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Sega notified investors today that it expects to post huge losses for their fiscal year due to the "severe economic environment" in the United States and Europe as well as "rapid changes" in the market. In order to recover, they plan to make drastic changes.

"We conducted detailed reviews of earnings projections for titles targeted toward the U.S. and European markets and decided to narrow down sales titles from the following period and after to strong IPs, such as Sonic the Hedgehog, Football Manager, Total War and Aliens which are expected to continue posting solid earnings," said Sega in a document outlining their structural reforms. "In accordance with this, we are canceling the development of some game software titles."

There's no mention of what games will be axed. Considering how long Aliens: Colonial Marines has been in development, I assumed it was in danger. Glad to see Sega specifically mentioning that the Aliens is safe. The company mentions that they're going to strengthen their "digital content" development so any downloadable titles in the works should be spared as well.

Sega also says that they're going to "streamline" their organization in both the United States and Europe. In other words, they're laying people off. The company hopes that these cuts will position them for "sustained profitability." Again, no specifics on which companies will be hit by these lay-offs.

Though they're taking it on the chin in the video games department, Sega's not doing too bad in arcade industry. However, it's not enough to keep them in the black. They expect to post a loss of 7.1 billion yen, which is about $85.7 million.

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