Sega is asking hundreds of workers to step down

The pandemic has no respect for video games or our sense of nostalgia.

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Amid its decision to sell its arcade enterprise, Sega Sammy — the holding company comprised of Sega and Sammy Corporation merger back in 2004 — has issued a statement that is bound to rattle many of its employees as well as consumers. In a company-wide letter, the Japan-based firm takes note of an "extraordinary loss," asking for the "voluntary retirement of employees and reduction in the amount of compensation of directors." In total, Sega Sammy is asking 650 of its workers to step down from their jobs of their own accord.

The reason for this call, which will undoubtedly devastate hundreds of its workers, comes down to the COVID-19 pandemic, which has similarly affected other businesses. Some industries are doing well, like flower businesses, while others have suffered significant financial damage. Sega Sammy's own forecast predicts a loss of $96.6 million at the completion of its fiscal year, which is next March.

What Sega Sammy says — Sega Sammy adds, "In order to recover earnings at an early stage and achieve sustainable growth in the future, we consider that it is necessary to promote cost-reduction centered on fixed expenses and build an even more efficient system and decided to call for voluntary retirement of employees."

As such, 650 of its full-time employees have been asked to retire. Those who decide to will be given "payment of extraordinary retirement allowances and reemployment support for applicants." On top of this, Sega Sammy is officially looking into slashing directors' compensation to keep its ship afloat.

"In order to clarify management responsibilities for the operating results for this fiscal year and the implementation of voluntary retirement associated with structural reform, the Company decided to reduce the compensation of Director of the Board and executive officers of the Company and certain Group Companies," the company announced.

In total, the company is slashing the representative director, senior executive vice president, and the senior vice president's budgets by 30, 20, and 10 percent respectively.

All is not lost, though. A structural overhaul like this sounds rough but it's one of the few ways to survive an unpredictable financial year in the middle of a pandemic. Operating losses and lowered sales account for most of the financial bruising Sega Sammy has witnessed so far. But, as James Batchelor points out for Games Industry, the company expects to actually see an increase in sales in the future, going from $2.68 billion to $2.73 billion. And with that, its operating income ought to go up as well. It shouldn't take too long for Sega Sammy to get back on its feet. Of course, that's no use to those who'll be laid off.