Sega Spending More Time on "Higher-Quality" Content Prompts 90% Profit Forecast Cut

"Higher-quality content is expected, thus resulting in a trend of longer development lead times."


Sega announced this week that, after reviewing recent business performance, it's decided to cut its revenue and profit projections for the current fiscal year by significant margins.

For the year ending March 31, 2016, Sega now expects revenue to be ¥355 billion ($2.8 billion), down ¥65 billion ($528 million)) from its previous forecast of ¥420 billion ($3.4 billion). Total profit is now expected to be ¥2 billion ($16.2 million), which is nearly 90 percent lower than the ¥19 billion ($154.3 million) that it was previously expecting to make.

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Sega attributed the downward revision to a number of business considerations.

First, Sega's Pachislot and Pachinko business unit, which is regularly the company's overall top-earner, is taking a hit as a result of new measures being implemented by the Japan Pachislot Machine Industry Association and the Japan Pachinko Machine Industry Association (Nikkoso). Sega said "demand for new pachinko machines is expected to become weak in line with the application of the voluntary agreement on measures to prevent players from becoming too immersed in playing, which were decided by Nikkoso."

In addition, Sega warned that pachislot machine sales, apart from mainstay titles, "are weak." As a result, Sega now expects to sell 154,000 units before the end of the fiscal year, compared to its previous forecast of 265,00 units. Pachinko machine sales, meanwhile, are now expected to reach 203,000 units for the year, compared to an earlier projection of 220,000.

Another factor in Sega's revised earnings projections has to do with gaming. The company said competition in the Japanese market is "intensifying," and as such, the company needs more time to deliver games that stand out as a result of their quality.

"Higher-quality content is expected, thus resulting in a trend of longer development lead times," the company explained. "Sega also has titles whose launches were postponed from the initial schedule and titles that did not fulfill our expectations in terms of market reception."

One major Sega game that was recently delayed was the new Sonic Boom for 3DS, Fire & Ice. The game was previously expected to launch this year, but was pushed to 2016 so the developer could spend more time making it better and more complete.

"In the grand scheme of things, while the downside is that you won't be playing the game this year, the upside is that what you'll play next year, and what fans will continue to play for years after they pick up the game, will be a stronger, more enjoyable experience," the developer said back in September.

In July, Sega Games CEO Haruki Satomi admitted the company betrayed the trust fans put in the company over the last few years. At the time, he stressed that Sega's goal was to improve the quality of its games in hopes of re-establishing itself as a valuable brand.

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Avatar image for fatalscorpion

Jet Set Radio and Crazy Taxi looking for consoles brah.

Avatar image for chaosbrigade

My first ever console was the Saturn and I grew up on SEGA games, I really hope this company would find itself again.

Avatar image for wexorian

I still hate them, how hell they ruin sonic franchise all time especially after colors and generations i don't know, overall sega lacks of franchises atm they ned good franchise or they need to team up with some other sinking company, capcom ,se etc.d

Avatar image for deactivated-57ac8af80dfb0

Part of me is glad that they expect less profits in their pachislot business because I hope they look at their depreciated gaming front and actually try harder.

-Perhaps bring over that PSO2 that people are asking about every time you try to converse with the general public(Putting up signs that tell the audience not to ask about a game you announced years ago is not good PR).

-Revive some of your older franchises with modest reboots, I'm sure people would be all for a simple arcade reboot of Streets of Rage, Crazy Taxi, Afterburner, Golden Axe, Toejam and Earl, or Vectorman( Kind of in the vein of Sonic Generations, an homage to the original game, but not some overblown budget AAA style release)

-Now that neither Sony or Microsoft require you to do full dubs when putting out games, how about adding some subtitles for formerly JP only stuff like the Shining Series and bring some of those over (If you want to save money, go digital only and offer to release a physical steelbook/artbook on your store if a game sells well enough).

-Try to create a brand new IP every 3 years at least. If it succeeds, congrats and if not...well at least we'll respect you for trying.

Avatar image for louixiii

It's about time they kick out a quality Sonic title. Give me a reason Sega...And another Virtua Fighter or Shinobi would be nice

Avatar image for berzerk0912

@louixiii: Especially if SEGA decides to do a Ninja Gaiden type of Shinobi. I would faint.

Avatar image for louixiii

@berzerk0912: Just make sure you're on the couch when you do. Gaming with a concussion isn't ideal lol

Avatar image for ronan32

sega are cowards. if they had any balls they'd make a console. Not everyone is a bro that likes xbox of ps34. i own my own house and car, unlike most console players, please sega save us.

Avatar image for louixiii

@ronan32: You call Sega cowards yet you ask them to save you? Since you crave a Sega console so badly, why don't you pick up a Genesis or Dreamcast and enjoy the nostalgia. It wasn't a Sega's console alone that grew their popularity, but their library of quality software. Since you own a house and vehicle(s) as well, I'm sure you're fully aware of the word finance. Believe me, if it was in Sega's financial best interest, they would...but as you can see, that's not how the cookie crumbled. Sega is a mere shadow of what they once were. Many of it's greatest minds left years ago to either join other developers or build their own studio. Much like Konami, they failed to realize that you want to keep your best and brightest minds happy and content. This is why Miyamoto still remains a Nintendo employee. If you really want Sega to succeed, recommend they hire game testers that aren't afraid to give honest and solid feedback to help them through this process. Maybe then will we see the rise of a legendary giant.

Avatar image for xolivierx

Ironic thing : the Sega Dreamcast was 10 times more entertaining than the wiiU.

Avatar image for nights_team2k7

SEGA can die in a hole. They refuse to bring PSO to the west for I don't care what happens to them.

Avatar image for fatalscorpion

@nights_team2k7: I'm pretty sure you can play it in the west now. I played it like 2 weeks ago...

Avatar image for Redsyrup

Would love to see real arcade games from Sega again. Either in arcades/amusement centers or released for Consoles/Portables. 3DS has seen some nice examples of this (Outrun, After Burner II and Fantasy Zone) but I'd like to see more. Sega Rally, Virtua Cop, Daytona. Do it Sega!

Avatar image for lvsolja

1.sonic boom is an abomination.. sonic lost world should have been continued

2.with the sucess of shenmue kickstarter-sega should have started on working on optimizing a 1&2 on a disk for ps4/xbx1

3..want to make some money optimize-dreamcast games and some best sega saturn games to be purchased and played on psn& xbox1..

start right there

Avatar image for lvsolja

their developers need to study some of the high rated games and look at the level of quality that garnered them that score and such sales.

Avatar image for Alurit

they have soo many good games and IP's, but the company is so mismanaged that I don't know what to say. I've stated playing valkyria chronicles last week and enjoying it, but if they could make it a bit more like x-com it could be so successful in the west

Avatar image for thespicychiken

@Alurit: VC was a great game! I picked it up when it first came out on PS3, what does sega do for the 2nd game? They put it on the vita! LIKE bone head move of the century. FEW people had a vita at the time. Sega is dead.

Avatar image for Alyzen

@thespicychiken :

Unfortunately they didn't put it on the Vita. They put it on the PSP. :(

Avatar image for xantufrog

Quality over quantity, Sega. You still publish good games from time to time, but we are all fatigued by the borderline shovelware we get from you at times as well. Glad to see steps in the right direction. Ultimately, if they restore their brand image their games will sell better and profits will not be a concern - play the long game!

Avatar image for Zironn1

About time they have so many IPs collecting dust.

Avatar image for Thanatos2k

New Pachinko regulations are destroying their profits? Wonderful! That means Konami is screwed!

Avatar image for jinzo9988

Please consider doing smaller projects. I hate seeing them spend so much money on projects that just fall flat with people. I don't want to say that Sonic is straight up dead but given the marketplace, I don't think that's a franchise worth investing tens of millions of dollars in development anymore.

Partner up with the folks that did Freedom Planet and do a crossover game with them. That wouldn't require a ton of money and I'm sure people would enjoy it. I think that's the route they should go for a little while to build their reputation back up. I mean they're a big company and they can't live off of making so little money like that but work on a couple of smaller things at the same time. It's not like they need the entire studio to do a game like that.

Avatar image for skyhighgam3r

Blah blah blah blah blah....

**** Pachinko, and all this other nonsense.

Sonic for Xbox One/Playstation 4

Or gtfo.

Avatar image for mvilleguy88

@skyhighgam3r: *good Sonic*

Avatar image for skyhighgam3r

@mvilleguy88: Yes, indeed.

I just want them to stop throwing gimmicks at it.

Unleashed's daytime levels were FANTASTIC, but they had to put in the "werehog"
Color's base gameplay was awesome... but they threw in those STUPID powerups... plus it was only on the WII lol
Generations' Modern levels are some of the best Sonic gameplay that I can think of... but they just HAD to do the classic levels...

Even lost world added a lot of great things...
Holding R to run was GENIUS... it really solved the issue with platforming.
Being able to run on walls and grab ledges was LONG overdue.

But of course they had that god awful level design...
Those ANNOYING "sinister six" idiots...

What they need to do is make it slightly darker, bring back ROBOTNIK, and make him actually evil, and hellbent on industrializing the whole planet. Not some bumbling idiot who can't even speak without making an ass out of himself. (did you ever see the Saturday Morning Cartoon?) and just focus on the running/platforming.

No gimmicks... just blazing through at mach speeds, stopping just long enough to nab some items, bonk some enemies, and find those special stage rings.

Avatar image for Panzer_Zwei

It'll get better next year with PERSONA 5 and the VALKYRIA CHRONICLES games.

Avatar image for bunchanumbers

Its too bad they couldn't finish Sonic Boom. But I blame BRB for that.

Avatar image for Barighm

Sounds like he just admitted Sega has been choosing to release unpolished crap for years. But we all knew that.

Avatar image for mvilleguy88

@Barighm: He still only said last few years. Like they haven't been hit and miss since dream cast over a decade ago.