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For the six months ended September 30, 2024, the sales fell from the same period in the prior year when "Smart Pachislot Hokuto No Ken" was a huge hit. Conversely, in the Entertainment Contents Business, the consumer area and the animation area showed favorable performance. In the Pachislot and Pachinko Machines Business, sales of titles in general showed steady performance. As a result, both sales and ordinary profit made a better-than-expected from the beginning of the current fiscal year.The Group recorded an extraordinary loss of approximately ¥5.9 billion in the second quarter for the fiscal year due tothe sale of overseas development studio, Amplitude Studios SAS through a management buyout. In contrast, as the Group was influenced by the rebound effect from the restructuring loss occurred in the same period of prior year, and the Company recorded an extraordinary income by transfer of the shares of Phoenix Resort Co., Ltd., in the first quarter forthe fiscal year, the profit attributable to owners of the parent resulted in an increase from the same period in the prior year. The adjusted EBITDA, which the Company adopted as the management indicator since the current fiscal year, reachedto ¥34.8 billion. This resulted in short from the same period of prior year, ¥37.5 billion, but still a better-than-expectedfrom the beginning of the current fiscal year. The provisional accounting treatment in the same period of the prior year was applied to the business combination with Rovio Entertainment Corporation on August 17, 2023. Due to the finalization of provisional accounting treatment forbusiness combination in the prior year, all the numbers shown are reflected by the result of the finalization of provisional accounting treatment in terms of the comparison and analysis between the prior and current first half for the fiscal year.
« Entertainment Contents »
For the six months ended September 30, 2024, the consumer area and the animation area showed the strong performancewhich had been continued from the first quarter of the fiscal year, and both sales and profit resulted in highly increased from the same period in the prior year. By each sub-segment, in the consumer area, the titles such as "Persona 5 Royal (Remaster)" released in the fiscal yearended March 31, 2023 and "Unicorn Overlord" released in the fiscal year ended in March 31, 2024 led the sales, and suchrepeat titles showed steady performance. The promoted sales of additional downloadable contents for the series of "Total War" as well as expansion into subscription services for catalog titles and the foreign exchange rate made the positiveimpacts to the Group's business performance. In the animation area, "Detective Conan : The Million-dollar Pentagram" broke the all-time record for highest box officerevenue in the series, and the release of "Knuckles" in April 2024 contributed to a significant increase in revenue from the"Sonic" series movies productions and other products.In the amusement and toy area, the Group showed the steady performance with releasing a new title, "UFO CATCHERTRIPLE TWIN Compact", but highly increased material costs due to the depreciation of the Japanese yen has made thenegative impacts.
The Group will launch new mainstay titles and accelerate the transmedia development of the Group's IP from October onward. In the consumer area, "Metaphor: ReFantazio" released on October 11 received a high score of 94 points(PlayStation®5) on the overseas review aggregation site Metacritic (as of November 7, 2024) with surpassing 1 millionunits sold worldwide on its first day of the release. "SONIC X SHADOW GENERATIONS" released on October 25 alsohad a strong start similar to "Metaphor: ReFantazio" released, surpassing 1 million units sold worldwide on its first day of the release as well. As for the "Sonic" IP with the release of "Sonic the Hedgehog 3", the third movie title approaching in December, the Group will strategically implement transmedia development with Full Games, F2P Games, andmerchandising, etc., thereby aiming to expand the value of the "Sonic" IP. In the series of "Like a Dragon", distribution of the Amazon Prime Video original drama "Like a Dragon: Yakuza" isreleased on October 25. The Group will take this opportunity to implement initiatives to strengthen sales of catalog titles in the series and also aim to expand the IP value. "Like a Dragon: Pirate Yakuza in Hawaii" is scheduled to be releasedon February 21, 2025 as a new title in the series of "Like a Dragon". In F2P Games, the Group plan to launch "Sonic Rumble" worldwide this winter and "Persona 5: The Phantom X" inJapan. In particular, since "Sonic Rumble" as the first fully-fledged collaborative title with Rovio Entertainment Corporation, grouped-in August 2023, the Group will push forward initiatives to create synergy effects. The progress of the Entertainment Contents Business through the second quarter has far exceeded expectations at the beginning of the fiscal year. In the third quarter and beyond, the Group will accelerate various initiatives to realize mediumto long-term growth by launching mainstay titles and promoting transmedia development. However, the Group has announced that the release of "Football Manager 25" will be postponed until March 2025. The Group has made this decision to keep the quality of the product and will continue to grow the IP value of "Football Manager" in the medium to long-term. In addition, the above-mentioned sale of Amplitude Studios SAS has been implemented as part of structural reforms in Europe that the Group has been working on since September 2023. The Group deems that this marks the completion ofthe series of structural reforms and will work toward realizing a business structure that further focuses on the strengthsgoing forward, thereby tackling achieve regrowth in the European business.
※ For new released titles, please see "Results Presentation Q2 for the fiscal year ending March 31, 2025"https://www.segasammy.co.jp/en/ir/library/
« Pachislot and Pachinko Machines »
For the six months ended September 30, 2024, both sales and profit fell from the same period in the prior year when"Smart Pachislot Hokuto No Ken" was a huge hit. However, the sales of new titles showed the steady performance and resulted in a better-than-expected from the beginning of the current fiscal year. In particular, the Group's first and flagship Smart Pachinko title, "e Hokuto No Ken" recorded 35 thousands unit of sales, which exceeded the Group's expectation, and the most-sold pachinko title released during the year of 2024.*1
Since August 2024, which is the month of introduced, the utitilization levels continue to exceed the market average, *2 and itaccounts for approximately share of 5% of the total ¥4 pachinko utilization with one title,*3 so it has become a title thatis now supported by a wide range of users. Going forward, the Group continuously sells new titles in both the pachislot and pachinko machines. In the third quarter,in the pachislot business, the Group plans to sell, "Smart Pachislot Initial D 2nd", "Smart Pachislot Aura Battler Dunbine",etc. In the pachinko business, the Group plans to sell new multiple titles such as "P Monster Hunter Rise", "P The Rising of the Shield Hero", etc.Under the most recent business environment, the utilization of the pachislot machines in the market shows the steady performance. In contrast, the competitions in the pachislot business amoung the companies is intensifying. In the pachinkomarket, some trending titles equipped with "Lucky Trigger" have been released, but have not pushed up the market demand with weak performance of utilization. In such business environment and recent sales trend, the Group need toflexibly review the second half sales lineup with improving the product capabilities and will assess the impact on thebusiness performance.
*1 own estimate (by the Group)
*2,3 reference: own estimate by DK-SIS data / Daikoku Denki Co., Ltd.
※ For new released titles, please see "Results Presentation Q2 for the fiscal year ending March 31, 2025"https://www.segasammy.co.jp/en/ir/library/
« Gaming business »
At the start of the New Medium-term Management Plan released in May 2024, the Group created the new "GamingBusiness". In the Gaming Business, SEGA SAMMY CREATION INC. ("SSC") develops, manufactures, and distributesgaming devices, and PARADISE SEGASAMMY Co., Ltd. (affiliate accounted for using the equity method), which is a joint venture with Paradise Co., Ltd. in South Korea, develops and operates the integrated resort facility, "PARADISECITY".In November 2023, with the aim of entering the online gaming market, especially the U.S. iGaming market expected tocontinuous grow in the future, the Company concluded an agreement to acquire GAN Limited ("GAN"), which operatesa B2B platform business mainly for U.S. casino operators. In July 2024, the Company also announced the conclusion ofan agreement to acquire Stakelogic B.V. ("Stakelogic"), a Netherlands-based company that develops B2B iGamingcontent supplier business. The Company is proceeding to complete the acquisition.Sales increased and profit decreased from the same period in the prior year.Gaming equipment sales were robust, with "Railroad Riches™", a video slot machine compatible with the new "GenesisAtmos®" cabinet that was introduced in U.S. in January 2024, recording high operating rates and receiving highevaluations from the market. In "PARADISE CITY", the casino sales have remained strong with the drop amounts(purchased amount of chips by customers at the table) of Japanese VIP’s maintained at a high level and contributed theCompany's profit from equity method accounting. In contrast, as merger and acquisition costs and foreign currency basedasset devaluation occured by the depreciation of Japanese yen, the Company recorded the ¥0.2 billion ordinary loss in theGaming Business.*PARADISE SEGASAMMY Co., Ltd. is posted 3 months delay due to the fiscal year ended in December. Going forward, the Group will further promote sales of the video slot machine equipment such as "Genesis Atmos®" bycontinuing to introduce gaming equipment that will receive high evaluations from the market in North America and Asia,increasing the number of machines installed, developing new customers, and acquiring new licenses. As for "PARADISECITY", the drop amount by Japanese VIPs in August 2024 recorded the all-time high, and the Company expects equitymethod accounting will continue to profits led by the casino sales mainly generated by highly maintained Japanese VIPs. Under the New Medium-term Plan, GAN will become a gaming service provider with comprehensive range of services by adding Stakelogic's unique content to its own B2B platform business, which is one of its strengths. By combining theseservices with SSC's customer network, the Group will create synergies and work to establish the gaming business as theCompany's third business pillar. The Company received approval for merger with GAN from the Nevada GamingCommission in the United States in October 2024, and is currently seeking approval by the authorities concerned in othercountries and regions. The acquisition of GAN is expected to be completed in the fourth quarter of the fiscal year endingMarch 2025. The acquisition of Stakelogic is expected to be completed in the first quarter of the fiscal year ending March 2026.
A few slides from the Results Presentation and Appendix
Results highlights
FY2025/3 Q2 Results
➢ Exceeded initial expectations overall
• Performed strong centered on CS*1 and Animation
(Entertainment*2 )
• Steady sales of new titles (Pachislot & Pachinko)
• While recorded gain on sales of shares of PHOENIX RESORT, etc. as extraordinary income, recorded loss on business restructuring associated with the transfer of European studio as extraordinary losses
Forecast
➢ Closely monitor the trends in each business
• Launch new mainstay titles, promote Transmedia development (CS)
• Review the lineup in the second half due to recent weak order situation (Pachislot & Pachinko)
Results for the Entertainment Content Business segment
FY2025/3 Q2 Results
➢ Strong performance as a whole
• Exceeded expectations due to strong DLC*1 sales etc. and positive impact from foreign exchanges (CS*2)
✓ Sales of Full Game increased YoY, but slightly below the expectations
✓ Recording of Rovio sales contributed sales increase
• Sonic’s cinematic works and Detective Conan : The Milliondollar Pentagram performed strong (Animation)
Forecast
➢ Launch new titles in Consumer area
• Full-scale sales of mainstay new titles (CS)
• Promote Transmedia development in line with the above
• Closely monitor the impact of exchange rate fluctuations (CS, AM*3 & TOY)
Consumer Area: Sales trend (revenue and units)
Results presentation - https://www.segasammy.co.jp/cms/wp-content/uploads/pdf/en/ir/20241108_q2_presentation_e.pdf
Appendix - https://www.segasammy.co.jp/cms/wp-content/uploads/pdf/en/ir/20241108_q2_appendix_e.pdf
FY3/2024
Q1 - https://www.installbaseforum.com/fo...-2024-financial-results-april-june-2023.1830/
Q2 - https://www.installbaseforum.com/fo...ignificant-restructure-of-the-eu-branch.2104/
Q4 - https://www.installbaseforum.com/fo...ry-losses-due-to-european-restructuring.2681/
FY3/2025
Q1 - https://www.installbaseforum.com/fo...y-5-5-yoy-ent-contents-oi-up-by-184-yoy.2894/
