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Sega's mobile hits inspire a shift in strategy

With the publisher earning millions every month, the next fiscal year will see the rapid expansion of its mobile lineup

Sega's transition to digital will continue apace in the next fiscal year, with ten mobile game launches planned in the first half alone.

That's a direct result of the performance of many of its 18 existing mobile titles in Japan, only 5 of which were deemed to be "Failures" (earning less than ¥30 million a month).

In a strategic report released yesterday, Sega revealed that, as of this year, 13 games from its mobile lineup earn more than ¥50 million a month. Among the successes, 6 earn more than ¥100 million ($825,000), and 2 bring in over ¥500 million ($4.1 million) - Chain Chronicle and Puyopuyo!! Quest.

Those figures were all bare minimums in terms of monthly revenue, and the report indicates that many of the games earn far more. However, even with such restrained estimates, Sega's monthly earnings from mobile in Japan are already significant: $15 million at the absolute least, and that's just from the 13 games categorised as out-and-out successes. Over the course of 12 months that adds up to $180 million - almost 20 per cent of its consumer division's revenues in the last fiscal year.

None of these games is close to the level of the Japanese market's biggest hits, of course, but combined they represent a clear incentive for Sega to make mobile a more important part of its strategy in the next fiscal year.

The company has committed to operating 16 of those 18 games in the next fiscal year, and it confirmed that it has a further 20 titles in development: 5 internally, 10 from studios within Sega Networks, and 5 co-developed and published with third-parties.

Indeed, Sega has added another studio to that expanding web with an investment in Playheart Inc. The company has been acquiring or investing in mobile studios since at least 2011, but it has been particularly active in the last few months, buying Demiurge Studios outright and acquiring stakes in Space Ape and Ignited Artists.

The recent acquisitions, in particular, seem to have been made with the mobile markets outside of Japan in mind. Sega disclosed no specific data on the performance of its mobile games in "Overseas" markets, but it did stress that they are unique and will require a strategy "independent" from that which it uses in Japan.

One thing is very clear, though: it wants to see growth, in terms of both content production and market performance, for every relevant mobile market.

This all adds to the picture of Sega as a publisher with an entirely digital future - one that could be the day-to-day reality sooner than you'd think. The company's balance sheet has been pointing in that general direction for at least a year already, but the targets for a recent round of layoffs and closures were also telling.

When former Sega of America CEO Tom Kalinske spoke to GamesIndustry.biz recently, he lamented that the company seems to have made, "the wrong decisions for 20 years." Putting more of its weight behind digital platforms and less behind high risk, low margin AAA products would not be among them.

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Matthew Handrahan avatar
Matthew Handrahan: Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.
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