Sega Profits Halved, As Market for Package Games "Softens"

Japanese publisher still posts a profit for the quarter, but it is only half of what the company made last year.

Sega today reported earnings for the April-June quarter, announcing profits overall were halved, as the company's game business saw an operating loss. The publisher said uncertainty in the Japanese economy, along with a "softening" of the package game business, was to blame.

For the quarter ended June 30, Sega's game division--what it calls Consumer Business--saw net sales rise 13.3 percent to ¥21.4 billion ($207 million). However, this division still recorded an operating loss of ¥282 million ($2.7 million), compared to operating income of ¥39 million ($378,000) last year.

This downturn was attributed to an "increase in advertising expenses."

Sega sold a total of 1.7 million packaged games during the quarter, including 640,000 copies each for North America and Europe, along with 420,000 games in Japan. One of Sega's biggest games during the quarter was Persona Q Shadow of the Labyrinth, which shipped 250,000 copies in Japan.

Though Sega's packaged video game business was "soft," the company said sales of its digital offerings for mobile phones, smartphones, and PC remained "solid." Sega said online role-playing game Phantasy Star Online 2 was a particularly strong performer during the quarter.

Overall, Sega recorded net sales of ¥88.4 billion ($858.7 million) for the quarter, which is down 2.6 percent year-over-year. Profit took the biggest hit, coming in at ¥5.5 billion ($53.4 million), a dramatic year-over-year decrease of 57.4 percent.

Some major upcoming Sega games include Sonic Boom and Alien: Isolation.

Sega was not the only company to announce financial results this week. For more on how major video game companies are faring, check out our reports for Nintendo, Sony, and Capcom. Next week, Take-Two Interactive, Konami, and Activision will all report earnings.

Eddie Makuch is a news editor at GameSpot, and you can follow him on Twitter @EddieMakuch
Got a news tip or want to contact us directly? Email news@gamespot.com

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

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Discussion

93 comments
Thanatos2k
Thanatos2k

Hey Sega, we're STILL waiting for Valkyria Chronicles 3!

hardeman
hardeman

im still waiting on sonic adventure 3, but no we get sonic boom, and where the hell is the sequels to shenmue, power stone, crazy taxi etc

markoswan
markoswan

I'm still mad at Sega for shutting down the servers for Chromehounds. 

deathcon4
deathcon4

They may of faired better if they let Creative Assembly have the development freedom it needs for the Total War series. As for Sega only developing Sonic games that's obviously not the case being they bring out a Total War and Football Manager every year.

metallinatus
metallinatus

Sega is doomed, they should become a software company and make games for the other conso-- Oh, wait!....

ebonyflame
ebonyflame

When was the last time Sega released a game that was not Sonic related? When was the last time Sega marketed any game that was not Sonic related? How long must audiences wait for Bayonetta 2, not that the sales will wow since it is on Wii U? How much longer must the world wait for Phantasy Star Online 2? As much nostalgia as I have for the company I think it is time somebody bought the video game division, or at least their immense backlog of franchises old and new, and did something with them. I hate to say it but maybe Activision should buy the Sega video game brand since SeagSammy is just running it into the ground.

veryDERPY
veryDERPY

oh and i'll never forgive them for valkyrie chronicle 2 on the psp and 3 for not being here at all. ty based emulator

veryDERPY
veryDERPY

i could've told them they could've avoided this by bringing yakuza here...sega is USELESS at marketing. have they learned nothing for the past...~20 years?

imajinn
imajinn

I've said it before, and i'll say it again. Reach into your old franchises and you won't have this much of a problem. Don't blame it on "packaged games". As a matter of fact, I don't think they packaged much in a while now.

REBELSOULJA
REBELSOULJA

SEGA, Release some solid games @ retail and maybe your "packaged video game business" wouldn't be so "soft".

mark_unix
mark_unix

stores should just start selling CD keys at online prices, and they wouldn't have been hit so hard..

BradBurns
BradBurns

How is a "softening of the packaged game business" something to blame for Sega? How many packaged games has Sega been making recently?

Matter fact, how many games has Sega made or published in the past 2 years altogether? 

You can't get money back from something you never produced.

Thanatos2k
Thanatos2k

Also, how about you make a real Shining Force game?  You know, one that isn't a mediocre action RPG?

Thanatos2k
Thanatos2k

Sega hasn't put out anything good in a while.  I'm hoping against hope that they don't ruin Atlas.


Sega is absolutely pathetic about localizing their games.

chronoschris
chronoschris

Haven't played or heard of anything significant from SEGA in a good while and it looks like they're pissing off their fanbases by not releasing PSO2 and Yakuza over to the west.   Go figure why they're not making that much money.   Also Sonic Boom looks to be the next SEGA mess up.

leakingdogmilk
leakingdogmilk

Gamespot should be useful for once and ask them why they don't advertise their games. I am sick of these Incompetent morons who studied years in business school running game companies to the ground because they have no clue about the industry.

Relvar
Relvar

Maybe they should make a Console?

UnrealPro
UnrealPro

Dear Sega, we still don't forgive you for Aliens: Colonial Marines.

ivo_ree
ivo_ree

Maybe it involves Sonic the Hedgehog sucking.

wexorian
wexorian

Sega,square and crapcom should unite under one banner :D

SavageEvil
SavageEvil

Sega/Sammy are almost as ridiculous as Capcom, they forget their plethora of titles from the past and rely on a couple of franchises and ruin/run them into the ground. Sure they are making money but most of it is from Sammy's Pachinko business not video games. Sega has so many titles that could easily make them a household name but they seem to have no desire to utilize any of them. Stop whoring Sonic out in all sorts of stupid games, why is it PSO 2 only now finally surfaced like 15 years after the first game debuted. Not only that the bloody archaic way PSO worlds are traversed is still there, Sega is stuck in many weird loops. They release the Yakuza games which are more or less in the same vein as Shenmue but not a peep, mention or idea concerning Shenmue at all. I have no idea what Sammy is thinking about but perhaps they should look at Sega's old sales figures about some of their most notable games. Shinobi, Out Run, Sega Rally, VectorMan, Streets of "bloody eff'n" Rage, Golden Axe the list goes on, even the great and fun Comix Zone was fun and different. 

Wasted and squandered back catalog of some of the greatest games to land on a console, no one even attempts to further any one of them. How has no one thought of building out a 3 dimensional SoR but still played like a side scroller, only the models built out in 3D and using an artistic design. Let's put out Aliens Colonial Marines...uuggh another FPS really?!? Why? Shake my head, Sega is circling the bowl just like Capcom, seems like these guys are both caught up in "westernizing" their catalog way too damn much and it's biting them in the wallet. Keep it up guys, only a few more and you'll both end up flushed.

xantufrog
xantufrog

Pick up a Dreamcast and play with me, friends. We can set up servers and play Unreal Tournament and PSO on Sega's last great console. Don't forget your VGA adapter for 480p goodness :-)

jer_1
jer_1

Translated: Our games won't sell until we bundle them and sell them to suckers dirt cheap...cheers!

Cryoteck
Cryoteck

From what I understand the Japanese gaming market is strongly trending toward mobile games. They need to realize that traditional large console/PC games need to be sold overseas where there is a demand for them.

MooncalfReviews
MooncalfReviews

I love how they blame the market "softening" instead of their games softening. The "package games" market isn't softening, the games are just getting crap!

homey_d_clown
homey_d_clown

How the mighty have fallen..... sad considering Sonic was my sh1t, before they ran it to the ground!

MooncalfReviews
MooncalfReviews

Time to go back to your roots, and stop with the constant Sonic games. Give your fans (yes you still have fans) Shenmue HD on current gen consoles, and you'll win back a lot of love.

Banefire76
Banefire76

@Thanatos2k You beat me to it, i was just going to say the same thing. If they did that then they would see enormous profits.

vicsrealms
vicsrealms

@Thanatos2k Yep, they ruined two of my favorite Sega franchises by turning them into Action RPG's.  I spend more time playing Shining Force 1/2, Shining in the Darkness, and Phantasy Star 2-4 on my PS3 these days.

seriousgaming
seriousgaming

@chronoschris Sonic Boom a mess up? Other than the games being Nintendo exclusives, which is only a problem with the Wii U, I don't see any real indication of that. 

leakingdogmilk
leakingdogmilk

@chronoschris

Binary domain is the perfect example that sega is filled with retards. The game is clearly made to cater to the westerners yet it has zero advertising whatsoever. It is like sega make new IP just to bury it.

Banefire76
Banefire76

@UnrealPro Sega just funded it, several develops (Gearbox included) fudged that game up.

Panzer_Zwei
Panzer_Zwei

@SavageEvil 

SAMMY merged with SEGA because of its parent division, which is the arcade/amusement bussiness, not because the consumer division. So I doubt they're that concerned about it. SEGA is the most successful arcade company in history.


The consumer division historically has always underperformed. Even during the Megadrive era (its most successful period), they came short of the parent divsion's expectations and did terrible in their home country.


It's understandable why people recoginze and have more fond memories of SEGA's consumer division, since they cover the home systems and games most people know and love, but they're not the main branch of the company, and they have always lost money. Always.


Also, the consumer divisions all have their own agendas. Most of the titles that the US/EU divisions fund (including ALIEN : COLONIAL MARINES) don't even release in Japan.


There's also no point in wanting classic franchises back when the staff who made them are not around anymore. You'll only be getting the name, but  not the talent who made those games great in the first place. And its the same with KONAMI and CAPCOM. They let go on most of their former game studios.

xantufrog
xantufrog

@MooncalfReviews "like" for nostalgia - however I'm not sure Shenmue would be a good idea. It cost a ton of money for them to make and was actually an important part of their financial troubles during the Dreamcast era. Plus, although you and I love it, I don't think it sold well, so - would this be a big earner for them? Probably not.


Still, if they made it I would buy it.

sladakrobot
sladakrobot

@Wolf42Moon Yes...and multiplattform please :-)

Almost the only game series i wished they wasnt Sony console exclusive

UnrealPro
UnrealPro

@Banefire76 @UnrealPro But it was within Sega's power to release the final product. It would be plain stupidity if one of their people didn't even play a build of the game and never saw this coming.

MooncalfReviews
MooncalfReviews

@Dissentioncc I'm actually not a NIntendo fan. The avatar is an inside joke. I haven't bought a Nintendo product in about 5 years.