Unionized Sega employees reach a bargaining agreement with game maker

Less than a year after Sega recognized a group of its workers as a union, the group has ratified its first contract with the company—the first with a major publisher in the industry.

The contract, which was ratified Tuesday, will cover 150 workers who are members of the Communications Workers of America (CWA) and includes a number of protections, ranging from higher salaries to Just Cause protections in the event of layoffs.

“This is a watershed moment for workers in the video game industry,” said Jasmin Hernandez, a representative for Allied Employees Guild Improving SEGA (AEGIS-CWA) in a statement. “We’re hopeful that in the midst of extensive layoffs, workers across the video game industry will see organizing as a pathway to improve working conditions for all of us.”

The contract with Sega union members ensures layoff protections, and the publisher has committed to crediting people on games they have worked on, including early quality assurance (QA) testers. Workers will also be able to continue with a hybrid work model for at least six months and have won an expansion of their professional development opportunities, including paid-travel expenses.

Sega has also clarified its noncompete policy to allow workers to pursue creative endeavors outside the workplace and committed to providing advance notice of any planned use of AI in the workplace.

AEGIS-CWA and Sega have been negotiating the contract since this past July.

The bargaining agreement comes at a time where the video game industry is seeing even more volatility than usual. Over 8,000 workers have been laid off so far this year; and large publishers, such as Swedish holding company Embracer Group, have been selling off holdings at a rapid clip.

That has spurred the creators of video games to explore organizing. Workers at Microsoft-owned Activision-Blizzard formed the largest U.S. video game union earlier this month. QA workers at ZeniMax, also a Microsoft holding, have also unionized. (QA workers, who often work especially long hours for fairly low salaries, have been eager to secure union protections.)

AEGIS-CWA says it hopes the agreement it reached with Sega will bring optimism to workers at other companies.

“We’ve proven that a collectively bargained contract with substantial improvements and protections is possible even when management takes an initially hostile stance toward worker organizing,” said Hernandez.

After a golden era during the pandemic, the video game industry is facing a slew of challenges currently. The rapidly escalating cost of game development is pinching margins for publishers. Before the pandemic, a major game generally had a budget of $50 to $150 million. But a report last year from the U.K. Competition and Markets Authority (CMA) says that the development budgets alone of AAA games today reach $200 million or higher, with some franchises, like Call of Duty, costing as much as $300 million.

The spike in interest rates has also made it considerably more difficult for publishers to access funding. Public companies are a lot less willing to take on debt, and private companies have found that venture capital has all but dried up (unless, of course, you’re working in the artificial intelligence space). Investors, however, are still expecting growth—and that has brought about many of the cuts announced so far this year.

Even Sega wasn’t immune. As negotiations for the bargaining agreement took place, it announced plans to cut 61 positions in January, including many who were members of AEGIS-CWA.

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