Sega Restructuring Game Business with Online Games at its Core Following Soft Demand for Packaged Titles

on November 1, 2014 4:33 PM

Sega Sammy Holdings posted its financial results for the six months ended on September 30, showing a rather significant reduction in operating and net income (which was in the red) compared to the same period last year.

SegaResults

The company mentioned a softening in the demand for packaged games betwen its liabilities, despite total sales being higher than in the same period last year:

In the home video game software industry, demand expanded in the market for digital games geared toward social networking services (SNS) and smartphones, while the market for packaged games softened.

In the consumer business, the Group launched titles such as “Persona 4 The ULTIMAX ULTRA SUPLEX HOLD” in the packaged game software field. Total volume of packaged software sales were 4,100
thousand copies, which includes 1,420 thousand copies in the U.S., 1,960 thousand copies in Europe, and 710 thousand copies in Japan and exceeded results for the same period in the previous fiscal year.

On the other hand, in the field of digital game software for mobile phones, smartphones, and PC downloading, performance remained solid for the online RPG “PHANTASY STAR ONLINE 2” as well as titles such as, “Puyopuyo!! Quest” and “CHAIN CHRONICLE – Kizuna no Shintairiku.” Meanwhile, on the pachinko and pachislot game website for mobile phones and PCs, the smartphone version of “777TOWN for Android,” “777TOWN for iOS” and service for DeNA Co., Ltd.’s “Moba7” were enhanced.

Also, the number of titles distributed domestically in the field of digital game software as of September 30, 2014 was 139 (including 74 Pay-to-play types and 65 Free-to-play types).
In the toy sales division, the Group implemented the sale of such as “Anpanman Series” and “Jewelpad.” In the animated films division, distribution revenue from theater film “Detective Conan: Dimensional Sniper” and license revenue and revenue from merchandise sales from the TV series “Yowamushi Pedal” were favorable.

As a result, net sales in this segment were ¥48,631 million (an increase of 10.3% for the same period in the previous fiscal year) while operating income was ¥939 million (a decrease of 16.0% for the same period in the previous fiscal year) because of an increase in advertising expenses.

As a result of recent performance, Sega Sammy determined to restructure its business with the entertainment contents division built around the online game business.

The group’s companies will be reorganized into three business groups by around April 2015:

  1. Pachislot and pachinko machines business centering on Sammy Corporation.
  2. Entertainment contents business with SEGA CORPORATION’s network game business at its core.
  3. Resort business engaged in the development of hotels, golf courses, facility business and other businesses.

Each business group will accelerate the decision-making process, streamline overlapping functions, build a system that will allow the appropriate injection of management resources, and enhance management efficiency by adapting to the changes in the business environment.

Finally, the group also revised its forecast for the full fiscal year downwards:

SegaForecast

Between the reasons for the change it was mentioned the expected under-performance of packaged games due to the “harsh market environment.”

Personally, I can’t really say I’m surprised, considering that Sega doesn’t seem to be too keen on really using its best IPs (*coughs* Valkyria Chronicles *coughs*) and appears to be extremely reluctant to localize and properly promote some of its strongest games in the west (*coughs* Yakuza *coughs*), but what do I know…

 /  Executive News Editor
Hailing from sunny (not as much as people think) Italy and long standing gamer since the age of Mattel Intellivision and Sinclair ZX Spectrum. Definitely a multi-platform gamer, he still holds the old dear PC nearest to his heart, while not disregarding any console on the market. RPGs (of any nationality) and MMORPGs are his daily bread, but he enjoys almost every other genre, prominently racing simulators, action and sandbox games. He is also one of the few surviving fans of the flight simulator genre on Earth.
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