Interview: Amid Layoffs, Sega's Hayes Talks Business Restructure, Digital Growth

Sega is reorganizing its Western business, and in steps it says are aimed at keeping up with the market and improving efficiencies, the company is reducing headcount and increasing its digital focus. The company tells Gamasutra it will lay off 36 workers in its San Francisco office and 37 in London, for a total of 73 people, or about 10 percent of its Western publishing work force (not including studios). Generally, the San Francisco office will act as the administrative hub for Sega's new digital concentration, while the London office will form the center of the company's packaged goods strategy. "We intend on moving into [digital] with more investment," Sega West president Mike Hayes tells Gamasutra. "And this has also given us an opportunity as a company to look at how we can become more efficient." But the reorganization doesn't indicate a shift away from the traditional packaged goods business, Hayes said. "If anything, we're still looking to make further investments in the traditional console and PC market," he notes. "But overlaid on that is the need to grow digital at an even faster rate." For Sega, this means moving more aggressively into mobile platforms, digital content, paid downloadables, and social gaming. "We've had success already mostly by focusing on existing Sega IP, and that's done us proud over the last two years," says Hayes. "Now, we're wanting to invest more in development and in people to try and create new gaming experience and new IP," he adds. "Now, which one of those specific arenas will become relatively strong for Sega, we don't know yet, because we're on this path now of exploring this exciting new market." So its organizational moves today are, according to Hayes, the best way to grow in the current market. "They say a day is a long time in politics; well, an hour is a long time in games," he says. "But we feel we're in very good shape to be competitive in the existing business." Of the decision to shape the San Francisco and London offices as more focused hubs, Hayes clarifies that there's no intent to "regionalize" Sega: "We're absolutely in a global business, and digital is part of that cause, but what we need to do is create centers of leadership and direction," he explains. "It's just providing focus, bit of efficiency, leadership in those quite distinct however v blurry part of the gaming business." "Being in video games is like a roller coaster, and if anyone ever says anything different, they're not telling the truth," Hayes says of the rapidly-shifting market. "Certainly we've had great successes on Wii and DS and continue to do well, and recently we've been excited about the success of Aliens vs. Predator, which has done well on Xbox 360. We have good IP, we're in a good place, and we have established brands." But Hayes is most enthusiastic about the next two to three years: "We're excited about E3 as much as the media community," he says of looking forward to seeing more from Sony and Microsoft on the gesture-controlled gaming front. Move and Natal are, in his opinion "extremely viable peripherals we will be supporting actively, and if you overlay that with the incredible digital arena, we have many ways of creating gameplay experiences that are different for the consumer." "It's challenging," he concedes. "New IP in the traditional business is tough to break through on -- we've seen that. It's becoming more of a sequel market, but htere are things happening that allow us to do different and hopefully interesting things. We're very upbeat with the opportunity we've got for the next few years."