Sega Announces Major Investment in Gaming as Performance Significantly Exceeds Expectations

Today Sega released its financial results for the first half of the fiscal year, related to the period between April and September 2021.

The company reports strong performance centered on the Entertainment Contents business, which focuses on video games.

Both the consumer (meaning home video games) and arcade areas performed strongly.

Sales and sales and operating income showcased significant improvement year-on-year, as you can see on the tables at the bottom of the post. In particular, operating income is back in the black while Sega operated at a loss during the same period in the past year.

Similar improvement year-on-year in sales and operating income can also be seen for the Entertainment Contents business. According to the publisher, the results of the business “significantly exceeded expectations.”

This leads to a revision of the full-year forecast. While the pachislot and pachinko machines segment is predicted to decline due to the semiconductor shortage affecting distribution, this is offset and overcome by the growth of the gaming business, resulting in a small increase in the overall income forecast.

Speaking of the gaming business, in particular, the strong performance is identified for both new games and those released in previous fiscal years.

In the future, Sega expects growth in both sales and expenses for the consumer area (home video games for consoles and PC) due to launching more new titles. Free-to-play games also have been performing steadily and Sega plans to launch the global version of one of its titles (Hatsune Miku: Colorful Stage) and a major update for Phantasy Star Online 2: New Genesis on December 15.

We also get a mention of the plan to create “super games” and the partnership with Microsoft to use Azure tech both within Sega’s games and to update the development environment.

Perhaps even more interesting is the plan to proactively invest in the consumer game area. Sega expects to invest approximately 100 billion yen ($880 million) by March 2026 to expand its development pipeline, strengthen global mobile and online games, strengthen its customer relationship management department to revitalize user communities, and invest in new business areas like NFT.

Another 100 billion yen will be invested in what Sega calls its “gaming area” (which actually focuses on Pachinko, Pachislot, and similar activities), and 50 billion will be invested in other activities like start-ups, IP acquisition, and creation of new businesses.

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