Sega reports a profit, but top execs step down

Hideki Sato and Tetsu Kamaya, Sega president and COO respectively, have both stepped down from their roles at the company over the recent merger debacle - just as the publisher announces its first annual profit in five years.

The two executives will remain in position on Sega's board of directors, and their removal from executive office is seen as acceptance of responsibility for the very public fiasco of the recent merger talks with Sammy and Namco, which broke down just prior to E3.

Sato will be replaced as president by Hisao Oguchi, a 19 year veteran of Sega who steps up from his current position as head of the Hitmaker studio, where he was responsible for titles including Crazy Taxi and Virtual On.

The reshuffle comes just as Sega announced its first annual profit in five years, with a 3.05 billion Yen (â'¬22.4 million) profit reported for the year ended March 31. This is a significant turn-around from the 17.8 billion Yen (â'¬131m) loss reported last year, and comes despite a small drop in overall annual revenues - from 206 billion Yen (â'¬1.51bn) to 197 billion Yen (â'¬1.44bn).

For next year, Sega is projecting an annual net profit of 7.5 billion Yen (â'¬55m), despite plans to release and sell significantly fewer software titles overall. In the past year, Sega released 106 games and sold 10.66 million units, and for next year, it plans to release 77 titles and sell 9.25 million units. The difference, it claims, is that in the past year 50 per cent of its games made an overall loss, whereas next year it aims to make a loss on only 20 per cent of titles.

Speaking at a press conference to announce the results and the management reshuffle, incoming president Hisao Oguchi announced a number of key initiatives which will be implemented at the company in the coming months. One of these is the publishing of third-party developed titles in Europe and the USA - a drive already well underway in Europe, where Sega Europe announced publishing deals for Team 17's Worms 3D and Games Workshop's Warhammer Online prior to E3.

Oguchi also plans to consolidate the 10 major Sega development studios into four or five core operations, a move which will involve laying off between 10 and 20 per cent of the company's 1000 development staff.