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Sega Sammy reports sharp income decline despite soaring game sales

The Japanese firm sold 34.2 million games in the nine months ended in December, 77% more than the year before

Sega Sammy published its financial result for the nine months ended December 2020, reporting a 51.8% decline in operating income to ¥13.5 billion ($128 million), compared to ¥28 billion ($266 million) for the same period the previous year.

Sales also decreased 25.2% year-on-year, generating a total of ¥210 billion ($1.9 billion).

Looking at games specifically though, Sega reported strong performances with 34.2 million copies shifted, compared to 19.3 million for the same period the previous year. This was mostly driven by sales from its back catalogue, which represented 30.4 million copies. This growth is directly related to people staying at home due to COVID-19 measures, the company reported.

Games generated ¥102.4 billion ($974 million) in sales during the period, compared to ¥90.2 billion ($858 million) the year before.

Full games represented 42.6% of the total sales, 13.8% of which were new physical titles, 28.8% repeat sales of physical games, and 62.8% digital sales. Free-to-play transactions also represented 41% of overall sales.

Games actually represented the vast majority of the company's revenue for its Entertainment Content segment, which was overall down 10% to ¥167.6 billion ($1.6 billion), as the segment also includes amusement centers which were closed for several months last year due to COVID-19.

Operating income for the segment reached ¥29.9 billion ($284 million), a 75.8% increase compared to the same period the year before.

Sega Sammy revised its forecast for the full year, with results expected to be decreasing 7% year-on-year for a total of ¥276 billion ($2.6 billion) in sales. Operating income has been revised upward, with a 10.5% rise expected, reaching ¥9 billion ($85 million).

Sega Sammy recently announced a new structure, splitting apart its video games and amusement divisions. Haruki Satomi was appointed as the new group CEO of Sega Sammy Holdings.

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