Sega-Sammy Posts Small Profit in the First Half of the Fiscal Year 2016

Sega-Sammy have posted its financial result for the first half of the fiscal year ending March 31, 2016. The company reports slightly lower sales overall than in the same period the year before, but this time it posted a small profit of 964 million yen ($7.96 million). We once again included a chart to show the performance of Sega-Sammy’s different segments. The blue bar is the one that interests us the most, as this is the one comprising the “Sega” brand of the company. To the left are the net sales for each segment, while the right side shows the actual operating income (or loss).

As you can see, the Entertainment contents once again achieves much higher sales numbers than the Pachinko/Pachislot business,  but the profitability remains a problem. More specifically, the Entertainment Contents business had ¥90,615 million net sales ($748 million), while the operating income was ¥1,575 million ($13 million). While the net sales were almost the same as in the same period last year, the operating income was more than double this time around. Sega-Sammy attributes this change to the reduced expenses in R&D.

For their physical games, Sega-Sammy noted that sales were lower than in the same period last year, largely due to a lack of new games. However, they highlighted that sales of their older games have been strong, particularly overseas. In terms of digital games, the sales did not meet expectations due to some games being delayed and other new releases not performing as well as they had expected. As usual, Sega’s older mobile games Chain Chronicle, Puyopuyo!! Quest and Phantasy Star Online 2 were noted for their continued strong performance, while more recent mobile game releases such as Hortensia Saga, Monster Gear and Sen no Kaizoku were said to be “off to a flying start”.

Looking forward, Sega-Sammy expects strong competition in the digital market. This seems like a logical evolution. With the mobile market being flooded with so many similar games, it becomes more and more difficult for new titles to stand out. As such, Sega-Sammy states that higher quality content is needed and this leads to longer development times. In the third quarter of the fiscal year, they’ll be focusing on releasing new digital games as well as proving updates for existing titles.

Overall, this isn’t a bad result since Sega-Sammy managed to post a profit again, but with their biggest games scheduled for a release in 2016, it’s clear that the Entertainment business won’t be posting stellar results until then. Sega-Sammy still expect to end the fiscal year with a profit of ¥19 billion ($157 million).