Julio Neves
Sega has released its financial report for the six months ending on September 30, 2024. While overall sales were slightly lower than the previous year, the company’s games division saw significant gains, fueling positive performance in Sega’s Entertainment Content segment.
Key Financials:
- Total Net Sales: ¥211.6 billion ($1.39 billion), down 4.5% year-on-year
- Entertainment Content Net Sales: ¥141.7 billion ($931 million), up 16.4% year-on-year
- Games Segment Sales: ¥95.6 billion ($628 million), up 22% year-on-year
The Impact of Games on Sega’s Success
Despite overall sales decreasing year-on-year, Sega’s games division has delivered robust results, with a notable 22% increase in revenue. This uptick has largely been attributed to better-than-expected sales of downloadable content (DLC) and strong repeat sales. Sega highlighted Unicorn Overlord as a key contributor, alongside the impact of recent additions from Rovio, which Sega acquired last year.
Additional Growth Factors:
- Exchange Rate Advantage: Sega benefitted from favorable currency fluctuations, which enhanced earnings in international markets.
- Cost Efficiencies in Europe: Sega implemented cost-control measures in Europe, which exceeded the company’s original targets.
New Titles Versus Repeat Sales
While DLC and repeat sales helped Sega meet its goals, newly released games saw a slower performance in the first quarter. Revenue from new games was ¥5.6 billion ($36.8 million) for H1 FY25, compared to ¥6.2 billion ($40.7 million) during the same period last year. On the other hand, repeat sales grew significantly, totaling ¥22.1 billion ($145 million), up from ¥17.1 billion ($112 million) in FY24.
Overall, full game sales amounted to ¥27.7 billion ($182 million) for the half-year, compared to ¥23.4 billion ($154 million) in H1 FY24, indicating the sustained success of ongoing titles and repeat purchases.
Free-to-Play Titles: Steady Performance
Sega’s free-to-play (F2P) games performed in line with expectations. Revenue from F2P titles totaled ¥23.1 billion ($152 million), a slight decline from ¥26.9 billion ($177 million) in FY24. Despite the small drop, Sega remained satisfied with these titles’ contributions to its overall financial health.
Projected Full-Year Outlook
Looking ahead, Sega expects its full-year net sales to reach ¥445 billion (close to $3 billion), marking a slight 5% dip from FY24. However, the company’s games segment is expected to grow to ¥235 billion ($1.5 billion), representing a 5% increase year-over-year.
Sega anticipates a boost from upcoming game releases, including Metaphor: ReFantazio, Sonic x Shadow Generations, and Football Manager 25, which was rescheduled for March 2025. The release of Sonic Rumble is also on the horizon. Furthermore, Sega foresees increased revenue from licensing its Sonic character in a variety of media, further expanding the iconic franchise.
Organizational Changes and Studio Restructuring
Sega also announced that it has concluded structural reforms at Sega Europe, including granting Amplitude Studios independence. This restructuring led to major changes, including the cancellation of Creative Assembly’s Hyenas, the sale of Relic, and layoffs across several Sega-owned studios.
As Sega’s transformation continues, the company is committed to sharpening its focus on profitable projects while allowing studios more autonomy. This reorganization follows Sega’s acquisition of Rovio, the company behind Angry Birds, in a €706 million deal completed last year.
Timo Rahkonen, Rovio’s Vice President of Strategy, shared insights on this acquisition’s impact earlier in the year, one year after the partnership began.
