Sega Sammy is having a difficult year, and as a result have announced some major changes to its investors. Sega stated that these changes, including transferring shares, cutting salaries, and requesting early retirement from employees is due to the heavy impact of the coronavirus on the arcade and amusement business.
This is not the first loss for Sega this year. On the 30th of August, Sega shut down its famous Akihabara arcade, also known as the Sega 2 Building, in Japan. This arcade was an iconic landmark for tourists. The popular building has been featured in the backdrop of various video games set in modern day Japan.
The company revealed its plans to recover earnings and achieve growth in the future in its Notice of Forecast document released on November 6. According to the document, Sega Sammy has created a “Structural Reform Committee” to take a look at its non business properties, rebuild an organizational structure that can adapt to changes in the market, and reduce costs. The company has set a reduction target of 15 billion yen, which equals $145,215,165 USD. Sega plans to achieve this reduction goal by focusing on group-wide fixed expenses.
As part of this structural reform, Sega Sammy announced to its shareholders on the 4th of November that it will sell the majority of its shares in its Sega Entertainment division to Japanese amusement rental business, Genda Inc. According to Sega Sammy, Genda has a “strong desire” to expand amusement operations in Japan. Sega will be transferring approximately 81% of its shares of Sega Entertainment, and retain just 14.9%. The deal is scheduled to go through on the 30th of December.
On November 6th, the company announced that it has decided to call for voluntary retirement of 650 of its 9,051 employees to promote cost-reduction. Full time employees and contract employees of its Group Companies are eligible. Sega Sammy is requesting a retirement date of the February 28, 2021. Employees that choose to retire voluntarily will receive “payment of extraordinary retirement allowances and reemployment support for applicants.”
In addition to calling for voluntary retirement, the company stated that there will be a reduction in directors’ compensation. According to the Notice of Forecast document the company decided toreduce pay for the board directors and executive officers and some Group Companies. The reduction amount varies from 5-30% pay reduction for different positions. This pay reduction is applicable until March 2021. Sega Sammy also stated it does not plan on paying out bonuses to the directors, as they are performance based.
Sega Sammy reported it expects to record approximately 10 billion yen in extraordinary losses in fiscal year ending March 2021. The full extent of the damage is outlined in the company’s quarterly earnings report released on the 6th of November.
Source: Sega Sammy
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