Sega of America Inc is to lay off 30% of its workforce, indicating things are not well at the games company as sales of the Saturn continue to be unimpressive. The Redwood City, California arm of the Japanese games giant has fired 60 people in areas such as the test group and product management to enable it to refocus on the development of a new and more powerful games console. The company said it has made the cuts to remain financially responsible and competitive and is now working on the development of a new super console, as the Saturn requires less attention. The new hardware is being worked on with third party developers and will hit the streets in the US in 1999. Details are sketchy and the company is not champing at the bit to talk to the outside world, but did say that it is waiting until next year after assessing the current market situation. At the end of last summer, Sega was in talks with Microsoft Corp, negotiating an agreement that would result in the development of games for a 128-bit machine (CI No 3,242), double the capacity of rival Nintendo Co Ltd’s 64-bit console. It hasn’t come as a major shock that the company responsible for Sonic the Hedgehog and the Mega Drive, has not been performing as well as its rivals. Sales of the Saturn have lost out to Sony Corp’s Playstation and the Nintendo N-64. As a result of the poor Saturn reception in the US, the Japanese parent company, Sony Enterprises Ltd has cut its forecast for the year to March to $46.1m from $139m, taking a $200m charge for the write off of 16-bit consoles (CI No 3,069). Sega of America will continue to support the Saturn in the US over the course of this year.
