Sega sees profits fall despite a boost in software sales

Sega has reported a year-on-year profits drop of 62 per cent.

In its financial reporting on the first half of the fiscal year, Sega saw consolidated net sales fall by 12 per cent year-over-year (YoY) to ¥171 billion ($1.5 billion), and its overall profits drop 62 per cent to ¥6.7 billion ($59 million).

The Entertainment Contents Business – in which sits Sega’s video game business – things were a little more positive with a 5.6 per cent net sales rise to ¥107 billion ($951 million), but the operating income also fell by almost 39 per cent to a little over ¥6 billion ($55 million).

"Regarding the environment of the Entertainment Contents Business, in the field of digital game software, the competitive environment is further intensifying, with titles that capitalize on powerful IPs (Intellectual Properties), in addition to being high-quality products, take up the top spots in sales rankings," the report states.

"With regard to the packaged game software market, expectations are rising for future expansion of the market due to the penetration of hardware of home video game console, while game distribution platforms such as Steam are expanding in the PC games market."

The Japanese developer-publisher highlighted sales of a new PlayStation 4 version of Border Break, despite the game only retailing in Asia, stating sales were "robust" but also mentioned delays in the launch of "some titles that were planned for release in the first half of the fiscal year" that caused knock-on "development expenses". Software sales increased from 8,650 to 11,180 thousand copies YoY, owed in part to back catalogue sales.

Looking ahead, Sega plans to launch multiple new titles "that capitalize on existing and new IPs", citing plans for physical releases of Project Judge (working title), Total War Three Kingdoms and Football Manager 19, with digital releases planned for Idora Phantasy Star Saga, Ryu ga Gotoku Online, Wonder Gravity, Readyyy!, and Revolve8.