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.

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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.

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