Sega Reports Strong Gaming Growth in H1 FY25: What’s Behind Their Success?

Sega recently released its financial report for the six-month period ending on September 30, 2024 (H1 of FY25). The Japanese gaming giant showed strong performance in its video game segment despite not launching any major new titles during this period.

Key Highlights:

Overall:

• Total revenue reached ¥211.6 billion ($1.38 billion), marking a 4.5% decrease from the previous year
• Operating profit experienced an 18% decline, settling at ¥32.8 billion ($215 million)

The Entertainment Contents division (video games, animation, and toys):

• Revenue increased by 16.5% to ¥141.7 billion ($928.8 million)
• Operating profit surged by 136% to ¥18.7 billion ($122.5 million)

Video Games sub-segment:

• Video games revenue grew 22% to ¥95.6 billion ($626 million)
• Full-game sales increased by 18% to ¥27.7 billion ($181.4 million), although this fell short of Sega’s expectations.
• 61.5% of video game sales came from outside Japan
• Older titles accounted for nearly 80% of total game sales
• Overall, Sega sold 12.39 million game units, a 17% increase (new games only 1 million units)

Key Growth Factors:

Sega attributed this growth to robust sales of downloadable content (DLC), favorable foreign exchange rates, and the inclusion of revenue from its recent acquisition, Rovio.

Rovio, which Sega acquired for over $700 million last year, contributed ¥17 billion ($111 million) in revenue during this period. Sega is leveraging Rovio’s expertise for the global marketing of the upcoming game, Sonic Rumble, set to release this winter.

However, the company noted that while game sales in the first quarter were strong, they slowed down in the second quarter.

Which Franchises Are Leading Sega’s Success?

Out of 12.39 million game units sold in the first half of FY25 ending on September 30, 2024, here are the top performers from SEGA:

• Persona franchise: 1.81 million copies
• Sonic franchise: 1.53 million copies
• Like a Dragon series: 1.41 million copies
• Total War series: 1.24 million copies

With this success Sega’s RPG franchises now reach new sales heights:

• Persona series: 23.5 million lifetime sales
• Like a Dragon franchise: 27.7 million lifetime sales

Notably, the Persona 5 line alone has sold over 10 million copies, making up nearly half of the franchise’s lifetime sales.

Sega credits this success to a “multi-platform launch strategy”, simultaneous worldwide releases, and remastered editions, such as Persona 3 Reload, which launched on all platforms globally on February 2, 2024.

Sega also provided sales updates about recent releases:

• SONIC X SHADOW GENERATIONS (Release: Oct. 25, 2024): 1 million in day one
• Metaphor: ReFantaggio (Release: Oct. 11, 2024): 1 million

Divestment of Amplitude Studios

As part of a strategic restructuring of its European operations, Sega also divested Amplitude Studios through a management buyout (MBO). The Endless Space developer will now operate independently. This move resulted in a one-time financial loss of ¥5.9 billion ($38.6 million) for Sega.

Key Challenges and Changes

Despite the overall growth, some challenges remain:

• New release sales were relatively modest at just over 1 million units
• Q2 performance of Q1 releases was below expectations
• The Amplitude Studios divestment resulted in a ¥5.9 billion ($38.6 million) loss

Despite these challenges, Sega remains optimistic about its future, driven by strong sales of its classic titles and the upcoming launch of new titles.

They outline their “transmedia approach” for the Sonic franchise, by expanding the franchise across different media platforms like games (SONIC X SHADOW GENERATIONS), movies (Sonic the Hedgehog 3 – December 20), and anime (Knuckles – April 2024).

Sega postponed the release date of Football Manager 25 from November to March 2025 to ensure “game quality”, with new elements including the full license of the Premier League and the adoption of female soccer.

Sega is also in the process of acquiring two gaming companies, though it has not disclosed their names.

For more information, visit the official Sega website. And Remember to subscribe to Gaming Foodle for more news!