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25 per cent of Sega staff for the chop

Colossal loss predicted for fiscal 1998 -- and 1999 doesn't look any better

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Sega is to cut 1000 jobs -- 25 per cent of its workforce -- next year, following a poor set of results for the last 12 months. The games console maker yesterday warned it will post of loss of around Y45 billion for fiscal 1998, which ended on 31 March. Sega blamed lower-than-anticipated sales of consoles and software, and poor attendance at its UK and Australian video game arcades. Losses there will see the company writing off around Y33.3 billion as it withdraws its stake in those businesses; writing off inventory of the superannuated Saturn games console will add Y11.5 billion to that figure. All of which leaves the company focusing its hopes on its profitable Asian video game arcade business and sales of its 128-bit Dreamcast console. The trouble is, Dreamcast sales are way behind predictions, partly because of the difficulty chip maker NEC had manufacturing sufficient quantities of the console's graphics PowerVR processor, but also because demand for the machine is growing slowly. Sega originally hoped to shift one million Dreamcasts by the end of calendar 1998. NEC's problems forced it to put that deadline back to fiscal year end, but in the event Sega still missed its target, by 100,000 units. Demand won't be helped by Sony's canny decision to unveil its 128-bit PlayStation 2 early. Ironically, it's the original PlayStation that did for the Saturn. The Sony console isn't set to ship until the end of the year, but it will still hurt Dreamcast sales as buyers decide to wait and see how the two consoles compare. ®

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