Sega within mobile temptation

Sega won’t uncork the champagne this year. The conglomerate it shares with Sammy loses more than ¥11 billion, whereas they had gained ¥30 billion last year. The slower revenues and the rising general expenses destroyed the EBITDA, and several write-downs made it even worse for the net result.

Pachinkos are a net provider as always despite a lower activity (operating result falls by 43%), but arcade is a disaster and loses 2 millions. Theme parks and leisure centers are slightly down, the reason of which being the rise of VAT done in Japan in Spring 2014, Sega says. The group warns investors that no immediate improvement in profitability is in sight, because it will start building a giant resort in South Korea which completion is due in 2017. Besides, Odaiba’s Joypolis will receive further investments/

On the consumer business side, that is to say video games, anime and toys, Sega blames the physical games market for being increasingly sluggish. Indeed, despite a 15% rise in volume of sales, boxed games cause an operational loss of nearly 3 millions! The digital content on the other hand (smartphones & PC) provide a ¥8 milllion gain. Clearly upset, the publisher states that it will shift resources from the traditional games market to mobile, while giving guarantees on Persona 5. Sega wants to lift the doubts : although the current restructuring in the West is severe, there are no plans to drop consoles. Yakuza 0 sold very well in the rising Chinese market, so the firm is still committed to quality and innovation and teases an “announcement” at Tokyo Game Show to back their intentions.

Sega-Sammy’s balance sheet is unchanged : this year’s loss barely damaged their equity, that remains strong of years of retained earnings. The group is not weakened and has the capacity to fulfill their pledge and our dreams : more ambitious games. The reveal of Seven Dragon III on 3DS doesn’t improve their case, but the port of Blade Arcus from Shining on PS3/PS4 is a step in the right direction. All they need to do now is to race to excellency.

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