Sega Europe has announced sweeping layoffs impacting its European studios and the sale of strategy game developer Relic Entertainment. The cuts affect roughly 240 positions across Sega Europe, Total War developer Creative Assembly, and a smaller number at mobile studio Sega Hardlight.
The layoffs follow a period of struggle for Sega Europe. In May 2023, Relic laid off 121 staff, and Creative Assembly cancelled its live-service shooter Hyenas, resulting in further studio redundancies.
Additionally, the recent release of Total War: Pharaoh failed to meet sales expectations, and Creative Assembly apologized for missteps with Total War: Warhammer 3 DLC.
Sega cites a "rapidly changing" financial landscape as the reason for the restructuring. The company blames a decline in post-pandemic stay-at-home demand and economic downturn for lowered profitability.
Sega Europe boss Jurgen Post apologized for the layoffs' impact and the fact that some staff learned of the news through media reports before official communication. He claims the company's legal obligations in Japan prevented earlier notification.
Post emphasized Sega's commitment to supporting laid-off employees through severance packages, career support, and redundancy consultations.
The sale of Relic Entertainment sees the studio become independent with the backing of an unnamed investor. Relic assures fans that support for Company of Heroes 3 will continue.
These layoffs are part of a wider trend in the games industry. Xbox boss Phil Spencer recently expressed concern over industry stagnation and job losses, following major layoffs at Xbox and Activision Blizzard in January 2024. Across the industry, estimates suggest over 15,000 jobs have been cut in the past year and a half.
The impact of these layoffs will be felt not just by the departed employees, but also by the remaining staff at Sega Europe's studios. Morale is likely to be low, and there may be concerns about further job security. The pressure to deliver successful games will be even higher, as Sega Europe looks to streamline its operations and improve profitability.