Sega just announced its financial results for the first half of the fiscal year, related to the period between April and September 2023.
Net sales were 221,158 million yen (up 47.3% year-on-year) while operating income was 39,579 million yen (up 313.4% year-on-year).
Yet, the results of the Entertainment content division, which includes video games, weren’t as positive with net sales at 121,086 million yen (up 3.8% year-on-year) and ordinary income at 9,072 million yen (down 47.4% year-on-year).
The growth for the whole company was mostly due to the strong performance of the Pachislot and Pachinko business. Unfortunately, looking at video games, full game sales of new console games and one new free-to-play game were “weak.”
Incidentally, while it isn’t explicitly named, it’s likely that the free-to-play game is 404 Game Re:Set which launched in April and is going to be shut down in January due to poor sales.
On top of that, Sega recorded impairment losses due to the structural reform that led to the cancellation of Hyenas and more unannounced games, which was caused by sluggish sales and increased costs at the publisher’s European studios.
On the other hand, sales of games from previous fiscal years were “steady” on both consoles and mobile.
That being said, it’s interesting to see that the full-year forecast for the consumer segment (227.5 million yen in sales and 30 million yen in operating income) looks much better than the half-year result, with strong growth in sales and a very small drop in income.
This is due to the fact that several games of popular franchises are going to be released or have just been launched in the second half of the fiscal year, including Sonic, Persona, and Like a Dragon.
Interestingly, the presentation also includes Sega’s plans to seek a return to growth for its European studios.
For CS business in Europe, we see potential for re-growth from the perspective of owned IPs and development capabilities for specific genres, and we will improve our earnings structure through structural reform
- Focus on the strength of each studio and narrow down the lineup (selection and concentration)
- Review of fixed expenses levels in the European CS business as a whole to an appropriate scale
- Integration of European and U.S. publishing functions
- Improve cost structure by sharing marketing functions and strengthening development management and content checking functions
- Sales promotion through multi-platform and expansion of region roll-out
If you’d like to compare today’s results with historical data, you can check out our previous article focusing on Q1. You can also read our report about Sega’s Integrated Report 2023 with more information about the company’s future plans including the “Super Game” and the return of beloved IPs.
