Sega Sammy profit plummets 93 percent

  • By Patrick Caldwell, GameSpot
  • Posted Jul 28, 2006 6:05 pm PT

Game division punches 4 billion-yen hole in company; yearlong profit estimates aren't affected.

Sluggish sales of Sega Sammy's Pachinko slot machines dropped the company's profit almost 93 percent during its first quarter, the company announced today.

Japan-based Sega Sammy Holdings Inc., which owns both Sega Corp. and Sammy Corp., reported a profit of 779 million yen (about $6.8 million). It was a sharp drop from its 10.7 billion-yen ($93 million) take during the same time last year. Pachinko slot machines accounted for just 2.2 billion yen ($19.1 million) of the company's earnings this quarter, compared with 18.2 billion yen ($158.9 million) last year. The company's overall revenue, however, slipped less dramatically--a 15 percent dip to 85.6 billion yen ($746 million).

Sega Sammy blamed higher "upfront development costs" in making games for a loss of 4.06 billion yen ($34.9 million) in its games division--about twice the amount it lost last year. Sales of its video games--particularly those in the Sonic franchise and Noryoku Trainer Portable 2--increased this year to 16.5 billion yen ($143.8 million) from 11.6 billion yen ($101 million). But the company's game-development expenses rose 7 billion yen ($61 million) from a year ago, eclipsing any profit it would have otherwise made.

Sega Sammy insisted that despite the financial setbacks, its previous full-year earnings commitments are still on track.

89 Comments

  • PatLTornado

    Posted Aug 3, 2006 3:18 pm PT

    Uhh Full Surface, You ever heard of Lindbergh? It's a new 256-bit arcade machine that is twice more powerful that PS3 and has dual 2X512 MB memory and 800mhz clock speed.
    www.system16.com

    This is the hardware I believe SEGA could and may use for thier new console

  • PatLTornado

    Posted Aug 3, 2006 3:11 pm PT

    You want to know what this means? This means that the time has come for SEGA to return to the home console market, I already assumed that SEGA wasn't making enough money as a software maker, thier money has always been in hardware and arcade machines, as for the Pachinko machines Sammy not SEGA needs to stop making them, thier getting old and dated and have been manufactured in Japan for over 60 years, sort of like how the arcade market has died in the U.S.

    In really hope this a a wake up call for SEGA, letting them know that it's time to return, and that since the arcade market is strong in Japan that they will be welcomed back with open arms, also with the U.S. gaming industry selling thier souls to the devil for money maybe SEGA can reinvent themselves.

    HOW Dare you curse SEGA!Leave them alone and harras EA nad Sony instead.

  • Burin077

    Posted Jul 31, 2006 11:35 pm PT

    Return to SPACE HARRIER!

  • Kn0w0ne

    Posted Jul 31, 2006 10:32 pm PT

    Bite your ill advised tongues. The gaming world would be a much worse place if it were'nt for Sega. I don't even need to back this one up... for those with some sense, and there are a few here, (GAMERS), you kn0w what i speak of.

  • FlashGordon

    Posted Jul 31, 2006 6:35 pm PT

    and they want to hitch their wagon to the PS3

  • dukerav

    Posted Jul 31, 2006 3:23 pm PT

    very owch indeed.

  • DarknessOfFate1

    Posted Jul 31, 2006 2:01 pm PT

    gee they cant win games or otherwise! I wish they woudl just go bankrupt and be done with it.

  • axia_777

    Posted Jul 31, 2006 1:34 pm PT

    Man o man. Sega is CURSED!! Only a matter of time till they are gone forever. Too bad too. I like Sega. I don't think even Sammy can save them after all the debacles with Sega consoles. Too much lost cash. it's not like they are like Microsoft. Who can lose obsiene amounts of dough and still keep trucking along.

  • MrSickVisionz

    Posted Jul 31, 2006 11:36 am PT

    Everyone is mentioning games as if thats why Sega Sammy (more than just video game sega) lost $$$.

    "... $93 million take during the same time last year. Pachinko slot machines accounted for just 2.2 billion yen ($19.1 million) of the company's earnings this quarter, compared with 18.2 billion yen ($158.9 million) last year."

    They made $93 million profit last year and $6.8 million this year. Now, this is with a $130 MILLION DOLLAR DROP IN SALES OF PACHINKO MACHINES. ONE HUNDRED AND 30 MILLION DOLLARS DROP IN SALES OF PACHINKO MACHINES.

    LOL, why are you guys saying, "if they release more retro games", lmao. Video games at best might add $10 million in profit. What Sega needs to do is figure out the drop in pachinko machine sales. Is it cuz people aren't buying machines or because pachinko is dead? Figure out that question and then act accordingly. Doing retro games will do next to nothing to make up that loss.

  • Link_in_Green

    Posted Jul 31, 2006 10:26 am PT

    No surprise. I love Sega franchises but they make the stupidest decisions. That's why they're a third party now.

  • Shifty_Pete

    Posted Jul 31, 2006 10:19 am PT

    Looks like not enough people realize the awesomeness of Guilty Gear.

  • rwilcox99

    Posted Jul 31, 2006 9:07 am PT

    dont forget sonic. and when i say sonic i mean old school sonic. the GOOD sonic.

  • skyvader

    Posted Jul 31, 2006 8:53 am PT

    If they did what capaom did and release an arcade combo disc with games like thunderblade, super hang on, power drift, afterburner 2, space harrier, super monaco gp, enduro racer, galaxy force they could rake in some cash from the old school gamers. The compilation they made for the ps2 sucked with crappy "updated" graphics and poor control. Don't mess with the classics and make them available to all in legal form. I'd like to see a new nights game and maybe burning rangers remake. thunderblade and galaxy force are my two all time faves from sega arcade!

  • blackIceJoe

    Posted Jul 31, 2006 7:19 am PT

    I so want to see Sega bring out a new Nights into dreams game.It could be on either the Wii or the PS3.Both use the controller in different ways.So I think it would be cool.Just like the game was on the Saturn.I really think it should be on the Wii though seems like it work better.Plus would love Sega to remake some of there Saturn to Dreamcast games.I loved Dragon Force would love to see it in new color on the PSP.I think if Sega was to remake some of there great games and bring them to either the PSP or DS Sega could really bring in the cash.

    Maybe if Sega does not want to remake there games they can go the way Sony is with the PSP.In October people will be aloud to play PS games. Maybe Sega can get in on it too and bring out games from Genesis,Saturn, and Dreamcast in download form.That way Sega can make profits by people buying old games and if they see them do real well maybe Sega can bring out new games from that series.

    Makes sense why try and make a new game when it will end up mediocre. So it makes sense to remake a game that was awesome years ago.That way you know it will sell.

  • darkmind-tvtome

    Posted Jul 31, 2006 5:19 am PT

    i agree with rulo reznor, sega really should remake Panzer Dragoon Saga, on the current gens, and maybe a sequel for next gen platforms.

    I'd also love Dragonforce to be released in the EU, as its been released under the sega ages brand on PS2 in Japan, not sure it would solve Sega's problems, but it would make me happy

  • Vicious-RedDrag

    Posted Jul 31, 2006 1:36 am PT

    When Phantasy Star Universe comes out, hopefully things can get better.

    I also want GOLDEN AXE!

  • Blazer88

    Posted Jul 31, 2006 12:44 am PT

    Sega pretty has not made a good game that has sold well since they dropped out of the hardware business so I am not exactlly shocked at the news. the only thin I bother with that has thier name on is the Total War series,.but they don't make that really and just bought the dev that did.And I would get all too much hopes on on PS Universe i sounds like it will be very much like PSO,.just with updated graphics and such. Um,...that isn't going to hold up that well against other things out there is that is true. And btw PSO is not an MMO if you are going to use the tag at least least what it means first.

  • segafanac

    Posted Jul 31, 2006 12:36 am PT

    Segata Sanshiro, where are you?

  • Corvidae

    Posted Jul 30, 2006 9:25 pm PT

    That's what they get for not making a Skies of Arcadia sequal!

  • Turisman4

    Posted Jul 30, 2006 7:30 pm PT

    Well, Sega Sammy's failure doesn't affect me in any way. However, if something were to happen with Sega Rosso...

  • Ironclash

    Posted Jul 30, 2006 6:14 pm PT

    Ouachhhhhhhhhhhhhhhhhhh!!!

  • FullSurface

    Posted Jul 30, 2006 3:55 pm PT

    Just watch and see if SEGA comes back most likely they will around 2008 or 09 let them get some more sales off the 360, wii, ps3 then they will be ready to seperate and enter the console war, im sure there planning something major if you guys want answers email SEGA like i did.

    Solid Snake
    Semper Fi

  • OfficialBed

    Posted Jul 30, 2006 3:11 pm PT

    SEGA

  • Mkeegs79

    Posted Jul 30, 2006 3:11 pm PT

    Everyone that thinks Sega should make another console system is stupid. First of all they already spread their franchise on other systems. Second competition is much harder now so there isnt any room for a 4th system. Third they got out of the console development for a reason! They would be losing more money by having to sell the system less than what it makes to develop for and you have to make it all back in games. Its not ever happening! It would be crazy!

  • Tecmolover173

    Posted Jul 30, 2006 11:18 am PT

    They should hurry up and get back on their game.

  • TheGamer4Life

    Posted Jul 30, 2006 7:44 am PT

    With a name like Sega SAMMY is there any wonder why their profits are dropping>? Bring back the original ONE named SEGA...

  • s0ck69

    Posted Jul 30, 2006 6:58 am PT

    one word chromehounds its a massive success see the sales and sega were involved in that just recently they will always be a success cause sonic like mario will never die

  • Myugenjin

    Posted Jul 30, 2006 2:00 am PT

    Sega can't compete on the console they've lost out with the dreamcast. Face it im sure even the Wii's dev. cost what Sega's revenue is ($700+million). It's like Atari or Odessy trying to bring something back.

    They need to become a growth company and focus on Just console games like Capcom or Namco! Or just sell/merge themselves to Square Enix or Konami to make a Japanese Gaming Zaibatsu kinda like GM & Dymler Chrysler

    4 those who don't know Sega bought a Disneyland in Japan and converted it to 1 of a few theme parks they own. Only problem is Japans inflation is worse then ours so attendance has been low since Jan.

  • acidicdot

    Posted Jul 29, 2006 11:47 pm PT

    Uh .. I guess I'll comment on this new Sega console talk. You gotta lose money to make money. Microsoft's Xbox division hasn't had a profitable year/quarter/whatever. Now projecting profits in 2008, what that's 7+ years after starting R&D on the Xbox. Obviously making money elsewhere to support this spending. Now, I want to see a new Sega console as much as everyone else but just don't see it happening, at the least in a very, very long time.

  • FullSurface

    Posted Jul 29, 2006 10:19 pm PT

    SEGA will make a new system and it will sell.

    Solid Snake
    Semper Fi

  • HyperMetaDragon

    Posted Jul 29, 2006 8:01 pm PT

    I agree with ultimate_zero.

  • ultimate_zero

    Posted Jul 29, 2006 7:56 pm PT

    thats good news for Sega, i think they should make a new console, I enjoyed the Genesis, Saturn, and Dreamcast. And they're like one of the 1st companies to make consoles.

  • thepeter

    Posted Jul 29, 2006 7:00 pm PT

    Sega will make good money from digital-distribution. (the Wii virtual console)

  • Vash67

    Posted Jul 29, 2006 6:37 pm PT

    Sega has the money to produce a console... it just would sell badly.

  • FullSurface

    Posted Jul 29, 2006 5:41 pm PT

    it's so funny how people actually believe SEGA has no money to produce a new system, read the article people SEGA has made so much profit off there games and there console would sell if the specs were 10GB mem with HD for 300.00 to 350.00 dollars because people want a system not too pricey and capable to stay inline for the console war and if "if" SEGA lost money to produce the system, most likely they would like every other console company remake the profit by selling the games and like the article and faqs say SEGA games do sell so the console would stay alive, why do u think Sony is so pricey because the games and the PS3 specs will keep the system alive we hardcore gamers know more then you rookies.

    Solid Snake
    Semper Fi

  • segasaturn4ever

    Posted Jul 29, 2006 5:02 pm PT

    creating games before a system launches always is expensive. with the price of development on next gen games and the big losses on the Pachinko slot machines they actually did really good profit wise. in a few years the cost will fall again as technology rises.

  • WolfSkill5544

    Posted Jul 29, 2006 3:23 pm PT

    where are the guilty gear games???

  • abelmaestro

    Posted Jul 29, 2006 2:41 pm PT

    All the games I`ve played that are made by Sega really suck ....I liked the dreamcast though.

    PS: Sonic is a good game,I liked that one.

  • rulo_rezn0r

    Posted Jul 29, 2006 2:15 pm PT

    The answer to sega's problems = remake shining force III and panzer dragoon saga

  • OmegaGear

    Posted Jul 29, 2006 2:06 pm PT

    Alright, I certainly hope Sega worded this news to its investers better than this piece of media, because it certainly makes the situation seem more grave than it really is. When I saw "Drops 93 percent" I thoguht " HOLY **** but then I remembered most companies are in the red, let alone the black, or even green.

  • hemakm3

    Posted Jul 29, 2006 1:57 pm PT

    Sega posted profit---just not near as much as the year before. They definately need to be concerned but they had profit for the year.

  • upuratut

    Posted Jul 29, 2006 1:01 pm PT

    guys... they're talking mostly about drops in their pachinko games... those gambling/slot machine type games in japan (found largely in pachinko parlors) where the metal balls drop and bounce against pins (a lot like the price is right game, plinko)... there isnt any need to get all hysterical about sega/sammy bombing..

    and besides.. phantasy star universe is coming out soon.. and what i've seen on this site, it looks like it's going to be a winner!

  • revelations

    Posted Jul 29, 2006 12:39 pm PT

    The problem is every time they publish a game from one of their franchises, it sucks. They take variations of the classic gameplay and its ruining the games.

  • NDokmo

    Posted Jul 29, 2006 11:59 am PT

    we'll never see shenmue 3

  • Sig12047

    Posted Jul 29, 2006 10:29 am PT

    Sammy, you shouldn't have bought Sega. Now, it seems like they are more trouble than they are worth.

  • absolut_wisted

    Posted Jul 29, 2006 10:20 am PT

    Sega's fine, guys. This is mostly pointless banter, with the exception of a noted few who recognize the recent efforts Sega has been making to strengthen their appeal in the west. One studio worth watching in particular is From Software, the makers of Otogi.

    I'm sure others would agree that the 2K / VC house was a significant loss to Sega. This is a company that easily trumped Madden and all EA counterparts within a few development cycles. That's nothing to scoff at.

  • Hellisunreal

    Posted Jul 29, 2006 9:48 am PT

    thats some really sad news

  • Zweihanderhero

    Posted Jul 29, 2006 9:19 am PT

    Agreed.

    The Shining Force action RPGs are killing the series...From a series with an almost equal brand name to FF or DW,SF now lingers in limbo with crappy games...

    They want profit?Release a Shining compilation,with all the Shining (Force,In the Darkness,The Holy Ark and all the offshoots) games in one set and then follow up with Shining Force 4...

    It's a guaranteed way to recoup losses

  • crck

    Posted Jul 29, 2006 8:57 am PT

    What amazes me is Sega's refuse to release a Shining Force 4. Instead they continue to release average action/rpgs with the "Shinning" name. Damn its almost been 10 years since Shining Force 3 ! Come on already! Hell I'll settle for a remake of Shinning Force 3 Scenario 2 and 3 which were never released in the US.

  • jamestillett

    Posted Jul 29, 2006 8:24 am PT

    Its not surprising they have so many good coin-ops that could be converted to console like Virtual cop3 that was promised for Xbox owns that never made it Daytonna Usa a Nother remoured title but it never happened so what did we get crap like puy puy fever football manger sega said it was to broaden there Horizion but it slumped there profits instead there best game so far this year has been Outrun coast to coast but that has taken god knows how long so sega please get it back on track and start converting some decent arcade titles and watch those profits soar

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