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Sega Sees Profits On Declining Sales,  Bayonetta  Sells 1.1 Million Units

Sega Sees Profits On Declining Sales, Bayonetta Sells 1.1 Million Units

February 5, 2010 | By Leigh Alexander

February 5, 2010 | By Leigh Alexander
More: Console/PC

Sega Sammy posted a 7.7 percent drop in revenues for the nine months ended December 31, but was still able to swing to profit, compared to a loss a year prior.

The company posted sales of ¥285.34 billion ($3.19 billion) for the period, down from ¥309.02 billion ($3.46 billion) year-on-year. Net income rose to ¥16.95 billion ($189.68 million) from a net loss last year of ¥10.84 billion ($121.3 million).

Aside from publishing home console games like Bayonetta and Sonic, Sega Sammy also runs pachislot, amusement center, and arcade machine businesses.

The company attributed the overall drop in sales to a "stagnant" Japanese economy and an unfavorable exchange rate for the yen.

Sega's consumer business (toys and home console games) achieved a ¥1.4 billion ($15.6 million) operating profit in its first three fiscal quarters, closing the ¥5.65 billion ($63.2 million) operating loss it saw during the same period last year.

Consumer business sales dropped 13 percent to ¥83.1 billion ($928.8 million). Sega credits a narrower portfolio and strong domestic sales, but says overseas sales were not as strong as expected.

The company sold 16.73 million units of software during the period -- 6.09 million in the U.S., 8.16 million in Europe, and 2.47 million in Japan. Its key releases, Mario and Sonic at the Olympic Winter Games and Bayonetta, sold 5.67 million units and 1.1 million units, respectively worldwide since launch.

"While domestic sales were mostly firm thanks to streamlining the development by narrowing down the titles, overseas sales were weaker than expected following the adverse market condition, and also, the launch of some titles was postponed to the next fiscal year," said the company in a statement.

Sales in Sega's pachislot and pachinko business were up 17.7 percent to ¥125.86 billion ($1.4 billion); operating income was up 409.2 percent to ¥26.95 billion ($301.58 million) thanks to lowered costs and brisk sales.

Arcade machine sales were down 33.4 percent to ¥35.14 billion ($393.23 million); operating income dropped 24.3 percent to ¥4.71 billion ($52.77 million) due to lack of major releases during the period.

Sega also said it closed 51 amusement centers during the nine months, and opened three new locations, amounting to 274 operating locations for the period total. The segment reported a 23.8 percent decline in net sales to ¥41.46 billion ($464.51 million) and an operating loss of ¥644 billion ($7.22 billion), up from a loss of ¥4.97 billion ($55.71 million) last year.

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