nearly 10 billion yen on these furloughs. Staff has until December 25 to decide to volunteer and will be expected to work until the end of February.

Japanese companies often avoid downsizing since most people work overtime, which keeps from having to hire more people than needed or lay off employees during a recession. Founded by Hajime Satomi in 1975, Sega Sammy was formed from Satomi Corporation’s manufacturing and marketing divisions for amusement arcade machines. The company was also involved in the video game industry as a publisher for games such as the Guilty Gear series, The Rumble Fish series, and Survival Arts.

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