SEGA Sammy have released their latest report showing off robust earning through several of their division but certain segments of SEGA’s internal division still lost them money, however it was not the usual suspect as one might expect, click the break to find out how well the SEGA Sammy group did overall;
CONSUMER DIVISION
Despite traditionally being SEGA’s best selling IP, Sonic: Lost World was not SEGA’s most shipped product
SEGA’s consumer division enjoyed strong figures going into the third quarter with Football Manager 2014 being their standout seller, posting sales of 680,000 units though this figure is down from last year’s installment at 730,000, though it should be noted Football Manager 2013 is the fastest ever selling Football Manager. Whilst SEGA’s Japanese football management series, SAKATSUKU Pro Succer Club wo Tsukurou! sold 200,000 units, however according to Sinobi, SEGA was expecting sales of 280,000 in total for the title.
Football Manager allows players to take control of their favourite team and lead them to glory
The major talking point though was the latest adventure starring SEGA’s blue mascot, Sonic: Lost World. The title managed to sell 640,000 which seems to be the lowest entry for sales for a mainline Sonic game since 2006, what would be interesting is seeing how the title does for SEGA’s entire fiscal year as we would have a better idea of how well the title is selling, the previous two Sonic titles usually add between 200,000 – 300,000 between the January – March period (Sonic Colours went from 1.85 million to 2.18 million and Sonic Generations went from 1.63 million to 1.85 million) At this point it is hard to estimate just how much has been sold through to consumers as we know sales in America have not pushed beyond 200,000, the game could either have sold a late flurry of units or there maybe a lot of units on the shelves. The full year report in May should give us a better understanding just how long the titles legs will be.
Puyo Tetris is one of a number of titles pushing a strong lineup for Q4
The division in sales between packaged goods and digital goods are almost identical, with packaged goods selling ¥28.4 billion and digital goods selling ¥28.3 billion, no doubt soon we will see stronger digital sales for SEGA than packaged goods. In the Consumer Division’s other departments, SEGA Toys noted continued sales in their mainstay product “Jewelpod Diamond Premium” and recording sales of ¥7.4 billion whilst their animation department reported to favourable sales for their latest animated feature “Anpanman: Fly! Handkerchief of Hope” recording ¥8.3 billion in sales.
Hero Bank is one of two new IPs SEGA releasing in Q4
In total the Consumer Division posted sales of ¥72.3 billion (£436,052,400/$714,798,000) with a year on year growth of 20% and whilst the consumer division had a few titles that under-performed, still managed to post a robust operating profits of ¥2.7 billion (£16,083,900/$26,365,500) a mighty increase of 436.7% year on year growth. SEGA Sammy is predicting the consumer division to build further on their operating profits with a full year forecast of ¥109.5 billion net sales and operating profits ¥3.9 billion (£23,233,626 / $38,083,500) And whilst SEGA have a very little in terms of Western software (Project Diva F for the Vita being their only title) their Japanese lineup is quite strong, featuring Ryu Ga Gotoku Ishin, PSO2 Episode 2 for Vita and Puyo Tetris to name but a few as well as significant growth for SEGA Networks which recorded revenues of ¥6.7 billion (Year on year growth 55%)
Ryu Ga Gotoku: Ishin is no doubt SEGA’s biggest title in the final quarter
Despite this however, it might still be a tricky task as Puyo Tetris experiences long term sales rather than an initial burst of sales, PSO2 Episode 2 will probably see sales around 100,000 – 120,000 in line with the original, Hero Bank is an untested new IP and we know that SEGA’s stab in the rhythm dance genre in Utakumi 575 was a massive failure, it may come down to how well Ryu Ga Gotoku: Ishin and Hatsune Miku: Project Diva 2nd f perform and whilst the latter seems like it should have strong sales, Ryu Ga Gotoku: Ishin current preorder numbers align closer with Ryu Ga Gotoku: Kenzan meaning a debut of around 180,000. No doubt the success of the Playstation 4 will effect the long term sales of Ru Ga Gotoku: Ishin. Still I would expect the consumer division to produced a good operating profit by the end of the fiscal year.
PACHINKO & PACHISLOT
Pachislot machines continue to show year on year for SEGA Sammy
Continuing to be SEGA Sammy’s biggest money maker, the pachinko & pachislot segment posted a mighty ¥160.2 billion (£954,151,200 / $1,565,794,800) in net sales. The biggest contributor to the number, Pachislot, provided much of the bulk with sales of ¥107.1 billion ( ) with the group putting the impressive number down to solid sales of “Pachislot Eureka Seven 2” (59,000 units sold) and “Pachislot Juoh” (42,000 units solid) helping to push the division to a growth of 143% selling a total of 286,396 units which is up staggering from last year’s numbers of 130,590 units. The group expect the growth to be even greater by the end of the year, predicting net sales of ¥165.0 billion with year on growth of 157%
Over on the Pachinko side of the business the group noted strong sales of “Pachinko CR Hokuto No Ken 5 Hyakuretsu” (64,077 units) and “Pachinko CR SOUTEN-NO-KEN” (27,139 units) with total unit shipments accounting to 156,538 units. Net sales for the segment was ¥49.3 billion though SEGA Sammy is expecting that revenue to more than double to ¥100.8 billion for the full year as major titles will arrive to help boost the profitability of the division. Altogether the pachinko & pachislot division recorded an impressive ¥50.0 billion in operating profits seeing a massive growth of 549% year on year.
AMUSEMENT MACHINE SALES & AMUSEMENT CENTRES
In Code of Joker players pit their monsters against one another via a table top fashion
Unfortunately it was not all good news for SEGA Sammy as their previously stable arcade division recorded an operating loss which was further exacerbated due to the trouhled amusement centres unable to make up the difference. SEGA’s arcade sales division biggest money maker was Code of Joker earning them ¥2.3 billion, a good strong figure and historically what is expected for a tentpole new release for SEGA’s arcade division. Other major titles WORLD CLUB Champion Football Series and Border Break made ¥2.1 billion and ¥1.2 billion respectively. The segment produced revenues of ¥28.0 billion with an operating loss of ¥0.2 billion. Blaming the loss on sluggish market condition as well as the lack of many major new titles, however the group is hopefully of an end of year operating income of ¥2.7 billion.
Border Break continues to bring in a steady level of income for SEGA Sammy
However SEGA’s Amusement Centres continues to suffer as the group was forced to close a further 3 stores domestically whilst opening 4 more, unfortunately that is all they will be opening this year but closing 5 more by the end of the year. It certainly is a shame and no doubt the arcade industry is in it’s twilight years perfectly demonstrated by the number of amusement centres it had in the beginning of 2010 (260 facilities) compared to the total facilities they will have by the end of fiscal year 2014 (197) The segment recorded net sales of ¥32.4 billion of which saw them make an operated loss of ¥0.0 billion, meaning a minor loss but a loss none the less.
CONCLUSION
Alien: Isolation contributed to SEGA’s increased Research & Development cost
Overall the group saw a raise in net sales from ¥207 billion to ¥303 billion (£1,811,334,000 / $2,970,006,000) But whilst the rise was only 55% in net sales, they saw a massive increase in profitability recording net profit of ¥44.3 billion (£264,825,400 / $433,519,800) up 1377% from the same period the last fiscal year. A major reason for the increase outside of both the consumer, pachislot and pachinko divisions all coming off of major year on year increase in profitability was the sales of shares in Sanrio Co., Ltd (2.87 million) making an additional profit of ¥10 billion in profits. Going into the final quarter, it seems almost certain for both the pachislot, pachinko and consumer division of meeting their goals and should prepare them for a strong finish to the current fiscal year.
Ad:Related posts:
SEGA Sammy Q1 2016: Top mobile games generating 20 million a month
SEGA Sammy third quarter review for fiscal year ending 2017
SEGA Sammy Holdings Q3 report: Group posts healthy profit
SEGA of America going through another huge restructure, main office is relocating
SEGA Financial Report: Alien: Isolation sells over 2 million while Yakuza Zero and Sonic Boom display weak sales
A detailed analysis as always, nice work! I was just wondering, where do Index Corporation (and Atlus) fit in all this? Seeing how they’re part of Sega-Sammy Holdings now, I would image their results would also be factored in these financial reports, but that doesn’t seem to be the case?
Atlus didn’t have any major titles, plus the acquisition was completed in November (Which is mentioned as one thing to take into consideration for slightly lower cash reserves) but do expect them to be factored in the consumer division for future.
Love the high detail in these reports, but I wonder, hypothetically, would these be strong enough for Sega to concentrate on their first successor console since the Dreamcast?
And if so/or not, how far off would they be and what would it take along with these results.
I see other major players don’t seem to be doing as good as Sega by some distance, like Capcom in particular, and even Nintendo, Microsoft have received a lot of bad press recently also.
I’m not aki-at, but I think it’s highly unlikely that Sega will enter the console business again. competition is too fierce as it is. They’ll have to be very worried about penetration into the West – besides the Big Three consoles, Amazon is prepping their own console, there’s the SteamBox (not exactly a direct competitor, but nevertheless attractive for people who don’t use powerful PC’s and PC is strong in the west), Apple is increasingly making room for themselves as a game device maker. Japan is apparently a little less hospitable to consoles than the West is, what with the prominence of handheld and mobile gaming, but there’s really only one hypothetical competitor (PS4) I suppose. A very strong one, to be sure.
As game consoles become multimedia devices/ “entertainment centers”, Sega has to be in the sort of financial position that enables them to secure contracts with Nico Nico, Hulu, Netflix, and all of that stuff. entertainment apps. What Sega is in is an enviable position as a developer/publisher in Japan.
IIRC Nintendo posted a profit, but the Wii U is still in an awful position so the resulting press is not good. I don’t know how the sales of the Yamauchi shares factor in. And Microsoft…I think they’re going to be fine for a while, with the prominence of Microsoft Office?
Sorry for the late reply but it is exactly how InTheSky described it. SEGA is far too small now to be able to support a console and honestly, it’s just a loss making business all round. Keep in mind Sony, Microsoft and Nintendo are losing money on each console sold, for SEGA to entertain a thought like that would mean their very healthy cash reserve to quickly dry up.
I’d rather support SEGA’s expansion into the PC space and perhaps even try their own game’s delivery platform like EA and Ubisoft have but instead, use their diverse backlog to support such a on demand service. That would probably be the closest we ever get of a console service again from SEGA.
Maybe they could call it the Sega Virtual Console, or some other Sega console like name to that effect that is effectively an app that is accessible on every device, and then when large enough, use their online presence to advertise Sega hardware as well as Sega software, similar to what Valve done with their Steam service.
That’s probably the closest Sega could get as far as realism can go at this time.
Sega probably is still a bit on the small side to be a major player in the industry, but they are pretty big as they are at what they do currently, being able to buy up Index 100 properties like Atlus most recently, and owning all these extended companies from the offices of Sega-Sammy Holdings.
“saw them make an operated loss of ¥0.0 billion,”
Apologies for asking, but what does this mean? Is there no number in the millions?
No problem, ask away!
And yep you’re exactly right, since SEGA Sammy reports in billions, the number is less than ¥99,999,999. They don’t state any numbers that go under ¥100,000,000 or else it would have been reported as ¥0.1 billion.
Grand news.
Great improvement from this time two years ago.
That Ishin preorder number is discouraging…but! It’s also a launch title for the PS4. A great position, lends itself to impulse buys, maybe. It would be hard to believe Ishin selling low.
Very curious to see how the consumer division does over the course of the year. It’s a fairly mighty set up.
Great article! Very helpful to those of us who don’t really dabble in this kind of fiscal speak.
Question, how is SLW doing compared to Black Knight? I remember that title distinctly selling very poorly. I don’t think it has broken a million units shipped/sold worldwide at this point even.
It’s hard to tell the exact figure it sold since it (Black Knight) was hardly even mentioned in NPD threads from leaks with any figure outside of people saying bomba whilst it never left an impression on European charts.
Lost World probably is no where near the worst selling entry (Last generation, Sonic 06, Black Knight, Riders 2 and Free Riders sold significantly less at this point I believe) but it is still poor. Though the failure should be down more to a rejection (confusion even) of the main platform than the title itself. As we have seen the lowest selling entries in the New Super Mario Bros, Mainline 3D Mario and Pikmin on the Wii U, the console really is a massive handicap.
It will be interesting to see how Sonic Boom will perform since that should come out after the big hitters of Mario Kart and Smash Bros. If (And that is a big IF) Wii U can replicate Gamecube level of success at least, Sonic Boom could end up being a million seller on the Wii U alone.
A small note about PSO2 Episode 2, the physical package (PSO2 Episode 2 Deluxe Package) is going to be released for both Vita and PC (Episode 2 has been out for both since July digitally).