The job cuts, which were made Thursday, involved marketing and quality assurance workers tied to the Dreamcast console, said Sega of America spokesman Charles Bellfield. Bellfield would not say how many jobs were cut but said there remain about 125 people working at the company's U.S. office in San Francisco.
"It was relatively a very small number," he said.
After a week of speculation and denials, Sega announced Wednesday that it would stop selling the Dreamcast as a standalone unit. The company said it would halt production and slashed the price to $99 to clear out the remaining supply.
Sega, once the top dog in the video game business, has been losing money and market share in the face of increasing competition from Sony, maker of the PlayStation 2 game console. It was facing an even more pitched battle with Microsoft's entry into the console business expected late this year.
"We have a lot of work to do, software to sell, and hardware inventory to move through the channel," Bellfield said. Sega has said it will look to develop games for other companies' hardware and has licensed the Dreamcast technology to Pace Micro, which will include it in a forthcoming television set-top box.
Sega of America laid off 30 percent of its staff in January 1998 before the release of Dreamcast.