Sega Reports Decreased Earnings for Fiscal 2011

For the fiscal year ended March 31, 2012, Sega saw revenues of ¥395.5 billion ($4.96 billion USD), down by 0.3% from 396.7 billion yen ($4.97 billion) from last year. Profits also saw a decrease of 47.4%, down to ¥21.8 billion ($273.1 million) from ¥40 billion ($519.9 million) year-over-year.

Sega’s Consumer Business department, which is the home of its video games, toy sales, and animated films division, was the only business of the company that posted losses for the full year.

Specifically, Sega’s Consumer Business saw revenues fall by 3.6%, from ¥88.8 billion ($1.1 billion) to ¥85.6 billion. Sega blames the declined revenues and profits for the full 2011 fiscal year to the weak demand in the home video game industry and plans to counteract this shrinking market by dedicating further focus onto digital and mobile games. Notably, the company’s digital games business made ¥66.4 billion ($831.9 million) in revenue, down 1% compared to ¥67.1 billion ($840.6 million).

This shift of focus will result in the company separating its game development sector from its Internet services. A new subsidiary called Sega Networks will be established with their focus being on the online products for the company. Haruki Satomi is set to be the president and CEO of Sega Networks and will be established on July 2, 2012.

For the current fiscal year, the company projects full year revenue of ¥470 million yen ($5.9 million), up 18.8% compared to the company’s 2011 fiscal report and profits of ¥40 billion ($501.1 million), up 83.5%.

Analysis: Reported earlier this year was Sega’s plans to cut down operation costs, and this obviously led to some employees losing their jobs and the development of unknown titles being cancelled indefinitely. This is coupled with the fact that Mike Hayes announced his departure from Sega West, as we reported only a few weeks ago.

Although the company is still posting significant profits, things haven’t been looking good for Sega for a while now. I don’t blame the company wanting to streamline their business practices and maximize profits, albeit it would’ve been nice if nobody had to lose their jobs.

One thing I’m more concerned and disappointed about is that Sega has decided to focus purely on established franchises from here on out. This includes the Sonic the Hedgehog franchise, Football Manager, Total War, and Aliens. The only title in that list I’m interested in is Aliens, but more importantly, in an industry that really lacks innovation and new IPs, I’m not looking forward to yearly updates to the above listed franchises. As a financial decision, I understand the need to make this choice; but as a gamer, I can only hope that, once Sega starts posting stronger fiscal reports, we will see start seeing some new interesting IPs from the company once again.

Nathan Wood

About Nathan Wood

When he picked up a controller on that fateful day at the age of 6, Nathan had no idea how quickly it would captivate him. Enjoying a wide range of games, he is up for anything as long as it is of good quality, interesting or laughably bad. When not playing or writing about video games, he enjoys music, film, basketball and art. He is currently completing his last year of his IB diploma before mastering the great land known only as: University.