Sega-Sammy Holdings have revealed their results for the first trimester of the fiscal year 2016, running from April 1 to June 30. Last year in Q1 2015, they posted an operating loss of ¥9,455 million (around $76 million). This time around things are looking better for the holding company, as they posted a ¥3,055 million operating income (around $30 million). Individually, the three main business segments of the holding posted the following results. The Pachinko/Pachislot business posted an operating income of ¥343 million ($3.4 million), the Entertainment Content Business posted an operating income of ¥4,941 million ($49 million) and the Resort business posted a loss of ¥898 million ($8.9 million). But these are better illustrated in the chart we included below.
Comparison between Q1 2016 and Q1 2017 results
It’s immediately obvious that the Entertainment Content Business (which includes just about everything related to video games from the company) is the main source for Sega-Sammy’s profit this time. The Pachinko business avoided posting a loss and as such did a lot better than the year before, but the same can’t be said about their Resort business. The latter did even worse than the year before, and so far it seems the company is having difficulty posting a profit in that segment.
Console & Mobile
Let’s take a look at the business segment of Sega-Sammy that interests us the most: the Entertainment Content Business. In their results, the company highlights the launch of the PlayStation 4 version of Phantasy Star Online 2. This year also marked the PC version’s fourth anniversary on July 4, 2016. Despite being four years old, the game remains popular, and even broke the record of simultaneous connections this year on May 15, 2016, when a total of 130,000 users logged in to the game. Of course, all this makes it all the more disappointing that the game was never released in the West, despite being officially announced in July 9, 2012.
On the mobile side, Sega-Sammy released “Liberasion of azure” (we referred to this game as “Liberation of the Blue Sky” in our articles), a new 2D action-RPG for iOS and Android. They also continued support for their other mobile games. In particular, SEGA highlighted Chain Chronicle: Kizuna no Shintairiku, Puyopuyo!! Quest (which celebrated its third anniversary) and Hortensia Saga (which celebrated its first anniversary) as their main mobile games.
Unfortunately there’s no mention of the performance of digital games in the West, despite the fact that the company has a lot of titles on Steam. Their sales results also show that the majority of their digital downloads occur overseas. Yet Sega appears to be having difficulty with the mobile market overseas in terms of profitability, as many of their mobile games have been discontinued in the West in recent times.
Packaged Games
In terms of packaged games, Sega sold a total of 2.41 million copies. This is more than they sold in the same period the year before, and Sega attributes this success mainly to their overseas titles, in particular Total War: Warhammer, the latest title in the Total War series. The RTS franchise remains very popular, mainly in Europe, and Sega states that it has now sold a total of 20 million copies in 16 years.
Looking more closely at the data, it appears only 90,000 copies of packaged games were sold in Japan. The remainder of the 2.41 million was sold overseas. This has a lot to do with the simple fact that Sega apparently didn’t release any new packaged game in Japan for the first quarter of the fiscal year 2017.
Amusement Center
In terms of Sega’s arcade games, the release of KanColle Arcade proved to be a huge success for SEGA. When AM2’s arcade game (based on the popular online browser game Kantai Collection, abbreviated as KanColle) was first launched in game centers around Japan, people were waiting in lines for hours to get a chance to play the game. As such, Sega’s statement that the game is off to a “flying start” is no exaggeration. With the success of KanColle Arcade, combined with “reinforced management of prizes” in their game centers, the sales in amusement centers in the first quarter were better than the year before.
Animated film and toys
Last year SEGA released the theater film Detective Conan: Sunflowers of inferno, which at the time reached the highest-ever box-office revenue for the series. The release of the latest film, Detective Conan: The Darkest Nightmare, managed to do even better, once again breaking the box-office record for the series. In terms of toys, SEGA is selling toys based on the “Anpanman” series and the “Disney Character Magical Pod” toys.
Looking forward
There are no surprises to be found in Sega’s statements regarding their future plans for the Entertainment Content business, as most of it is essentially the same as in previous financial statements. They plan to release “major updates of the existing major titles”, which include Phantasy Star Online 2, Chain Chronicle: Kizuna no Shintairiku and Puyo Puyo!! Quest. Hosting various events and game collaborations also seems to be a key part of Sega’s strategy for their F2P games, as they also highlight the collaboration event between Hortensia SAGA and Fate/stay night: Unlimited Blade Works.
In the amusement center, Sega-Sammy intends to strive to “continuously improve profitability”, with income generated by existing titles like KanColle Arcade, as well as new titles.
As for the packaged games, one of the key games from Sega and Atlus is of course Persona 5. The game has been building up a lot of hype, and its release in Japan isn’t far away (September 15). As for the West, the wait will be a bit longer. The Americas are receiving the game on February 14, 2017, while Europe is still waiting for the exact release date.
Conclusion
In the past three years, the company has consistently failed to reach their targets. Last year, they had to slash their forecast dramatically. However, SEGA appears to be of to a good start for this fiscal year. Strong new releases like Total War: Warhammer and KanColle Arcade, along with continued success from Phantasy Star Online 2 and record-breaking results from their recent Conan: The Detective films, managed to bring their Entertainment Content Business to a good result this time around. Hopefully, SEGA can continue the trend throughout the rest of the fiscal year. The sales from Persona 5 will no doubt be an important factor in determining the results for the next fiscal quarter.
Source: http://www.segasammy.co.jp/english/pdf/release/201703_1q_tanshin_e_final_.pdf
Did they finish construction of that resort already? if they didn’t then it’s obvious it will only cost money. And speaking of that resort, I kind of find they missed an opportunity, adding Las Vegas in PSO2 this month instead of their own resort complex lol
I have to admit I haven’t really looked onto their resort business all that much, so I’m not sure what state it’s in.