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Sega Reports Q1 Loss As  The Conduit  Sells 150,000
Sega Reports Q1 Loss As The Conduit Sells 150,000
July 31, 2009 | By Kris Graft

July 31, 2009 | By Kris Graft
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    27 comments
More: Console/PC



Tokyo-based Sonic the Hedgehog house Sega Sammy reported a year-on-year decline in sales and a net loss for its first fiscal quarter ended in June. The publisher also revealed official sales figures for High Voltage Games' Wii-exclusive shooter The Conduit to retailers.

Sega reported net sales of ¥60.46 billion ($638.44 million), a 19 percent decrease from the same quarter a year ago. Net loss was ¥10.29 billion ($108.66 million) compared to net loss of ¥10.53 billion yen ($111.19 million) a year prior.

The company said it sold 150,000 copies of The Conduit during the quarter in the US and Europe. As the game didn't release in European territories until July -- after the April-June earnings period -- this figure presumably refers to the amount of copies sold to retail, not sell-through to the consumer. We've contacted Sega to confirm the company's recording policy.

The Conduit released at the end of the period on June 23 in the US, and on July 10 in the UK and July 16 in Australia.

Edge Online reported earlier this month that the NPD Group recorded 72,000 in sales for The Conduit in the US during June, when the game was on shelves for about a week.

Sega also said that it sold 790,000 copies of Virtua Tennis 2009 across PlayStation 3, Xbox 360, Wii, and PC in the US and Europe.

Out of all platforms during the quarter, Sega sold the most software units on Nintendo Wii, with 550,000 units sold on the console. The company sold 310,000 units on the PS3, and 200,000 on Xbox 360 during the quarter.

In fiscal Q1, Sega said it sold 2.65 million software units total worldwide, down 61.5 percent, with Europe being its biggest market for the period. Sega's goal is to sell 29.7 million software units this fiscal year. Net sales in Sega's home video game business specifically were down 41 percent year-on-year to ¥18 billion ($190.07 million), while operating loss in the division was ¥5 billion ($52.8 million).

"In the home video game software industry, growth in demand for software has leveled off in Japan and North America, due to the popularization of game platforms. Nevertheless, demand remains relatively firm in Europe," Sega said.

Sega Sammy's major businesses also include the sale of pachislot machines, a segment that brought in ¥19.68 billion yen ($207.87 million), more than the home video game business. Like many companies recently reporting deflated earnings and sales, Sega noted a weak global economic environment that is negatively impacting its business.


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Comments


Lo Pan
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I wish Sega the best. They are really trying to make quality games. The public (looking at you Wii owners) should start buying or you will lose a publisher that really wants to upgrade the Wii catalog. Btw, I saw the Iron Man 2 coverage at SDCC...looked amazing!!!

Mark Venturelli
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Christian, I may be wrong, but I don't believe that 150,000 copies is enough for a title as big as The Conduit to be considered successful. Best of luck for them, though.

Lo Pan
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Considering the Wii install base, the sales are poor. I still do not see Nintendo doing any promotion of 3rd party games to support these brave publishers.

steve roger
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Conduit is awesome, I am baffled that it did not sell other than the realization that the people who buy Wii Fit don't and Mario Kart don't buy high quality FPSs. Madworld on the other hand was not a great game despite critical acclaim. No suprise to me that nobody bought a black and white game that features blood.



This tells me that party, fitness and Nintendo sequel andNintendo platformers are the only thing that the Wii base is willing to support.



Which is really sad. What I wish that Sega had done with the Conduit was to have released it as a multiplatform title. Yes, yes I know it was optimized for the Wii, but it is a solid game, it would do well on the 360 and PS3. This would have really helped Sega.



Nintendo needs to come up with a game plan for it's third party producers or face the slow death of the Wii. I know, nobody thinks that is possible (either).

Alexander Bruce
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I'm not sure why people bother trying to force the issue of hardcore titles on any console. If they don't sell, they don't sell. Trying to force down peoples throats that they should get up and spend money on things that they clearly don't want to spend money on won't change the issue. It's not "their fault" that there aren't hardcore titles on the console. The market goes where the market wants to go, and if it's clearly moving further away from hardcore, a couple extra sales by trying to put people on guilt trips won't change anything.

Ian Fisch
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I refer to my article on this very topic: http://www.gamasutra.com/blogs/IanFisch/20090417/1183/Why_quotThe
_Conduitquot_Will_Have_Trouble_The_Wii_and_Hardcore_Games.php

Roberto Alfonso
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While it is true the casual market is the one guiding the Wii, it is always important to have a good supply of hardcore gamers in case some of those casuals decide to try something bigger. Without them, the casual gamer gets bored and stops playing (they would not buy another console, they are still casual gamers).

Bob Smith
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Has it occurred to anybody that the games are just bad? As a Wii owner, I expect my games to be polished and engaging. I have been waiting eagerly for a great FPS to play. I got burned on Red Steel because its controls are sluggish and the multi-player is lacking. I almost bought Conduit, but I read two reviews that say the controls are amazing, but the gameplay and story are both simple and unoriginal.



Ian that article was great. I don't think the graphics hold back the Wii nearly as much as the inane multi-player system does.

Ken Masters
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The Conduit doesn't have to sell a million copies in one week to be successful people.



Nintendo doesn't have to come up with a game plan for third parties either - that's the most ridiculous thing I've ever heard. Nintendo is the ONLY company that can keep their system afloat all by themselves. Third parties need to learn how to crack the Wii - like EA, Activision, and Capcom have. Each of them have million selling software on the Wii.

Matt Marquez
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I can see them turning a profit on home consoles if they would just release Sonic 4.

Uyiosa Iyamu
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It is funny how people are turning a hard eye on The Conduit for its sales. From what I hear, it is doing as well if not better then most of the recent first person shooters such as the new Call of Juarez and The Chronicles of Riddick. While it isn't doing blockbuster numbers, personally, I don't think it was advertised as hard games like major games like Infamous or Prototype, outside of the internet.



As for Sega Sammy, they do have issues, but I believe they are working on it. Capcom recently hit gold with the steady releases of popular sequels from past hits, Sega has a good stable, but they have to make sure the sequels, spinoffs or whatever they drop are good enough to please old fans rather then constantly trying to branch out beyond the original audience.



Although I can say the best sequel/spin off of a major Sega property in years has to be House of the Dead: Overkill.

Ron Alpert
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not surprised the Conduit didn't kill it. "What's a 'Conduit?'" Right now is a particularly bad time for fresh IP's esp. if you are a company like Sega. Yeah you can argue "but what about Prototype, InFamous" well those were being sold to specific markets with a fair amount of hype built up for awhile and I don't think I am wrong to assume the marketing was done differently (better) either.



Nintendo's not gonna go to bat for Conduit like Sony would for InFamous anyway, Sega's on their own - and that's how they always have operated, to the beat of their own drummer. Like any other gamer worth his salt, I am a Sega fanboy thru and thru but I question their long-term console goals if they don't just keep filling out with more big-selling Sonic titles (which the fanboys detest, but earns the $$$). They just need to bite it and make a kiddy Sonic Guitar Game..



www.HeadcaseGames.com

Fábio Bernardon
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I find it amazing that when one game (that is arguably good from the reviews I have seen) don't sell, then the culprit is the console, instead of the company that build such game. Call of Duty: WW sold more than one million copies in the Wii alone - so, what did that game had that The Conduit didn't? What about a brand, recognized and marketed for years? I know it sounds weird for some, but marketing DO sell. That is what any game needs to sell. It can be awful, but with marketing, it is going to sell.

Ron Alpert
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Of course marketing sells. That's the #1 rule at the end of the day. Certainly you need to make sure there's already a target audience in place that is gonna be receptive to your marketing and all of that (again, the difficulty with fresh IPs and strangely-named games). Make "Conduit" sound more like "Halo" or "Gears of War" somehow for starters. It's all a very delicate dance!

Lo Pan
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With the Wii install base of 44 million in US and EU, 150k sales is very, very poor. The Conduit is a Wii only title...an exclusive.

wes bogdan
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IDK why people single out conduit as a lacking story f.p.s-when i play a shooter i expect a shooter..not final fantasy!! Outside of metroid if you want a shooter on wii conduit's a great choice. Personally i heep

kudo's on high voltage for the fully customizable controls-the 1st thimg i did was set up my own custom layout. As for hardcore i own :okami,overkill,conduit,madworld and the re shooter. I'm watching:extraction,red steel 2-i expect it to come with and without motion plus and the new re shooter.



Red steel 1 was a launch game so i give it some slack for the always rush job but rs2 will be judged harshly if not up to or better than metroid or conduit play control standards. I did hear rs2 has a control scheme and whether you like or hate it that's what you're stuck with making the conduit with nearly

infinate options a better play...notice i didn't say better game because given the motion plus support

alone will be more accurate but my beef is when i can't set it up how i want.



I've had my 360 pads modded so the l stick=r stick and the d-pad=face buttons simply finished the southpaw control setting offered in most modern games and have fully customizable ps2 and 3 pads+i prefer inverted aim on a gamepad but wii i can deal with up=up and down=down.



I even have a saturn ps2 pad+a ps2-ps3 adapter+a ps3-360 adapter so i can use a true saturn pad

on anything i want ps one,2,3 or 360. The only problem with a playstation pad on 360 is neither the adapter or pad have a headphone jack so i couldn't talk to my friends but i'm still working on circumventing that problem.



Currently i'm working on getting a game art and animation degree but what i'm really after is bringing my expierience with perfecting controls to ALL gamers.

Adam Flutie
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For those saying the Conduit didn't have any hype or marketing, that is part true. Just about everyone that visits gaming sites knew about the conduit. It is/was the 'hardcore' shooting game for the Wii. It was the one that was going to show us that the Wii could do outstanding graphics...



The problems are of course: 1) if you are a shooter fan, you don't have a Wii for shooters. You want one, you really do because the pointing mechanic of the Wiimote (NOT Motion controls... big point to get here) seem awesome, but 2) The Wii can't do the graphics and physics you want anyhow. So even if it comes it 3) won't compare to the other systems offerings.



This all leads back to the real problem, the hardcore don't love the Wii for hardcore games... it has been 3 years now and no there isn't a market there. Time to move on developers.



I wonder when we will get a pointer mechanic for the other consoles and leave this motion control stuff in the dust already.

Lo Pan
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@christian

The Conduit since it first reared its head last April: according to those figures, the conspiracy-infused FPS sold under 72,000 copies between its June 23 launch and the NPD cutoff date of July 4, placing it at number 25 on the U.S. top sellers list. So I 'believe' the 150k is for a month. I am guessing the first week sales was actually 50k...which is pathetic.



infamous (PS3 exclusive) first week sales were 175k. That is not bad considering its install base.

Adam Flutie
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Christian, Lets focus on some of your comments because they are good and point out the real mistakes developers are making:



"developers tend to develop games for the best selling console, cause this is where they can sell games and earn a living"



Mistake one: Install base != targeted demographic install base. Just because people own the console doesn't mean they will pick up every game available. Chances they will pick up your game above the rest don't go up linearly with the install base either. Seems like install base shouldn't be the driving factor at all...



"Developers and publishing companies are interested in selling games to as many people as possible, not to a specific type of gamer"



Mistake two: You need to define your audience and make that game. That should be rule one. Now if you want to broaden your design to include many different types of gamers that should also be defined up front. Note, the more generic you make it the more fringe demographics you also exclude.



What was the audience for The Conduit? Wii owners that wanted an outstanding FPS that used the controls to their utmost. Unfortunately that audience doesn't exist, either that or the game failed to deliver on one of the points ('outstanding FPS' intentionally left vague)



"If I look at the sold consoles in this generation, it may be the case that hardcore doesn't love the PS3 and the XBox360 either, cause hardcore doesn't seem to buy enough consoles."



Correct. I don't think the audience exists that want to drop $400+ on a console. Or at least the audience isn't big enough. The next console gen should take this into account. Analysts are constantly pointing out the consoles install base is saturated at the current price points... just leaving it out there isn't going to magically create more people that want it. Either price point needs a changing or the features you get with it need to improve (software, features, etc).

Fábio Bernardon
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Adam, about this comment: "What was the audience for The Conduit? Wii owners that wanted an outstanding FPS that used the controls to their utmost. Unfortunately that audience doesn't exist, either that or the game failed to deliver on one of the points ('outstanding FPS' intentionally left vague)". Care to explain why Call of Duty: WW sold over one million copies on the Wii then? The audience is there, they are waiting for good games. Maybe The Conduit did not filled everyone expectations? Maybe it was overhyped? Or maybe we just need to give it some months for it to become a million seller? Why does a games have to sell 1M+ on its first month or it is considered a failure?

Adam Flutie
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"The audience is there, they are waiting for good games."



Or did they buy it on brand name alone?



"Maybe The Conduit did not filled everyone expectations?"



It definitely didn't live up to many reviewers expectations. Bland, unimaginative I think were the most used terms to describe it.



"Maybe it was overhyped?"



Most definitely. I think the developers painted a huge bulls-eye on their game. There comes a time when developers need to know the appropriate hype to give. Peter Molyneux also suffers from this developer disorder.



"Or maybe we just need to give it some months for it to become a million seller?"



Maybe. I would bet against it though.



"Why does a games have to sell 1M+ on its first month or it is considered a failure?"



With this game, I think because of the hype level. Personally, anything that makes a profit over the investment seems like it should be labeled a success. Unfortunately companies keep that number to themselves mostly and instead talk shear numbers sold. The industry themselves basically created the metric... whether it skewed or not people hold games to that bar for some reason.

wes bogdan
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Sadly games can die from lack of pre-orders these days. I 've already got :halo reach,metroid other m,gow III and fimal fantasy + versus 13 all qued up for next year. Would consider also doing :mass effect 2,bioshock 2,beyond good n evil 2,mario galaxy 2 and team ico's new game-i really don't expect that out next year but would be happily supprised if last guardian did arrive in 2010.



Company's can declare something a sucess or dismal failure by the pre-orders which kills whatever energy a game had before it even arrives in stores.

Adam Flutie
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Wes: pre-orders really matter that much? I personally don't pre-order anything simply because I won't ever hedge my money on a game that I don't know is good or not yet.

Adam Flutie
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Christian - "But on any previous generation most games were sold on the platform with the largest install base..."



Looks like that isn't the case at all anymore and in fact was probably only applicable last gen because all three systems were about the same hardware and performance levels. This gen that isn't the case. I think that variable isn't being taken into enough consideration this gen, instead people follow the install base instead of the demographics of that install base.



As for the 'define the audience' - I think we agree actually on this. Let me see if I can clarify my side a bit. It is ok to define the audience broadly, but that definition needs to be up front is all I'm saying. RTS as you have said indeed seems to get more and more complex to the level where entry into the genre is very very hard. As such RTS is excluding more than it is keeping.



However, if they defined the audience with less complexity to draw in new people to the RTS genre it will come with disdain from the current RTS crowd as being simple and with no depth. What I think should be done is find a way to make a entry level RTS that advanced users can drill down into for their own depth.



All three of these decisions should be made up front though.

Adam Flutie
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@Christian - I figured we were comparing something that is worth comparing, games that appear on both consoles, multiplatform games. The Wii is going to outsell the numbers of other consoles exclusives on brand name alone with the titles you mentioned... this doesn't have as much to do with install base IMO than brand name and your numbers seem to back that up. the top 5 Wii were: Nintendo only. top 5 X360: MS, MS, MS, Multiplat, multiplat. To 5 PS3: Sony, Sony, Sony, Multiplat, Sony.



Doing quick numbers you can see CoDWoW did much better NOT on the Wii. But GH did only slightly better on the Wii. RB? Doubled on the X360 above the other 2 platforms.



Examples:



CoD: World at War

X360 - 5.72 million

PS3 - 3.40 million

Wii - 1.21 million





SW:TFU - (Install base didn't seem to matter)

X360: 1.80

Wii: 1.34

PS3: 1.22





GH3: (Example of when install base might seems to matter)

PS2: 4.60

Wii: 4.26

X360: 4.25

PS3: 1.92





Rock Band 2:

X360: 1.66

Wii: 6.3

PS3: 6.3



GH:WT (Good example of when install base seems to matter)

Wii: 3.09

X360: 2.09

PS3: 1.27



to me though it seems like if you are developer install base alone shouldn't be that important. Only Nintendo titles and GH seems to sell better there... Look at the top 20 games for each system and compare 3rd party success rates?... then again that leads us back to the very problem you mentioned earlier, why does success mean +1 million units sold?



Anyhow, interesting conversation, but I still don't see why install base is the number to look at and not targeted demographic install base.

wes bogdan
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Well if you pre order at pawnstop you must part with $5-20 but i preorder at amazon where they won't charge til it's sent out. I did find it odd that you must play through part of the conduit before you received

the ability to hide and get more health...rather expected by todays gaming crowd but at least they had health units/full refils in the game.



My layout is: d-pad up-options,down is zoom,while left / right are switch weapon/grenade,a is jump,b is shoot,- is reload,+ is all seeing eye,z is crouch and c is target lock. Lobing grenades is handled by lobbing motion on the numchuck while beat down are forward thrusts with the wiimote.



Whatever rs2 is like i hope this is how it plays because this custom layout imho is the best avaible.



Options aren't vital so they go on up while zoom needs to be in reach so i put it on down and left /right are natural for selecting weapons - makes a great reload and + could be grenade,beat down or special gear. I used the remote to it's fullest potential and no preset was as well defined.



I know all to well default(s) ALWAYS suck-i can do it better if given a custom slot and less than 5 minutes. Then again being a lefty and having to fight an industry for something high voltage makes

available out of the boxhas made me extremely focused on controls so whether left,right legacy as long as it's not keyboard and mouse i know i can lay out a better loadout than the focus groups play on/game ships with. The fight continues.......southpaw always!!

Adam Flutie
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Christian: The games sales help you tell what type of user demographic bought the system. The multiplatform help tell you how much people want a certain type of genre and on what console. The conduit is a FPS, so it would see reasonable to compare FPS multiplatform games to figure out if people actually want to buy FPS on the Wii. The answer? No. The Conduit was a money grab and Wii only folk that are still looking for a FPS that doesn't suck. Now, I'm sure the developers didn't want it to show up that way, as such, they should have realized they should have just put it on all the other platforms too.



I'm still baffled people keep trying to cram 'M' rated games on the DS and Wii with no reason. At least rockstar realized it was a bust and moved there attempt over to the PSP where it might actually get sales. The reason I say this is the next two games that are coming out of the developers are the conduit will see the same fate. There isn't a big market there, they should make it multiplatform or move on already.


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