Sega has reported to its shareholders that they will be expecting "an extraordinary loss totaling around 7.1 billion yen" for the fiscal year ending March 2012.
The reason for this loss, the company cites, is due to the "severe economic environment in the U.S. and Europe and rapid change in market environment of home video game software", in addition to the flooding in Thailand causing the reduction and delay of Pachinko machine orders.
Accordingly, Sega is restructuring and reforming their future lineup of titles in order to recover for the next period. This structural reform will itself cost them 4.9 billion yen. Sega plans to "streamline organizations" that will "create a smaller company positionsed for sustained profitability", and it will focus on strong IPs, "such as Sonic the Hedgehog, Football Manager, Total War, and Aliens". Several game software titles will also be cancelled.
Taken at face value, this doesn't bode well for the Yakuza series or for Platinum Games, as critically well-received as they are. If I were in Sega's shoes, I wouldn't have put so much money into new IPs, like Rise of Nightmares or Binary Domain, unless I was confident in their quality. Innovation and execution is what they, and many Japanese developers, really need.