Sega Sammy Holdings Inc SGAMY reported its financial results for the first quarter of the 2024 fiscal year, revealing a mixed performance with notable strengths in its video game segment, despite an overall decline in net sales.

The results for the three months ended June 30, 2024, indicate a company navigating challenges but finding success in its core entertainment offerings, GamesIndustry.biz reported.

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Video Game Sales Shine Amidst Decline

Sega’s Entertainment Contents division, which encompasses video games, toys and animation, emerged as a bright spot in the company’s financials.

This segment reported net sales of 72.7 billion yen ($493.3 million), marking a significant 34% increase compared to the same period last year.

Within this division, full-game sales saw an impressive growth of nearly 40%, generating 15.1 billion yen ($102.5 million). This growth is a testament to the sustained demand for Sega's gaming products, particularly as the company managed to sell 5.9 million units, albeit slightly below expectations.

Key contributors to this performance included back catalogue titles, which brought in 11.2 billion yen ($76 million). Shin Megami Tensei V Vengeance was highlighted as a standout performer, moving 500,000 units.

Meanwhile, new releases, including the highly anticipated Unicorn Overlord and the remastered Persona 5 Royal, also made substantial contributions to the bottom line.

However, the company noted that while full-game sales were robust, they did not quite meet internal expectations. Sega pointed to the strong yen’s impact on foreign sales as one of the factors influencing these results.

Pachislot And Pachinko: A Struggling Segment

In contrast, Sega's pachislot (Japanese slot machines) and pachinko (mechanical game that is used as an arcade game and for gambling) businesses struggled significantly during the quarter. Net sales in this segment plummeted by 43% year-on-year to 28.8 billion yen ($195.8 million).

The company attributed this decline to the comparison with the previous year, which saw the release of the highly successful Smart Pachislot Hokuto No Ken.

Despite the downturn in this traditional segment, Sega's leadership remains optimistic about the future, particularly in light of its growing focus on the digital and interactive entertainment space.

Sega’s Strategic Moves And Future Prospects

Sega's acquisition of Rovio, the Finnish developer behind the globally successful Angry Birds franchise, has begun to pay dividends, contributing positively to the company's video game segment. The 706 million euro acquisition, completed in August 2023, is part of Sega’s broader strategy to strengthen its mobile gaming presence, particularly in Western markets.

Looking ahead, Sega is banking on a robust lineup of releases to sustain its momentum in the Entertainment Contents division. Upcoming titles include Sonic X Shadow Generations and the free-to-play spin-off Sonic Rumble, both expected to capitalize on the enduring popularity of the Sonic franchise.

Additionally, the company is set to launch a new IP from Atlus, Metaphor: ReFantazio, which is generating considerable anticipation.

The holiday season is also poised to boost Sega’s fortunes with the release of the third Sonic The Hedgehog movie on Dec. 20, 2024. The previous films have been commercial successes, and the company expects this installment to drive further interest in the Sonic brand across multiple platforms.

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