SEGA Sammy today announced their full year results with good news all round with the exception of one division. The strong results come after a hectic 2013 for the group in which SEGA was restructuring it’s core business, purchase of two high profile developers, the development of major resort complexes and expansion of some of their core development teams. The group also saw year on year growth for net income, hit the break to find out how the company did as a whole!
CONSUMER DIVISION
Ryu Ga Gotoku: Ishin! was one of SEGA’s major titles for the past fiscal year
SEGA’s consumer division had a string of major releases over the past year but only one managed to break the million mark and the latest Sonic the Hedgehog title that appears to be the worst selling mainline entry to date. SEGA’s best seller for the fiscal year was The Creative Assembly’s much anticipated Rome II. Despite the title’s issues with the launch, it managed to sell 1,130,000 units making it the fastest selling title in the Total War series. Next up was Football Manager 2014 which sold 790,000 units which would make it the second fastest selling title the series (It should be noted that the Vita release of the title is not included in the report as it was released in April 2014)
Due to poor sales of the Nintendo Wii U, Sonic’s latest adventure sold significantly less than previous titles
Sonic Lost World climbed from the figure SEGA posted in their last quarter (640,000 units) with an additional 70,000 units sold bringing the total to 710,000 units. Next up was Company of Heroes 2, produced by Relic who were purchased by SEGA after their parent company THQ went bust. The real time strategy game managed to sell 680,000 units and has probably already made back the investment SEGA made when purchasing Relic via sales of the game and various DLC. Finishing up the list was Kazuma Kiryu’s latest adventure in Japanese history as Ryu Ga Gotoku: Ishin! managed sales of 390,000 units, some way off the intended 500,000 units sold target SEGA had but should reach it with budget re-releases.
The Persona series became part of SEGA’s catalogue with the purchase of Atlus’ parent company, Index.
All in all, SEGA sold 8,730,000 pieces of software with Europe being the top region for sales of video game software having bought 3,770,000 units, followed by North America (2,800,000) and Japan (2,150,000) In addition to SEGA’s video game business, their animation business continued strongly thanks to the release of “Lupid the 3rd vs Detective Conan The Movie” but sales in their toy division were weak and below expectations.
Alien: Isolation looks to be SEGA’s biggest title for the new fiscal year
Thanks to the strong sales of their PC (2,640,000 units) and catalogue sales (3,790,000) helped SEGA’s consumer division record net sales of ¥99.8 billion, of which digital games (¥40 billion) produced the majority of revenue (Packaged good sales amounted to ¥38.8 billion) SEGA managed to make post a healthy ¥2 billion operating profit (£11,660,000 / $19,667,620) up from the operating loss they posted last year (-¥0.7 billion) Now with Atlus under SEGA’s belt and perhaps a quality Alien title around the corner, the group is expecting a massive growth in the future. The group is expecting a sizable increase in sales of packaged games (12,780,000, an increase of over 4 million units) with net sales to be ¥128.5 billion with net income to jump 230% to ¥6.6 billion (£38,491,200/$64,864,800)
AMUSEMENT MACHINE SALES AND AMUSEMENT CENTRE OPERATIONS
Code of Joker is recently under going to change to become a F2P arcade title
It wasn’t all sunshine and roses for SEGA though as their once mighty arcade division continued to post losses. SEGA’s best seller for the fiscal year was World Club Chamption Football Series generating revenues of ¥2.5 billion followed by Code of Joker generating revenues of ¥2.4 billion. What’s interesting about Code of Joker is that SEGA has recently announced that it would become a F2P title so seeing it’s future performance will be one to watch. Rounding off the list is Sengoku Taisen (¥2.1 billion) Border Break (¥1.5 billion) and StarHorse 3 (¥1.1 billion) Total sales were ¥38.6 billion (a decrease of 1% from the previous year) and the division saw operating loss of ¥1.2 billion yen, worse still the operating loss is set to continue next year with SEGA predicting a further operating loss of ¥1.7 billion.
The other part of the business, the amusement centres, continues to see further closure in the amount of domestic facilities. Whilst the division saw a 1% growth in net sales, climbing to ¥43.2 billion, it failed to make any sort of notable operating profit compared to last year where it at least managed ¥1.1 billion profit. But just like the amusement sales division, the amusement centre operations is set to lose money this fiscal year with a loss in the region of ¥0.6 billion and the closure of a further 7 centres.
PACHINKO AND PACHISLOT SALES
Kazuma Kiryu from SEGA’s Yakuza series wanders around a pachinko palour
Par for the course, the greatest amount of money was once against generated by the Sammy side of the business having managed to generate revenues of ¥181.8 billion (Pachislot having produced ¥112.7 billion whilst pachislot ¥63.5 billion) Sammy managed to sell 301,575 Pachislot machines, an increase of 49% from the previous year and a further 200,225 units of Pachinko machine, with a decrease of -8% from the previous year. In total the Pachislot and Pachinko managed to post an impressive operating income of ¥45.2 billion (£263,651,600/$444,044,800)
CONCLUSION AND FORECAST
Sonic Boom is set to be one of SEGA’s major titles for the up and coming year
The group managed to post revenues of ¥378 billion with a net income of ¥30.7 billion (£179,073,100/$301,596,800). Also, their cash reserve grew from ¥174.2 billion to ¥202.7 billion.
For the up and coming year the group is expecting continued growth with revenues hitting ¥450.0 (£2,624,850,000/$4,420,800,000) but with net income down to ¥21 billion (£122.4 million/$206.3 million) finally it seems SEGA will have a major marketing push for their software this fiscal year as they announced the marketing budget would be ¥14.4 billion (£83.9 million/$141 million) no doubt in thanks to the releases for Alien: Isolation and Sonic Boom. That concludes another fiscal report, if you have any questions you would like to ask please feel free to comment!
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Nice report thanks for the hardwork. One question, their cash reserve decreased from ¥202.7 billion to ¥174.?. If i read right it is the opposite,in the Consolidated Financial Statements, write that at the end of FY 2013 the Cash and cash equivalents at the year-end are 174.210, and at the end of FY 2014 it is of 202.741. I am reading wrong?
No you are indeed correct! It seems I read it wrong, thanks for the tip!
No problem, looks that they not have money problems but i am a little worried about their future numbers because they expect a decrese in their profit, i can not wait to see how they resorts an casino machine business work out. On the other hand with games like Alien I, Sonic Boom and Persona 5 looks that is going to be a fun year for us. Sorry for my english Btw XD.
Your English is fine, don’t fret about it.
Yeah their future numbers seem down to the fact that Sammy will be generating less income in the future, on the flipslide thanks to those three games you mentioned, SEGA is expecting a big increase in profit. Let’s hope it happens so they can continue to deliver us quality software!
@Aki-at, What benefit would you say the Sammy merger deal has given for Sega?
And if Sega would be better off just buying it’s own controlling shares back for itself (the ones CSK sold in ’01), and if so, would it be likely, if not, would you say it would be ideal, i.e better?
The benefits of the Sammy merger was wiping out of a sizable debt SEGA had and also added financial security. It’s allowed them to experiment with new IPs like Yakuza, Valkyria Chronicles, Binary Domain, Bayonetta etc all these years and they’ve been able to absorb any financial failures without much trouble.
I certainly think that if SEGA did somehow become independent from Sammy, it might not quite be good in the long run. It’s highly likely this will happen but let’s say they do, they would have regained creative freedom but at the same time there is no guarantee this will ensure output like Jet Set Radio etc as they would still need to make titles that will deliver a hit first rather than take a risky venture.
Honestly I would think it is a bad idea to go their separate ways. Even if SEGA had a massive re-structure in 2012, they still try to produce new IPs and other high risk moves. After all, even if it is a licensed game, who would make a survival horror game based in the Alien universe when all we’ve got in tie in games have all been shooter if not SEGA?
Thanks Aki, awesome as usual. Unless Aliens turns out to be GOTY level, there is no way SEGA is gonna sell this much of software, that they are expecting. But anyway, good luck to them.
Yeah, they are expecting at least 440,000 units from the Xbox One version of Aliens and under 690,000 units from the Playstation 4 version (There’s 3 skus, one I imagine is RGGs new game) and under 700,000 units for the Xbox 360. They are probably expecting sales of over 1.5 million, do able but only if it’s a quality game, as you say.
Also keep in mind Atlus’ output is included in SEGA’s report, Persona 5 should add another 500,000 – 900,000 units, the rhythm game a further 250,000 – 300,000 units and whatever else Atlus has planned.
Sku’s? What is an Sku?
Stock keeping unit.
For example, Sonic Boom has 4 SKUs, these are worked out as being;
Platform
Region
So Sonic Boom has Wii U in NA (1 SKU) Wii U in EU (1 SKU) 3DS U in NA (1 SKU) 3DS in EU (1 SKU)
Good article!
I see that Xbox 360 has 2 SKUs for 1Q- 2Q.
One is Alien, the other could be an Atlus game, an exclusive release or a limited/preorder exclusive edition of the game? I think is the last one.
Thanks for that Aki!
@Nirmugen: I believe each release counts as 1 SKU for each reigon.
Say for example, Alien Isolation.
It’s releasing in US and Europe, so it counts as 2 SKUs (One for US, and other is for EU).
So basically, its just Alien releasing in two regions.
@Pao Yeah, I think that but the PS4/Xbox One version only have 1 SKU each other in the same period of time.
This version is going to release in November for Europe, I suppose..
Thanks for the advise anyway 🙂
Hmm…what with the antsiness for the next Virtua Fighter, I wonder if it’s in the future of the series to pull a Soul Calibur and move primarily to consoles. Soul Calibur isn’t the most popular or best selling fighter, but it posts decent sales (considering whatever circumstances come in, like SCV being rushed) and besides even Tekken seems to be slowing down rapidly.
You have to wonder if this is what’s going to all fighters anyway. The arcade market only really exists in Japan and that’s where it’s feeling the pain now.
And it’s a shocker to see Code of Joker again! The game I remember only for having that nice logo.
No way Sonic Boom is going to do well on Nintendo hardware, why must Sega keep restricting Sonic at the start of every new gen, Sonic has only ever done good on Sega hardware (obviously) or all hardware. The last Sonic was considered another step in the wrong direction again (though not as bad as it used to be when it was in the wrong direction) and made a Wii u exclusive did not help sales wise, it restricted it.
Sadly, with Wii U’s install base so low, I seriously doubt Sonic Boom will be an initial success.
I hear from ReviewTechuSA’s channel on Youtube that Nintendo is maybe going to be anouncing new hardware soon, if it ends up being a new console, the Wii u will be considered Nintendo’s first real big failure in a while, an even bigger flop than Sega’s 32X and Saturn.
And that Iwata of Nintendo says he wants the company to now go beyond just games – probably to secure security in another industry, as Nintendo don’t really have anything else other than the hardware market (which is also diminishing thanks to Android smartphones), Sega still has their Arcade industry dominance – but this has also been in decline in the West for some time, still Sega is arguably the king of the Arcade industry and scene over all.
Sega’s doing better than Nintendo over all, Nintendo now seems to be in the same stage Sega was at in 1996~2001, Sega made four massive straight yearly losses before deciding to change strategy, Nintendo so far has made two huge yearly losses so far, this year and last.
Still great news all around then for Sega.