Sega Sammy is the latest company to release its financials for the nine months ended December 31, 2017, and both sales and profits have dropped off.
Net sales dipped by 8.7 percent year-over-year to 260.8 billion yen ($2.38 billion), while profits fell by 62.3 percent to 13.8 billion yen ($126 million).
Despite that overall decline, Sega's entertainment division - which houses its video game operations - saw sales increase by 1.6 percent to 157.9 billion yen ($1.44 billion), and operating income rise by 12.3 percent to 17.3 billion yen ($157.9 million).
That upward shift was driven by a sharp rise in physical game sales, with Sega selling 14.28 million retail copies through Q1 to Q3 compared to just 8.13 million copies during the same period in 2016.
The company credited recent releases like Sonic Forces, Ryu Ga Gotoku Kiwami 2, and Football Manager 2018 for providing that bump.
Sega's digital game roster struggled to match those performances, and digital sales actually fell by 17 percent year-over-year.
The Japanese outfit blamed that slowdown on the sluggish Japanese smartphone market, which it suggests is now dominated by a few key players who can afford to invest more time and money into high-quality releases.
Even so, the firm still talked up the "robust" performances of new digital titles like Magic Record: Puella Magi Madoka Magica Side Story, and seemed pleased with mainstays like Phantasy Star Online 2, Hortensia Saga, and Puyopuyo Quest.
Looking ahead, Sega believes its Entertainment Contents division will finish the year in good health, and expects net sales and operating income to hit 215 billion yen ($1.96 billion) and 14 billion yen ($127.8 million) by the end of the fiscal year.