Brilliant post about SEGA's recent buisness by Neogaf admin, Nirolak.

[Sharky]

I just thought this was a really informative and good post and wanted to share:

I'll start with a brief history of Sega over the course of the last generation and the path it's lead us to, which is not entirely clear yet, but will be soon.

 So, over the course of the last generation, Sega followed a pretty standard path for a Japanese publisher. Their line-up consisted of the following:

 1.) A mix of "AAA" games from both internal/external Japanese studios and independent Western studios. By ~2011, basically all of these product lines had failed and they essentially exited this business. I put "AAA" in quotation marks because the reason their games were failing was that they weren't actually living up to the expectations, budget, and/or tastes that defined actual AAA game production. Note, this isn't a condemnation of quality, since AAA is a production category.

 2.) They also made a bunch of mid-tier Japanese games on both consoles and handhelds. Some of these succeeded, but many of them failed or faded. They ended up discontinuing most of this production line with few exceptions such as Yakuza and Miku. If we go to today, even the popularity of these are starting to fade.

 3.) They made a selection of PC games that eventually became titles that primarily had high margin digital downloadable sales. These came from some early generation acquisitions they made such as Creative Assembly (Total War) and Sports Interactive (Football Manager). These actually significantly succeeded, and caused them to eventually make acquisitions like Relic (Dawn of War/Company of Heroes). Do note however that Creative Assemblies expanded efforts (console games like Viking, Alien, and Stormrise) didn't meet expectations and eventually saw the teams that handled them either shuttered or start working on Halo Wars 2 for Microsoft to absolve Sega of the risk.

 4.) They made a whole bunch of Japanese mobile games. First this was done primarily on feature phones, which in Japan generally means they were developed through DeNA/Mobage or GREE. These were profitable, and didn't take Sega resources for the most part. However, with the switch to smartphones, feature phone games (including their ports to smartphones) largely fell apart, which also caused most Japanese publishers to start publishing their games themselves. Over time, Sega found tremendous success here, overwhelmingly through new IPs with very high production values for the platform, but a strong sense of mobile tastes and monetization as well. As this division grew, it started taking many of the staff from the failing Japanese console, handheld, and arcade businesses, who continued to bring their game taste and design sense with them. If we look at a hit game like Hortensia Saga, it has quite a bit of voice acting, lots of cutscenes, high quality art, an anime opening, and a combat system that's more in-depth than you'd expect out of most mobile games. If it was a upper-mid-tier PSP game, no one would blink an eye (sans some of the mobile monetization systems). They do have some mobile games based on their existing IPs, but it's rarer. Sega also made a few PC oriented f2p service games, with the most notable being Phantasy Star Online 2, a game that succeeds on par to their high end mobile hits. By comparison, Phantasy Star on handhelds has completely faded.

 5.) They made Western mobile games as well. These were generally less successful, but it's something they're continuing to invest in through partnerships and acquisitions given their success in Japan and the important of mobile to the company. Sonic Dash is an interesting case, but I'll cover that in a moment in item 6.

 6.) Sonic is an IP that deserves its own item. It's a brand that was once the definition of the company (and, despite how it has faded, is in many ways still their mascot). Sonic had some moderate success earlier last generation selling a couple of million copies a game, and strong success with the Mario & Sonic at the Olympics series selling 5+ million copies an entry (the series since collapsed to 1/10th that or worse this generation). It's also a series they allowed to be developed both internally in Japan and at studios in the West. The quality of both approaches on dedicated devices ultimately resulted in failure, though Sonic Colors and Sonic Generations from Japan and Sonic Racing (both entries) from the West were stand outs before its final collapse. However, on mobile, there was a very interesting stand out in terms of Sega Hardlight's Sonic Dash. While it never made all that much money - but enough to be profitable - it reached a huge and well engaged audience totalling 150 million unique downloads. This was a huge win for what the Sonic brand has now become: a multimedia franchise. The Sonic Boom cartoon (made in France) is very successful, and mobile Sonic games help keep the series notably popular among children, so they pay out huge dividends even if they don't rake in $75+ million a year like some of Sega's mobile hits.

 7.) In addition to the previously mentioned recent strategic acquisitions (Relic for their successful PC business following up previous successful acquisitions like Creative Assembly and Sports Interactive, and a variety of companies like Demiurge and Three Rings Design for mobile development), Sega purchased Atlus in Japan. The idea behind this acquisition was that it fit three of their businesses quite well. The first was that it would help fill in their dying Japanese dedicated device business with a company that was actually on the up-and-up despite the dire situation of the Japanese dedicated device industry. The second was that Sega had a growing multimedia business and Atlus' brands were a great fit for that. The third was that they would eventually be able to leverage Atlus' IPs in mobile and pachinko games as well, especially as the Japanese audience got older and were less likely to be playing dedicated device titles (unlike the West, it's not uncommon for teenage Japanese gamers to end up as mobile-only gamers once they get a very time consuming job, and as they get into middle age and older, become big pachinko parlor fans. Obviously this doesn't apply to everyone, but for now it's something Japanese publishers certainly consider).

 Now, the big mix up here is that in 2015, the CEO of Sega Sammy assigned his grandson as the CEO of Sega Games. The new CEO of Sega Games noticed that the rigorous adherence to schedule for dedicated device games, done to help control costs and increased when Sega's products were starting to fail, was notably negatively impacting quality, which was causing Sega's remaining series to start dying. Realizing this was going to be the end of their dedicated device division, he decided to implement a new quality first strategy that would let games sit in development for notably longer in a bid to increase quality. However, since this just started at the start of 2015 - increasing even further on the extra breathing room a couple of series were starting to get - we won't see if this actually is helping until 2016 when the first games under this strategy start coming out. He said he ultimately wants to model Sega Games after Atlus, a notably successful dedicated device game division, whose flagship game Persona 5 has already been given 2.5 years of extra development time. Miku is getting a significantly expanded campaign mode and story cutscenes. Total Warhammer was delayed out of 2015 and even the fiscal year to April 28th, 2016. Yakuza 6 was noted as one of the flagships of this new development model and isn't releasing until Fall 2016. Relic's first game made entirely under Sega, Dawn of War 3, has been given a very long time already before it has even unveiled. And, perhaps most poignantly, Sega has been delaying Sonic Boom's second 3DS game in an effort to try and make a high quality dedicated device game in a series that could definitely use one.

 Will any of this meaningfully pan out? It's hard to say, but we'll find out as these games release one after the other.

 Now, that brings us back to Valkyria. Could this be a mobile or PC f2p game? Sure, there are several of those types of games that use Sega's IPs. However, Sega does often focus on New IPs for these types of releases. There are two notably exceptions in the form of Puyo Puyo Quest and Phantasy Star Online 2, which are both very successful. The game could also certainly be part of their renewed dedicated device game interest. Valkyria Chronicles on PC sold vastly above expectations, and the Valkyria staff working on The World's End Eclipse and Dengeki Bunko Fighting Climax's expansion are both about to release their products, so while I don't expect either of those teams to get smaller, they might have a staff lead staff switch-up/senior staff promotions so the old Valkyria staff can work on a new entry in that series.

 However, regardless of whether it's a service game or a dedicated device title - assuming this is actually a Valkyria Chronicles title - I expect it to be a high grade effort from the division that makes it, as that's central to Sega's current business strategy across the company.

http://www.neogaf.com/forum/showpost.php?p=182904675&postcount=360

[Trippled]

Hmmm...I have something similar coming up on the last part of my R&D history

[crackdude]

People in the West buy what the internet tells them too. Sega needs some marketing.

[Aki-at]

Great post.

But our LORD AND SAVIOUR Haruki is actually the son, not grandson.

[CrazyT]

The only lord and saviour is Iizuka san (ok that was random I admit)

[Sharky]

Hmmm...I have something similar coming up on the last part of my R&D history

Looking forward.

[Nameless 24]

Reading all of it, and it's got me thinking.


SEGA's better known over here and possibly Asia than in Japan. Perhaps dedicated hardware sales are dying in Japan, but they have always remained steady in the West and Asia, so why not port some of those successful mobile games to either the PS4, Vita or the 3DS? I am sure it wouldn't cost them as much as making a game from the ground up?


Their mobile business seems to be successful, and I am glad about it, but their focus seems to be directly on Japan, with a few successes in the West. Should they wish to expand this output, then they need to advertise their lesser known Mobile games better, as Sonic is probably the only one with a large download ratio compared to their other IPs.


Regarding their IP output on dedicated devices, it's good to know that they are finally getting some quality control in, but I have to wonder why they didn't just focus on making mid-tier budget games with some excellent marketing behind them back when their games such as Binary Domain and maybe their Platinum output needed it? They don't need to make AAA budget games like Acti or EA, but some control over budgeting would have increased their output of games, and perhaps the quality and marketing would have improved their sales, no?


It's quite positive overall to read, but their biggest problem is that brand recognition maybe too late to recover in the West (perhaps it'll do better in Asia) due to the lack of advertising of their products plus their decrease in output. If they have any chance of increasing the awareness, it'd be on Sony's Playstation 4.

[crackdude]

Brand recognition is easy to recover. Just make good games and hype them up on mainstream gaming sites.