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Sega’s New Console Games Underperformed Despite Persona 5 Royal, Sakura Wars, & Mario & Sonic Releases

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Sega’s New Console Games Underperformed Despite Persona 5 Royal, Sakura Wars, & Mario & Sonic Releases

Sega released its results for the nine months ended on December 31. While new console games underperfored, Phantasy Star Online 2 is still going strong.

Sega released its financial results for the nine months ended on December 31, 2019. While new console games underperformed, Phantasy Star Online 2 is still going strong.

As you can see in the table below, sales were up 12.2% year-on-year.

Operating income over doubled (up 135.4%) year-on-year.

We also get a breakdown of the period’s performance in the press release.

“Regarding the environment of the entertainment contents business, in the digital game software field, the strong competitive environment for mobile game continues, especially in Japan. With regard to the packaged game software field, in the market for hardware of home video game consoles, the game software sales market is expanding, mainly in overseas due to the growing penetration of current-generation video game console hardware. In addition, the expectations are rising for expanding overseas download sales and revenue opportunities from new business models with the launch of new platforms and services. As for the market for amusement centers and amusement machines, the rate of facilities utilization is still mainly in prizes. However, there are concerns about the impact of consumption tax
hike.

[…]

In the digital game software field, the Group recorded transient sales such as title transfers conducted by the second quarter, and offering titles. Also sales of existing titles in operation have been performing solidly. Besides, expenses substantially decreased due to the impairment loss on fixed assets recorded in the previous fiscal year.

In the packaged game software field, the Group sold including mainstay new titles “PERSONA 5 ROYAL”, “Mario & Sonic at the Olympic Games Tokyo 2020” and “New Sakura Wars”, in addition to selling repeat titles.

As a result, sales amounted to 19,330 thousand copies (18,510 thousand copies for the same period in the previous fiscal year).

[…]

As a result, net sales in this segment were ¥186,263 million (an increase of 12.1% for the same period in the previous
fiscal year) and operating income was ¥16,197 million (an increase of 52.8% for the same period in the previous fiscal
year).”

The digital games business (online PC and mobile games) was the star of the period with significant profit growth year-on-year.

The top-three titles in the business were as follows, with Phantasy Star Online 2 still at the top despite having launched almost eight years ago.

  1. Phantasy Star Online 2
  2. Fist of the North Star LEGENDS ReVIVE
  3. SEGA Pocket Club Manager

On the other hand, we learn that sales of new packaged games (basically console games) were below expectations despite the launch of Persona 5 Royal, Project Sakura Wars, and Mario & Sonic at the Olympic Games Tokyo 2020.

It’s worth mentioning that Persona 5 Royal and Project Sakura Wars haven’t released in the west just yet.

On the other hand, existing games launched in previous fiscal years performed solidly, exceeding the forecast.

Operating income for the field decreased year-on-year due to the expenses associated with launching new games.

That being said, there are still major games released of coming before the end of the fiscal year like Yakuza: Like a Dragon and Persona 5 Scramble.

As a result, the forecast for the full fiscal year for packaged games was lowered for new games partly offset by a smaller increase in older titles, resulting in an overall drop.

Speaking of forecasts, Sega revised its overall outlook for the full fiscal year, dropping net sales, leaving operating income as is, and slightly increasing ordinary income.

The outlook for the Entertainment Content business saw a drop in sales, but the prediction for operating income has been increased thanks to the improvement in performance of digital games mentioned above.

“With regard to Entertainment Contents Business, although net sales fell short, operating income is expected to exceed the previously announced forecast due to improvement in the Digital Games area, while the number of new titles sold in the Packaged Games area was lower than expected and the Amusement Machine Sales area was sluggish. “

If you’d like to compare, you can check out the results from the previous quarter, released in October.

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