Sega confirms US layoffs

House of Sonic's American arm confirms its payroll has been trimmed due to "reality of business challenges to profitability."

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Today, Sega of America confirmed to GameSpot that it is the latest third-party publisher to cut its payroll. The news comes just weeks after a particularly brutal year that saw a worldwide economic downturn hit such third-party publishers as Electronic Arts, Midway, THQ, and PlayStation 3 maker Sony.

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In a statement, the company explained the pink slips thusly: "Sega of America has grown at pace with the booming video game industry, but at this time of economic recession, harsh retail landscape, and the reality of business challenges to profitability, we must take steps to reduce our cost structure and ensure long-term success. The decision to lay off staff was a difficult one, and we thank these employees for their contributions and wish them well in their future endeavors."

Sega's US redundancies come after a disappointing holiday season that saw the Japan-based company's tent-pole releases get mixed receptions. In the US, Sonic Unleashed sold more than 660,000 copies despite being critically drubbed*, according to the NPD Group. However, the poorly received fantasy-action remake Golden Axe: Beast Rider was an unmitigated flop, moving less than 42,000 units through the end of December.

When asked if the latter game's developer, Sega-owned Secret Level, was affected by the recent staff cuts, company reps declined to comment. Reps also declined to clarify the number of employees let go, although unconfirmed online reports put the number at about 30.

* The Wii version of the game was significantly better received than the PS3 and Xbox 360 versions of the game.

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