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Sega Sammy Posts Quarterly Loss On Falling Game Sales

Sega Sammy Posts Quarterly Loss On Falling Game Sales

July 29, 2011 | By Kyle Orland

Sega Sammy has blamed "generally weak" video game demand in the U.S. and Europe for decreased video game sales that contributed to a company-wide loss for the last fiscal quarter ended June 30.

While Japanese sales "generally remained solid," with 700,000 retail game units sold for the quarter, the company cited "headwind-like sluggish personal consumption" for decreased U.S. sales of just over a million retail units, and lower European sales of 600,000 units.

In the earnings announcement, the company acknowledged a need to adapt to a market in which "demand for new content geared to social networking service and smartphone is expanding."

To this end, the company highlighted 1.3 million downloads for iOS title Kingdom Conquest, and continuing "solid" pay-per-use revenues from 777 Town in the quarter.

Net revenues in the consumer business segment of the company (which includes home video games as well as toy sales) were down 22.3 percent year-over-year for the quarter, to 16.2 billion yen ($207.2 million), contributing to an operating loss of 3.9 billion yen ($49.9 million) for the segment, a loss increase of over 500 percent from last year.

The company as a whole posted a loss of over 2.2 billion yen ($28.1 million) for the quarter, a massive slide from net profits of just over 7 billion yen ($89.6 million) a year ago. Net sales for the latest quarter were down 28.5 percent from 2010, to 65.3 billion yen ($835.8 million).

Sega Sammy's amusement center operations were impacted somewhat by temporary closures after Japan's March earthquakes, the company said, but only three locations remain closed as July 28.

Since reopening, the company's existing amusement center locations have seen a 102.5 percent increase in year-over-year sales, thanks to what the company calls "current consumer behavior turning to more accessible entertainment."

The company said its non-pachinko arcade machine distribution business "remained solid" despite sales that were down 21.5 percent to 8.2 billion yen ($104.9 million) and operating income that decreased 88.6 percent to 158 million yen ($2 million).

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