Sega West CEO explains reorganization

Mike Hayes details impact of restructuring, Iron Man 2 studio's closure; promises more original downloadable IP, weighs in on Saturn, Dreamcast era rereleases.

Yesterday, Sega confirmed the layoffs of more than 70 employees in its North American and European offices and announced a restructuring that will see a new digital division working out of San Francisco. Today, Sega West president and CEO Mike Hayes spoke with GameSpot to better explain exactly what impact the restructuring will have on the publisher.

Sega West president and CEO Mike Hayes.

In addition to clarifying the new digital division's role in the company, Hayes touched on a number of other topics, including this month's closure of the studio formerly known as Secret Level, developers of the upcoming Iron Man 2 game. The executive also shed a bit of light on the digital division's battle plans for the future, promising the publisher would finally branch out beyond the rereleases of console and arcade hits that make up the bulk of its downloadable catalog today. Hayes also confirmed the publisher is currently considering revisiting a heretofore neglected chunk of Sega history--the Saturn and Dreamcast era.

GameSpot: Will Sega have any internal retail development being done in the US going forward?

Mike Hayes: Basically, there was the one studio, [Iron Man 2 developer] Sega San Francisco Studios, which we announced the closure of. However, the intention is for us to continue to increase our business in America, and to do that, we need more development projects. It's just likely that for the time being, all of those are going to be handled on an external basis. So we are still looking for projects with external partners that we can hopefully sign up for the future on whatever platform. The closure of the studio and putting the administrative center of traditional products in London in no way reflects how key North America is to our traditional business going forward.

GS: Golden Axe: Beast Rider didn't set the world on fire, but I was under the impression Iron Man did well and the sequel had significant expectations on it. Why close the studio now and pull back from that?

Hayes says Sega's decision to close the developer of Iron Man 2 is no reflection on the movie adaptation's quality. The game comes out May 4.

MH: It was simply a case of what was the project we could find next for the studio, and that was where we stalled. Despite several months of good efforts in trying to find the next project, we couldn't actually agree and close on that idea. So it's not a reflection on Iron Man 2 because we've got great expectations that if it does as well as Iron Man 1, it's going to be a big hit. And the job they did on that was very good and very solid. The issue was more about what was the next project, and that's what we couldn't in the end agree upon.

We did the same in Europe three years ago with the Sega Racing Studio. The quality of Sega Rally was very high. The issue was in the driving genre. What is it we could have done next? And that was the problem. We couldn't solve that, and that was the reason for the closure.

GS: Will this affect the amount of external partnerships that you have in the US, or will they continue as they have?

MH: Our goal is to increase, quite frankly. We need more external projects to further build the market share that we've got in the US. We've made great strides since we reinvented ourselves as a multiplatform publisher. Our marketing share has grown steadily the past five years. Our intention is for that to continue, so we'll be quite actively and aggressively looking around the country to see what partnerships we can make with developers in the United States and Canada, as well as Europe, of course.

GS: Will Sega's European studios and partners handle just as much digital development as they were before, or will it be taken off their plate and put in San Francisco?

MH: The administration and the leadership will come from [San Francisco], but we're totally agnostic in terms of where the developer is. We want to make sure we get the right product at the right quality and the right price. Whether that's in Europe or Asia or the Americas, it really doesn't matter to us.

Sonic the Hedgehog 4 is one step in Sega's plan to expand its digital catalog beyond rereleases.

GS: This is separate from downloadable content, correct? Those add-ons would just be handled by whatever studio did the original products?

MH: Absolutely right. With digital and traditional, there's a huge amount of gray area. They're certainly not mutually exclusive. There aren't these blocks where nobody talks to everybody else. That's part of what we need to make sure we're effective. So, yes, the downloadable content for packaged goods will be dealt with by those studios. But the expertise in the digital group will input and advise us on how best to develop that.

GS: Sega's digital distribution strategy to date seems to be using it as a way to get value from the catalog. With the exception of Happy Tree Friends, all of your titles are rereleases of arcade or console hits. Should we expect more original titles like Sonic 4, or more original intellectual properties in the future?

MH: You've absolutely hit the nail on the head with that. We've had a good two to three years in the digital arena harvesting very much the existing IP. Some of it has been old platform games from the Genesis, but we've also reengineered very successfully. I think Super Monkey Ball is probably one of the most successful on the iPhone and now iPad. But you're absolutely right. The increased focus and need for an increased size team in San Francisco couples up with an increase in development budget, and part of that budget goes to develop new original IP that is more specific for the digital platforms. Through the summer and into the fall, we'll be making announcements on what those projects are. Several are in development already.

GS: You mentioned the Genesis and Super Monkey Ball. For all the retro and catalog titles you've rereleased, those two things bookend a dead period of the Saturn and Dreamcast where a lot of those games just aren't being brought back or made available to people. Is that something you're looking at changing?

MH: It's certainly something we're looking at, yes. But at the moment we've got no solid plans in terms of release.

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63 comments
luckjon
luckjon

Need another Virtual Fighter or Daytona USA. Daytona USA ruled the arcades, especially 6 players linked, I would race my cousins all day.

LindBergh2007
LindBergh2007

GravityDs. They have a On-Live like streaming console planned for later this year. As for a new console, SEGA is going this route so that they can once again get back into the home console market in 2012-2013.

gameOwl45
gameOwl45

Oh god i hope they bring back Jet Grind Radio and JSRF!!!!

Denveraic
Denveraic

[This message was deleted at the request of a moderator or administrator]

SadPSPAddict
SadPSPAddict

I read the article and comments with interest but I didn't really play Sega games growing up and missed out the whole Saturn/Dreamcast eras so don't have all the memories you guys seem to. With that in mind seems like they are trying to get themselves going again so good luck to them!!

GravityDs
GravityDs

Sega, come out with a new console. And since when did Vince McMahon become the CEO of SEGA West?

ebonyflame
ebonyflame

As much as I hope they turn their fortunes around, I am doubtful of their abilities. With such a huge library of back-catalogue games that they could bring into the present they siply waste their energies on ridiculous IP and grind others into the ground. The best example would be Sonic and Crazy Taxi. Sonic was bought intot he #d gaming space rather successfully with Sonic Adventure. While it was not a perfect game it was a solid playable and fun game. Then came Sonic Adventure 2, it took only the best parts of Sonic adventure, gutted the rest and added a whole lot of crap that brought that series to a crawl, a series that is supposed to be all about speed. Then there is Crazy Taxi. That game series is ripe for a rebirth into the current gen gaming systems. Imagine a Crazy Taxi with HD graphics, a killer soundtrack with both recognizable bands and new and upcoming bands. You could simply take all three of the past games, update the graphics into HD, put them all on one disk and get it done.

aryanbrar
aryanbrar

sega used to be so now they are going down hill, i stopped buying sega games when they refused to cooperate/work with universe at war developers for universe at war 2. that game was an amazing rts.

blue-peregrine
blue-peregrine

@vectorman88 Silpheed is developed by Game Arts. Sega just worked with Game Arts to publish the game for the Sega/Mega CD version.

KuRf
KuRf

yeah yeah...reorganizing so...yakuza 4 on english a go???

JoeBeetle1
JoeBeetle1

DC or Saturn games - Sony PSN should seal a deal on this before MS gets it.

S_Pac_316
S_Pac_316

It would be cool if they can re-release some Saturn and Dreamcast games as DLC and give them online compatibility. (chuchu rocket anyone?)

RIPANTHONY8008
RIPANTHONY8008

the games sega has published recently like bayonetta and resonance of fate were great.but publishing and developing are two different things and i alot of sega developed games(owned franchises by them) dont have the quality they used to have.im an old sega fan but i cant be the only one who sees this.maybe people who just started playing games say post dreamcast may not understand me but for the rest of you i think you will agree with my argument.i didnt realize how deep the subject of sega is until i started posting this.its just sad to see them the way they are right now.ill check in later to see what the gamespot community thinks.

RIPANTHONY8008
RIPANTHONY8008

@denveraic yeah sega has changed since the dreamcast ended but nintendo,sony and microsoft(maybe them even more than anybody)must of looked into buying sega around the beginning of the post dreamcast era.and as powerful as it may have been if sega and nintendo got together doesnt mean that all these classics would of just started rolling out.nintendo could survive on its own easily no one doubts that,microsoft needs more in house studios in my opinion so one has to wonder why nothing ever happened between them.look at the exclusive sega games that came out on xbox.shenmue II,JSRF,panzer dragoon orta etc.microsoft got the rights for shenmue II for north america and they didnt even advertise the game.they just sat back and waited for us shenmue/sega diehard fans to buy their systems.the exclusive games from sega was a major factor for me when i decided to by an xbox.in the end us gamers may of thought we benefited out of the deal but the good games exclusive for xbox by sega were JSRF & shenmue II.sony has a strong 1st party and have shown they didnt need to buy sega either.i like sega but their not a factor like they once were.look at the sonic games in the past few years.the most successful was that olympic trash game and i bet nintendos theme in those is what drove in most the sales for those titles.sonic and sega all stars racing is a very good though.

jay_rock_
jay_rock_

Pretty much it went all down hill after the dreamcast..

Denveraic
Denveraic

[This message was deleted at the request of a moderator or administrator]

fubbal
fubbal

I don't care about the 32X......but I bet with them looking at the saturn and dreamcast we'll see some releases of that stuff.I would like to see some sega cd stuff too. I would love to see panzer dragoon saga,skies of arcadia,virtua fighter 2 with online play...(Wouldn't that be cool, and despite the graphics virtua fighter 2 is still a very fun 3-d fighter!) Another thing that would be cool is too see some of the games that never seen the light of day over here,but got released in japan! Shining force 3 episodes 2 and 3 anyone!

Seifer-fx
Seifer-fx

Who cares! just make the Dreamcast 2 and Shenmue 3!!!

vectorman88
vectorman88

ok so youve got the dreamcast and the Saturn. Now SEGA, PLEASE include the gems of the Sega CD, 32 X, and more genesis. I want silpheed, Sonic CD, ecco the dolphin CD Afterburner II ( THe new one, climax is awesome btw)

mijahi
mijahi

lol@GameSpot Community Mention Shenmue 3, a game that will probably never happen, and everybody clicks the little thumbs up button... Mention a game that actually came out this year and happens to be a really great game...and you get negged! lol...y'all crack me up :P (btw- RoF IS a great game!)

Zerosumgame
Zerosumgame

fire those useless ppl, we need that awesome SEGA back!

pokemonboy607
pokemonboy607

You Need To Re-release The Dreamcast Games My Dreamcast Broke and You Cant Beat The Dreamcast Classics

digi-demon
digi-demon

Eh? Not sure where to go with the racing game genre after Sega Rally? Well how about an update of Power Drift (amazing game crying out for a remake or at least arcade original on download) or the Daytona series, Scud Race, Virtua Racing, Monaco GP, Indy Racing, Le-Mans or Super Hang-On etc. These are missed op's all of them.

bsnimunf
bsnimunf

I cant remember the last time i played a good sega game. Possibly Shenmue or Sonic adventure on the Dream Cast. Everyone thinks sonic went crap when it went 3D. The first real attempt at going 3d was sonic adventure and that was pretty good its everything since then the was tripe. Going 2Ds not the answer, learning how to produce a good 3d game is. I played Yakuza and it was absolute rubbish never tried Bayonette though.

melty3219
melty3219

SEGA fail, I wish one of the big three (Nintendo, MS, Sony) buy them out... Nintendo could make amazing games with all of SEGAs IPs.

spoonybard-hahs
spoonybard-hahs

@ Chiyou Actually, Sony announced late last year that they are in talks with Sega to possibly re-release Dreamcast games via PSN.

Menalque2
Menalque2

@Blacklace There actually was a sequel to Dragon Force... Dragon Force II, but it was never released outside of Japan.

Dark_Arkitect
Dark_Arkitect

Sigh.Where do I even begin Sega?So many great titles.Astal,Shinobi Legions,Clockwork Knight,Panzer Dragoon,Beyond Oasis,Space Harrier...the list goes on. Heck.Get with Capcom and rerelease the Power Stone titles.I'd love to see Sega back strong in the game.I'm sure i'm not alone on this.

Da4biddenOne
Da4biddenOne

i hope the reorganizing plan works to better the company. Sega just had great success with Bayonetta and im looking forward to the sequel.As for old games that they need to bring back, Space Harrier, Altered Beast, and Eternal Champions. Just to name a few.

szymon247
szymon247

Anyone notice how EVERY Sega-related thread has literally half of messages mentioning demand for Shenmue? It was an epic game and it's popular on all other sites too (I think the least on gamespot which is more about modern shooters) and I still fail to understand why Sega wants to close that chapter. It was their most epic game by far.

RIPANTHONY8008
RIPANTHONY8008

@kavadias i hear you about shenmue.i still havent got any of the yakuza games(probably the closest game to it) yet but shenmue to me was a landmark game.the series is 1 of my favorite franchises of all time.yeah the fact that part 3 was never released still bothers me.alot of people feel just like we do about this im sure.

GodGundamNT1
GodGundamNT1

did you notice on "iphone" "ipad" WTF?? those are not game consoles!! Make games on consoles like PS3, Nintendo Wii and XBox, screw that mobile crap and make games on NDS and PSP instead. As for Saturn and Dreamcast, porting those games is a bad idea, it would be better to remake them, reprogram them and repackage them on Disc medium as large scale games with higher resolutions textures and 3d effects because most gamers 99.9 percent will not buy these games instead they will complain and complain its not the same as a 2d game being reprogrammed like Capcom's Final Fight game. Oh and for those Shenmue complainers that I KNOW did NOT buy the DC version when it came out, stop complaining and buy Yakuza instead, its far superior and its your second to last chance at the Sega FREE experience.

Chiyou
Chiyou

pfft, they hardly talked about re-releasing Saturn and Dreamcast games, i feel ripped off >> i read it all in excitment and that tiny end sentence was all i got.. I think closing Secret Level was a bad idea, they should have just restructured it. It looks terrible for the release of Iron Man 2.

worthyofnote
worthyofnote

Oh Sega... the economy is rough for everyone. So many great games in your library, rich history. Hopefully this corporate restructuring plan puts Sega back on top in the coming years. I'd love to see them gear up for next gen with a great console. It's only wishful thinking, but it wasn't long ago that Microsoft came out with a console and changed the world of video games.

kavadias1981
kavadias1981

@RIPANTHONY8008 I can't go back to them. They sit on my shelf tormenting me. I was so gutted when Shenmue 2 ended. I just wanted it to go on forever. The fact that there will probably never be a sequel is still a blow to me, and by the sounds of things, many other gamers too. Easily two of the best games ever made. Even by todays standards.

RIPANTHONY8008
RIPANTHONY8008

it would be nice if they finally released shenmue III.since it would on xbla or psn they could release it in episodes/chapters.i would surely buy that.i still play shenmue on dreamcast and shenmue II in xbox.i cant get enough of the series.

Menalque2
Menalque2

Saturn games for Xbox Live and PSN? YES FRIGGING PLEASE!!!

jtthegame316
jtthegame316

yes sega look to the saturn and dreamcast for dlc to put on xbox live i know i keep saying it but panzar dragoon saga on xbox live arcade please well prefurablly xbox live arcade but even if it went i wii ware i'd buy it from there but xbox 360 xbox live arcade panzar dragoon saga please sega

Backlash24
Backlash24

Layoffs are never fun -- Sega needs to get back to being as awesome as they used to be though ...

mijahi
mijahi

What ever you do, Sega...keep your partnership with Tri-Ace because y'all hit the ball out of the park with RoF!! One of the better RPGs I've played in quite some time (and I even played and beat that other big RPG released around the same time). If you keep releasing innovative and addictive RPGs such as RoF...you'll be just fine!

gamer082009
gamer082009

Something needs to happen, because the games they've been releasing has been lackluster.

tmorri603
tmorri603

@EJH-SEGA That what is driving my crazy about Sega right now. Here they have just as history as Nintendo but don't know to update it for this gen. or they won't do it. I am not a big fan of RPG's but I loved Shining Force 3 but never got to play the last 2 chapters. Ninja Gaiden makes a great comeback but does Sega try to do something with Shinobi, no. They need to get back to what they did best, make great games. If they don't, we are just going to see more people lose their jobs.

green_dominator
green_dominator

They sound like idiots, as soon as a challenge hits they back off, as soon as a studio does something significant no matter how well it's reception they close a studio..... I actually know people who still want to see another Sega Rally game.....

Idiot_son
Idiot_son

id be over the moon if they released some reworked shining saga games

clqtte
clqtte

Digital games never work for me.Fortunately,we have a lot of choice to choose our own video games these day.

ferrarimanf355
ferrarimanf355

"We did the same in Europe three years ago with the Sega Racing Studio. The quality of Sega Rally was very high. The issue was in the driving genre. What is it we could have done next? And that was the problem. We couldn't solve that, and that was the reason for the closure." Aargh, you could have let them done a Daytona USA revival....

GravityDs
GravityDs

jesus SEGA just come back with a console already. Replace Microsoft and make awesome games like you used to. Everytime I read something about SEGA, i see nothing but positive feedback. You're the one company that didn't chump it up, aside from dropping out of the console scene.