Sega's mid-year financial outcomes bolstered by a 22% increase in gaming revenue

Sega has detailed its financial performance for the first half of its fiscal year ending September 30, 2024. Although company-wide sales experienced a decline, the gaming sector bolstered the Entertainment segment's outcomes for the period.

Financial Results

• Total Net Sales: ¥211.6 billion ($1.39 billion), marking a 4.5% decrease compared to the previous year
• Net Sales in Entertainment Contents (inclusive of games): ¥141.7 billion ($931 million), a 16.4% growth year-on-year
• Sales from Games: ¥95.6 billion ($628 million), reflecting a 22% increase from last year

Key Insights

The Entertainment Contents division reported a 16.4% boost in sales, notably driven by a 22% rise in the gaming sector, which Sega refers to as its 'Consumer' category. This growth was fueled by higher-than-expected DLC sales and robust repeat purchases, with "Unicorn Overlord" being prominently mentioned. The report also highlights the successful consolidation of Rovio’s sales, contributing positively to this surge.

The Japanese corporation remarked on advantageous exchange rate movements and better-than-expected cost efficiencies, particularly in Europe. Yet, it acknowledged that performance for new titles released in the first quarter fell short of expectations.

The figures for new game releases were ¥5.6 billion ($36.8 million) for the current year's first half, compared to ¥6.2 billion ($40.7 million) for the equivalent period a year ago. Conversely, repeat sales surged to ¥22.1 billion ($145 million) from ¥17.1 billion ($112 million) the previous year.

Total full game sales accounted for ¥27.7 billion ($182 million) during this timeframe, up from ¥23.4 billion ($154 million) in the prior year. Regarding free-to-play offerings, the firm stated they "performed as expected," with earnings of ¥23.1 billion ($152 million), compared to ¥26.9 billion ($177 million) in the previous fiscal year.

Looking forward, Sega anticipates total sales reaching ¥445 billion, nearly $3 billion, which would represent a 5% decrease from FY24. Specifically for its gaming segment, the forecasted revenue stands at ¥235 billion ($1.5 billion), approximating a 5% increase compared to the previous year. Influencing this outlook are upcoming titles such as "Metaphor: ReFantazio," "Sonic x Shadow Generations," and "Football Manager 25," which has been deferred to March 2025. Additionally, an expected increase in character licensing revenue from Sonic-focused transmedia initiatives is projected.

Sega's financial documentation also confirmed the reacquisition of autonomy by Amplitude Studios, finalizing structural adjustments in Sega Europe. This reorganization led to the cancellation of "Creative Assembly's Hyenas," the divestiture of Relic, and significant layoffs across UK facilities owned by Sega.

Earlier this year, we had a conversation with Rovio's Strategy Vice President, Timo Rahkonene, marking the first anniversary of the €706 million acquisition by Sega.