Sega Sammy Holdings: Actual Results for the Second Quarter of the Year Ending March 2013

Key insights

6 takeaways

01
Sega Sammy Holdings reported a decline in sales and income for the first half of the fiscal year ending March 2013, primarily caused by a downturn in the Pachislot and Pachinko Machines segment.See it on page 1
02
Operating income exceeded initial expectations despite missing sales forecasts, largely due to the strategic deferral of R&D and advertising expenses into the second half of the fiscal year.See it on page 1
03
The Consumer Business segment improved through Western market restructuring and strong digital performance, notably with Phantasy Star Online 2 reaching over one million subscribers and Kingdom Conquest surpassing three million downloads.See it on page 2
04
The company is investing 140 billion won in a joint venture with South Korea’s Paradise Group to develop a new resort complex.See it on page 1
05
The Amusement Center Operations business underperformed, characterized by a reduction in total operating centers and declining same-store sales.See it on page 1
06
Management has maintained its full-year financial forecast, choosing to wait for the performance of upcoming major titles and conversion kits before considering revisions.See it on page 2

Summary

Sega Sammy Holdings experienced a decline in sales and income during the first half of the fiscal year ending March 2013, primarily driven by a downturn in the Pachislot and Pachinko Machines business. Market conditions negatively impacted unit sales in this segment, leading to lower performance compared to the same period in the previous fiscal year. Despite missing initial sales forecasts, operating income exceeded expectations due to the strategic deferral of research, development, and advertising expenses into the second half of the fiscal year.

The Consumer Business segment served as a notable bright spot, showing increased sales and reduced losses. This improvement was attributed to successful business restructuring in Western markets, strong repeat sales of packaged software, and the robust performance of digital titles. Specifically, Phantasy Star Online 2 reached over one million cumulative subscribers shortly after launch, while Kingdom Conquest surpassed three million cumulative downloads. Conversely, the Amusement Center Operations business faced challenges, with declining same-store sales and a reduction in the total number of operating centers.

Geographically, the company is expanding its footprint through a joint venture with South Korea’s Paradise Group to develop a resort complex, with an estimated investment of 140 billion won from Sega Sammy. Looking ahead, the company maintains its full-year forecast, opting to monitor the performance of upcoming mainstay titles in the Pachislot, Pachinko, and Consumer segments before considering any revisions. The second half of the fiscal year remains critical, as the company plans to release several major titles and conversion kits to bolster its market position across its diverse business segments.