Today Sega announced its financial results for the first half of the fiscal year ended on September 30th, 2016. As you can see in the table below, all the profit numbers are in the black.
The press release also included an overview for the business of the whole company, breaking down the reasons behind the results showcased above.
“With regard to the pachislot and pachinko industry, in the pachislot machine market, pachinko parlor operators have adopted a cautious approach to replacement of machines to those compliant with the change in the application of the model test procedure by the Security Communications Association, which conducts model tests for pachislot and pachinko machines. Meanwhile, pachinko machine market remains uncertain, in line with the application of the voluntary agreement on measures to prevent players from becoming too immersed in playing, which were decided by Nikkoso, an association of pachinko machine manufacturers. Under such circumstances, titles receiving high appraisal are arising mainly in some series with successful track records, and in order to revitalize the market going ahead, it is essential to develop and supply machines that are compliant with various voluntary regulations and capable of appealing to a wide range of players.
Regarding the environment of the Entertainment Contents Business, a slowdown in the spread of smartphones in Japan and the predominance of leading publishers are accelerating in the market for digital games for smart devices. Therefore, provision of higher-quality content is expected, resulting in a trend of longer development lead times and higher operating costs. Meanwhile, in overseas business, future growth is expected mainly in Asia. With regard to the packaged game software market, expectations are rising for future expansion of the market due to the penetration of next generation hardware of home video game console. In Europe, the U.S., and Asia, large markets have been developed for PC games. As for the market for amusement centers and amusement machines, signs of improvement in facilities utilization and expansion of the player base are showing mainly in new video game titles.
In the resort industry, although the growth rate is slowing down, the number of foreign visitors to Japan is increasing continuously, and an upward trend in the hotel occupancy rate is still evident. With a view to establishing Japan as a popular tourist destination, a bill concerning the promotion of the establishment of specified integrated resort areas (Integrated Resort Promotion Bill) has been submitted to the Diet.
In this business environment, net sales for the first half of the fiscal year ending March 31, 2017 amounted to ¥169,501 million, an increase of 9.9% for the same period in the previous fiscal year. The Group posted an operating income of ¥15,364 million (an increase of 167.5% for the same period in the previous fiscal year), ordinary income of ¥15,475 million (an increase of 163.8% for the same period in the previous fiscal year). In addition, as a result of recording extraordinary gain of ¥11,994 million, including gain on sales of noncurrent assets, the Group posted profit attributable to owners of parent of ¥24,251 million (profit attributable to owners of parent of ¥964 million for the same period in the previous fiscal year).”
We also hear specific details on the Entertainment Contents business, citing 4.65 Million Copies of packaged games sold, including “strong” sales for Persona 5.
“With regard to the Entertainment Contents Business, in the field of digital game software, “PHANTASY STAR ONLINE 2,” which celebrated its fourth anniversary since its release, topped 4.5 million IDs in Japan and continued to maintain its strengths. With regard to titles for smart devices, sales remained robust mainly for major titles including “Puyopuyo!! Quest,” for which real-time competition among players officially started in September has been well-received, as well as “CHAIN CHRONICLE – Kizuna no Shintairiku” and “Hortensia SAGA,” which held various events. In addition, the Group released a chain scenario RPG “WORLD CHAIN” as a new title in September.
In the packaged game software field, sales amounted to 4,650 thousand copies, which were higher than the level for the same period in the previous fiscal year, as sales were strong for major titles such as “Persona5,” the latest title in the “Persona” series launched in September.
In the amusement machine field, as operations of “KanColle Arcade” continued to be favorable, revenue share models made contributions to income. Sales of CVT KIT “StarHorse3 SeasonⅤEXCEED THE LIMIT” from the “StarHorse” series, a horse racing medal game, now in its 16th year of evolution, were robust.
In the amusement center operations field, like-for-like sales were robust at 110.8% compared with the same period of the previous fiscal year owing to reinforced management of prizes etc. at the existing game center operations and favorable operations of mainly video games, including the new title “KanColle Arcade.”
In the animated film and toy field, the Group recorded income from distributing a theater film “Detective Conan The Darkest Nightmare.” In addition, the Group implemented the sale of toy products mainly regular and major products.
As a result, net sales in this segment were ¥97,829 million (an increase of 13.8% for the same period in the previous fiscal year) and operating income was ¥9,143 million (an increase of 436.8% for the same period in the previous fiscal year).”