Sega Sammy posts half-billion-dollar loss

Tokyo-based publisher suffers major setbacks on decline of its once-popular pachinko business; game sales up overseas, but down in Japan.

by

Back in October, it was becoming clear that all was not entirely well within the franchise of Sega Sammy. The company, which makes the majority of its money from pachinko machines, downsized its profit and net sales forecasts for the financial year.

Although the official figures, released today, aren't quite as low as forecast, they're not far off. For Sega Sammy's financial year from April 1, 2007, through to March 31, 2008, net sales were down 13 percent over the previous year to ¥458.9 billion ($4.4 billion). Both operating and net income were in the red, with the company's operating loss hitting ¥5.8 billion ($55 million) and net loss at ¥52.5 billion ($500 million).

Sega Sammy pointed out a number of reasons behind the numbers. Its pachinko business in Japan continued to decline, with machine sales falling by 24,000 units to 108,000 units, and it had postponed a number of major pachinko machine titles until fiscal 2008.

The minus figures also included impairment losses for Chinese businesses, and a cancellation fee for ceasing development of an entertainment complex in Minato-ku. The company also dissolved Sega Amusements Singapore along with Sega Korea, in order to "increase operating efficiency in the amusement machine sales business."

Game sales were up overseas, but down in Japan--2007 saw the release of Sega titles including Condemned 2: Bloodshot, Mario & Sonic at the Olympic Games, and Viking: Battle for Asgard. The company sold just under 27 million games in total during fiscal 2007, an increase of 5.7 million over the previous fiscal year. Nonetheless, only a small amount of these sales came from its home nation. In Japan, 2.6 million games were offloaded onto the public, compared with 12 million in the US, 12.3 million in Europe, and 70,000 in other regions.

Sega stated that Mario & Sonic at the Olympic Games was a best-seller overseas, whereas the third part in the Yakuza action adventure series, Ryu ga Gotoku Kenzan, fared well in Japan.

Despite the year's losses, the company remained upbeat about the outlook for fiscal 2008. It believes that the group will return to profitability, forecasting consolidated net sales of ¥470 billion ($4.5 billion), consolidated operating income of ¥15 billion ($143 million), and net income of ¥5 billion ($48 million). Sega Sammy concluded that it expected its game sales to once again "show healthy growth" overseas, although it made no new announcements regarding upcoming games.

Discussion

67 comments
TAGM5000
TAGM5000

In all honesty, the answer why they're losing money is pretty clear: They're trying to cater to us, and we just don't trust them anymore. And if a company can drive someone like sonic into the ground, who would?

lamprey263
lamprey263

SEGA needs another Panzer Dragoon game. They made the last one exclusively on the Xbox, and it was an awesome game, but nobody in Japan played it 'cause none of them had an Xbox. Now SEGA canned the studio that made it, and absorbed it. If that game had been a multi-platform, we'd of probably seen another sequel or two by now.

LindBergh2007
LindBergh2007

Personally I think SEGASammy sees something that others don't obvious see: that the 3rd party market in the U.S. is in trouble when it comes to quality they're not cutting it as a 3rd party publisher due to the fact that software market is way too competitive. Granted Sonic hasn't been exactly up to par, most of his multiplatform ttiles have been fraught with pure medicority instead of being terrible. As for the losses, Shame on you GS! Shame on your dumbass spin claiming SEGA loss half a billion so you can give fanboys another eeason to bash SEGA for no reason after all. I agree with ultimatlifeform, most of the losses are from Sammy's part. Sammy has been making panchinko machines since the 40s, these devices are much like slot machines and are used for gambling. And klugenbeel, that's exactly why people in Japan believe that SEGA is about to re-enter the console market because SEGA is releasing fewer and fewer 3rd party titles in Japan is focused more on the west. You can all bash SEGA as much as want. But it's pretty obvious that the U.S. third party market is in far worse trouble. Nate and Taegre, don;t listen to GS and thier patehetic spin. SEGA is doing fine. Thier arcade technology continues to thirve and there's still speculation about another console comming on the horizon. As for all the SEGA haters, SEGA will be the ones laughing when the U.S. game market suffers a huge setback and they use it as a window of opprtunity to make a major comeback in the console market, bringing life into the declining 3rd party market and becoming the Genesis again.

Taegre
Taegre

"Sega Sammy concluded that it expected its game sales to once again "show healthy growth" overseas, although it made no new announcements regarding upcoming games." Didn't they just announce four new games, Madworld included?

nate1222
nate1222

@fishnpeas1 Agreed. Sega should get back to catering to Japan. I enjoy many Western games. But even as an American whom loves Oblivion, Time Splitters and MK, I'm compelled to acknowledge how hollow many Western games can be. GTAIV and Halo 3 are good but seem to lack something. They're great 'products' but NOT great 'ART'. JRPGs (like Sega's own Phanasy Star) are art. They seem to have a soul. As were many of Sega's franchises. And yes, American gamers like myself WILL buy it!

fishnpeas1
fishnpeas1

It does seem that Sega are losing some of theirselves by catering to the West rather than their original audience. Compare Sonic Adventure on the dreamcast to the new sonic on the 360, and you can see the soul of sonic literally stripped out and replaced by something hollow. They need to cater for the Japanese market again, and the western market will still buy them!

nate1222
nate1222

Sega needs to get back to the fun 'arcadey' type of games that made them big. I see some of that happening with their Wii releases like HotD2&3. Hell, I still own a Genisis and wouldn't mind replacing ye ol' Dreamcast. Those consoles rocked pretty hard. They should port some Dreamcast games to Wii via disc at $20 and more Genisis games to Wii's Virtual Console.

CasinoOutlaw247
CasinoOutlaw247

I hope that Sega returns to what made them awesome in the past....

zeusbark
zeusbark

I just hope the "Total War" series doesn't go down with them.

kavadias1981
kavadias1981

...make some better games then, pshh, idiots....

ExuNavarinIdara
ExuNavarinIdara

It's a vicious circle. SEGA have made hardly any good games in years, just sloppy Sonic cash-ins and the like, but is it any wonder? Way back, when SEGA made or published good games, or good games appeared on SEGA systems, a lot of them went ignored and nobody bought them. If yesterday's market had given a crap, SEGA's business model today would be a very different story.

Wuflungdung
Wuflungdung

subrosian couldn't have said it better, well written.

subrosian
subrosian

SearchBomber - It's not about listening to old school vs new school though, it's about getting a clue as far as design goes. That Sega has to take advice from fourteen year olds on YouTube for game inspiration says to me that they lack a grasp of what's fun. That's not an insult to youth, it's simply a statement of a grim reality - if you survey everyone in an audience that ranges from fourteen to forty across a broad socio / geo demographic makeup, you're going to get a ton of definitions of what they would like out of the game. What separates a good designer from a poor one is recognizing when a player is suggesting something that would work, and sorting that from ideas that aren't as fun as they sound. - For example, players have been sick for years of the lame new characters. No one wants to play as Big the Cat, or spend hours slugging it out as Amy. So what does Sega do? They go with three hedgehogs - and then gimp the actual gameplay. They were in such a rush to get Sonic the Hedgehog out on the 360 / PS3 for the holidays, that they put a game that's almost unplayable due to the bugs. - Then there's Sonic and the Secret Rings. While the game isn't buggy this time, it's now like playing the special stages in Sonic 2 - just a tedious chore - now dragged out into an entire game. Part of the fun of 2D Sonic was that there wasn't a forced path through the level - there were lots of ways you could travel - here, the path feels forced, for all its sense of speed, putting Sonic on a rail is not the answer. - But really, to be honest - it's not that Sega isn't making attempts, it comes back to my original point - poor design. Even the 2D Sonics on the DS right now are honestly badly executed compared to Sonic 1, 2, 3 and Knuckles. Why? Blind jumps - repetitive top / bottom sections, tedious boss fight sequences, and too much "chunking" of the experience - that is to say, each level is too broken up by "other stuff" so the constant "running through lots of levels" is instead "look I beat level 4-2" - Sega just botched the formula for Sonic a long time ago, and they've spent every Sonic game since trying to re-invent the series. Not once have they simply tried making the old wheels spin again - y'know, going back to the Genesis-era design. I think that's partially because again, they don't have a clue what made those Sonic games special, so they turn to people who want to see Sonic and Amy making out, or whatnot, who aren't representative of why people liked Sonic in the first place. They can take all of thousands of great suggestions they want - all of the good ideas Sonic fans put out there - they lack the ability to interpret them into a cohesive game these days, and that shoots their series in the foot. - Sega-Sammy, going down the gutter? Doesn't surpise me in the least - they're betting on an old form of japanese entertainment that's going away, and on series that people just aren't big on any more - and subsidizing those with series that get some lukewarm support. It's not enough, and so they're slowly fading.

Pete5506
Pete5506

Sounds like Sega will not be around to much longer

AzureWind213
AzureWind213

They could do sonic right if they really, REALLY tried. I'm not sure they will, though... : (

roryk666
roryk666

can sega just go away already and die in the corner!

SearchBomber
SearchBomber

And would they please listen and read criticism on their biggest IP Sonic the hedgehog. That's what created Heroes/Shadow/'06, the "Terrible Trio" of Sonic games. New-school fans complain about something, old-school fans complain about something, SEGA tries to compromise and totally botches it.

BatrozX
BatrozX

I want a sequel for Jet Set Radio, and I want a not-rushed Sonic game, and a good Samba De Amigo. Is that too much to ask Sega? Can't you guys be patient or at least listen to the fans and the people who play your games?

X-RS
X-RS

while those games listed arent the ones im talking about, GIVE US THAT JAPANESE $#!+!!!!

tuznecote
tuznecote

Most Sega games are lazy, rush jobs flung together after a year and abit of development. Sonic cant save this game alone I don´t expect a Shenmue 3 because that game will bankrupt them alone but i do expect better respect of their Biggest selling names. Why do all their games miss a trick? Sonic riders could of been f-zero. Sega superstars tennis could of been Vitura Tennis with fun characters. Psu could of been PSO . Nights didn't need to be watered down with all those mind bogglingly bad mini missions just make Nights. And would they please listen and read criticism on their biggest IP Sonic the hedgehog.

Darkside7972
Darkside7972

This shouldn't be surprising to anyone. The only good Sega-published game I've played in a long time is Condemned 2, and it wasn't even developed internally (it was made by Monolith). PSU was a little above average, but the graphics were horrible and the game was pretty much unplayable until the expansion came out. Even now after its release, the game still has lots of problems, with new bugs, glitches, or server errors happening all the time. It's a shame too... Being a sequel to the amazing (for its time) Phantasy Star Online, it could have been so much more... Everything else they've done in recent years has flat out sucked though. Sonic 360 was atrocious, Viking was terrible, Nights failed as a sequel... The list goes on and on. Sega needs to step it up, or at the very least, Sammy needs to split from Sega before they drag Guilty Gear down with them :(

GeigerdolylWodd
GeigerdolylWodd

"Henninger What happened to the yakuza series coming to USA? I already have Yakuza but what happened to Yakuza 2? & now Yakuza 3 is out already in Japan? WTF!! Come on Sega bring it 2 the states." Agreed, they could probly release both a double pack and a triple pack of the Yakuza games much like what was done with GTA III - San Andreas.

hobotech64
hobotech64

To think this was the company that once stood tall against Nintendo and Sony...

ScreamDream
ScreamDream

I would have bought Iron Man but the demo was frustrating and so were the reviews. C'mon Sega, you still make good graphics just make the games better.

peeweeshift
peeweeshift

they have to make some nice games. It's pretty sad that devs arnt making custom forums for gamers to view and comment on how a game should be. they should at least read the forums of gs ign neogaf etc

patton101
patton101

Sega needs to seriously cleanhouse and get back to producing good games which they've so rarely done in the last 10-12 years.

doomsoth
doomsoth

Yeah, I haven't been to impressed with Sega in a long, long time.

JangoWuzHere
JangoWuzHere

Good unless sega can stop makeing terrible games and bad ports they should be loseing money

SonicDBZRacer
SonicDBZRacer

@ benleslie5: If they make a new Sonic Collection game, it should be for ALL systems, not just for Sony. The Xbox has yet to see the Sonic Adventure series too. I hope Sonic Unleashed turns out awesome, and not like Sonic 06.

Misfit119
Misfit119

Ahahahaha! That's what they get for releasing so many crappy and half-finished games. VIking was obviously rushed out the door, likely to be on shelves before the end of their fiscal season, and anything bearing Sonics name is an embarassment... unless it's a handheld game apparently. Seriously they either need to pull their act together or just stop entirely. Let someone else make the Condemned games and be done with it.

benleslie5
benleslie5

Hope they make anathor Jet Set Radio game or if not a Sonic Lost collection where you can play some of the rarest Sonic games or if not the Dreamcast versions of Sonic Adventure 1 and 2 for PS2 or 3 hopefully.

Henninger
Henninger

What happened to the yakuza series coming to USA? I already have Yakuza but what happened to Yakuza 2? & now Yakuza 3 is out already in Japan? WTF!! Come on Sega bring it 2 the states.

dr_jashugan
dr_jashugan

I think Sega should start making serious games than throwing all their money on the pachinko business. 8)

CageFury
CageFury

I must be seriously out of the loop. This is first time i've ever heard the words "Sammy" or "pachinko" associated with Sega.

reaver8
reaver8

Come on sega you need to release Shenmue 3 to make back some of the money you have been throwing at crap titles like let's see Ironman

Aero_Slasher
Aero_Slasher

Hmm... perhaps its high time Sammy begins to look into other fields than just pachinko if they don't wish for their next fiscal year report to be smeared in dark red paint. Sega's half of the business seems to be doing okay (quality of titles aside) but all the money they generate means nothing if Sammy's bleeding money. I wish them the best but expect the inevitable again.

lamprey263
lamprey263

Well, I hope they dont' go under, and if they do, I only hope that they can finish off the Condemned series and maybe bring back one more Panzer Dragoon game, on that's just as good if not better than the last one... but I don't really think they're going anywhere. If anything Nintendo will probably buy them out.

PacoL250
PacoL250

It's their pachinko business that's hurting them along with their lack of anything good in the realm of Sonic. Sure the DS games for Sonic are great, but you can't expect to do well just there. They need to work on a Sonic game for next-gen consoles that isn't super cheesy with all the characters and REALLY fix the camera angles. If they can't learn from Nintendo at this point on how to bring a 2D platformer into 3D and be successful, they really have no hope. Here's to hoping that their games with Obsidian, Alpha Protocol and the Aliens RPG do well...

jmartin1016
jmartin1016

Sega is long from dead. While their games may leave much to be desired, their ability to adapt is amazing.

ohjtbehaaave
ohjtbehaaave

hmmm... maybe they should try doing some games that don't SUCK then!

SearchBomber
SearchBomber

*watches pachinko empire crumble* Good going, Sammy. XD P.S. Anyone who says Sonic is dead needs to pick up a DS. Seriously.

puppiemaster
puppiemaster

$55Million is not 1/2 Billion, a billion is 1000 million.

nintendoboy16
nintendoboy16

*hiss* ouch. Half a billion, holy flup. Another half billion and it might be over for Sega, but who knows.

Dark_Mits
Dark_Mits

It's really ironic to see such bad figures so far into deep red when in the same year you release a game that sells over 5 million units... (Mario and Sonic). Sammy collaborated with Sega to keep them off bakruptcy, but now it seems it is Sammy who leads Sega to it!

Pumper
Pumper

Sonic and Mario Olympics = Lame. About the last half dozen Sonic games = Lamer. After Sonic on Saturn (or was it Dreamcast?) - it all went downhill from there. Bring back Sonic in FRIGGING 2D - with spiced up graphics, the way XBL had the new Prince of Persia, instead of all these 3D uncontrollable, unplayable adventures. Amazing how so many decision makers in this industry are so brain dead.

ultimatlifeform
ultimatlifeform

Game sales are up and the pachinko sales are down, yet people STILL blame the games?! Bah... Not surprised about the lack of support in Japan. Most SEGA stuff pertains mainly to the west.

klugenbeel
klugenbeel

Come on Sega, make a new system. Make something to compete with the Nintendo Wii! Come on now! Let Sony and MS fight each other, and you come in and cheap shot Nintendo and make a motion sensor system, with maybe better graphics card and processor. Make a come back, because you gave up too soon on the Dreamcast.

zeke2040
zeke2040

who's sonic?..lol well i think they need to make a new mascot or something to bring up there profit's... i do wish them the best.