Sega Sales Dip, But Company Back in the Black as Profits Increase
Video game sales decline attributed to "lack of sales of major titles."
Sega Sammy, the parent company of game publisher Sega, has detailed its financial results for the six months spanning April to September 2015, noting a downturn in sales, but an increase in final profit.
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Net sales for the period reached $1.2 billion, which is a 2.5 percent decrease over the same six months in 2014, where it reported just over $1.3 billion. Despite this slight decline in sales, profit hit $7.9 million, compared to a $23 million loss in 2014.
In its investor relations report, The Sonic the Hedgehog, Yakuza, and Total War publisher said competition in the digital market for "games [on] smart devices continues to grow at a moderate pace in Japan, in line with the spread of smartphones."
Key game highlights were mainly mobile titles, including Chain Chronicle - Kizuna no Shintairiku, Puyopuyo Quest, and Phantasy Star Online. Packaged video game sales was lower than last year due to "the lack of sales of major titles." It also attributed the soft sales of games to strategic delays.
"Performance in the digital game software field in the first half of the year ending March 31, 2016 were below the initial plan because the Group made a strategic revision to the timing of the launch of titles in response to intensifying competition and also because certain titles were less well-received than expected," Sega said.
Pachislot and pachinko machines, in particular the Fist of the North Star line, were described as "record-breaking" hits, but the business made much less than expected, overall.
Sega expects an "expansion" in the video game audience as the adoption of new-generation console increases.
In July 2015, Sega Game CEO Haruki Satomi said he believes the company betrayed the trust fans put in it over the last few years, and committed to improving the quality of its games to re-establish itself as a valuable brand.
"I've been talking to employees about how [Sega] should start putting serious consideration into quality from this point on," he said. "Particularly in North America and Europe, where it's always been more of a focus on schedules ... I believe that if we can't maintain quality, it would be better to not release anything at all.
"Sega in the 90s was known for its brand, but after that, we've lost trust, and we're left with nothing but reputation ... We'd like to win back the trust and become a brand once again."
In September 2013, Sega acquired bankrupted publisher Index Corporation, parent company of Persona developer Atlus. A year later, Index Corporation was separated from Atlus. The studio was tasked with continuing it game projects, one of which is Persona 5, with a team of 121 employees. Index's 166 employees, meanwhile, would focus on distribution, systems development, and advertisements.
Sega seemed to be transitioning away from console games and toward the PC and mobile markets, having invested in three Western developers, the most notable of which is Boston-based firm Demiurge Studios.
Demiurge, which was bought outright by Sega, worked with Harmonix, Gearbox, Irrational, and BioWare. The studio contributed to multiple Rock Band track packs, built the PC edition of Mass Effect, assisted with art design on the original BioShock, and worked on the ultimately canceled Wii U version of Aliens: Colonial Marines.
More recently, Sega underwent a restructuring, part of which involved 300 job losses and the relocation of the company's office in San Francisco. Key upcoming Sega titles include Persona 5, Total War: Warhammer, and Yakuza 6.
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