Sega turns a profit!

Discussion in 'Archived Threads 2001-2004' started by Andre F, Nov 20, 2002.

  1. Andre F

    Andre F Screenwriter

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    I'm glad to hear this news. Click here to read about it...
     
  2. Romier S

    Romier S Producer

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    Down Jones report and some prospective bad news for Gamecube Sega Sports fans[​IMG]:
    Dow Jones Business News
    Sega 1st Half Profits Down On Game Software Slump, Higher Costs
    Wednesday November 20, 4:33 am ET
    (This item originally ran at 0632 GMT Wednesday.)
    TOKYO -(Dow Jones)- Sega Corp.'s (J.SEA or 7964) group revenue and operating profit fell in the April-September period on a surprise slump in its core consumer game software business and increased sales and development costs.
    The Japanese maker of game software and amusement equipment said Wednesday its group operating profit dropped 20% from a year earlier to Y4.61 billion in the interim period on a 3% fall in group revenue to Y95.14 billion.
    But Sega posted a group net profit of Y1.01 billion for the six months, a turnaround from its loss of Y20.87 billion a year ago, when it posted hefty extraordinary losses on its stockholdings.
    The company left unchanged the full-year group forecasts that it lowered earlier this month. It expects to post a Y5 billion net profit on revenue of Y200 billion.
    Sega expects to post a group operating profit of Y10 billion for the full fiscal year.
    The company surprised the markets Nov. 7 by slashing its fiscal half and full- year earnings projections, prompting investors to hastily dump its shares. On the Tokyo Stock Exchange Wednesday, the stock finished at Y933, down 38% from its Nov. 6 closing at Y1,512.
    The profit warning raised grave concerns about Sega's strategy for becoming a top entertainment content provider after its painful decision last year to withdraw from its money-losing "Dreamcast" game hardware operations.
    Sega also stumbled in the first year of its core multigame platform strategy, under which it aims to supply software for all the major game platforms in the market - Sony Computer Entertainment Inc.'s "PlayStation 2" console, Nintendo Co.'s (J.NTD or 7974) "Gamecube" and Microsoft Corp.'s "XBox."
    At a press briefing, Chief Operating Officer Tetsu Kayama said it had been harder than expected to turn the firm into a multigame platform software provider.
    "We haven't been able to change our hardware-based (corporate) structure quickly" into a software-based structure, he said.
    Sega plans to sell a total of 12.6 million units of consumer game software in its three markets - Japan, the U.S. and Europe - in the year through March, sharply down from its original goal of 20 million units.
    Kayama said he is confident of achieving the new goal.
    "We haven't seen any bad signs in (software shipment) orders" since the firm's Nov. 7 announcement, while "we have made a conservative projection for sales of new software titles," Kayama said.
    Last fiscal year, Sega posted a group net loss of Y17.83 billion, an operating profit of Y14.20 billion and revenue of Y206.33 billion.
    In the just-ended fiscal half, Sega's consumer business segment centering on game software operations had a group operating loss of Y5.15 billion, compared with the year-earlier loss of Y870 million.
    The company expects the segment's loss to increase to Y5.6 billion for the full year.
    Acknowledging its initial business plan was overly optimistic, Sega said it will accelerate restructuring in its game software operations.
    "Initially, we set a break-even point (in the game software business) at ( annual) sales of 15 million units," Kayama said.
    Sega plans to lower that break-even point to 11 million units in the next fiscal year - 3 million units in Japan, 6 million units in the U.S. and 2 million units in Europe, he said.
    This fiscal year it plans to sell a total of 12.6 million units - 3.29 million in Japan, 6.69 million units in the U.S. and 2.62 million units in Europe.
    Sega also said it urgently needs to improve profitability in its loss-making sports game software operations in the U.S.
    Sega had decided to compete head-on against Electronic Arts Inc. (NasdaqNM:ERTS - News) in the huge U.S. sports software market, but it has failed to acquire the market share it had hoped for.
    "We'll have to narrow down our focus in the U.S. sports game software business," said Kayama, adding that Sega plans to completely halt developing such software on its own for Gamecube from next fiscal year.
    "However, we won't give up and will continue with the challenge" of competing in the U.S. against its arch-rival Electronic Arts, the COO said.
    Sega expects to incur a group operating loss of about Y6 billion in the U.S. sports software business this fiscal year.
    -By Kanji Ishibashi, Dow Jones Newswires; 813-5255-2929; [email protected]
     
  3. Kelley_B

    Kelley_B Cinematographer

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    not a surprise as Sega Sports titles on GameCube haven't been selling anywhere near the numbers that Xbox and PS2 versions have. I wouldn't be surprised if they outsource development of the titles next year as opposed to completely cutting off the GameCube.
     
  4. Masood Ali

    Masood Ali Supporting Actor

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    Even though the installed base between the PS2 and Xbox is of no comparison, I think next year, Sega Sports titles will probably sell better on the Xbox than on the PS2, simply because they support online play while EA doesn't (on the Xbox anyways).

    This is compounded by the fact that the number of Xbox Live! subscribers is growing everyday as well.
     
  5. Eric C. Mylonas

    Eric C. Mylonas Stunt Coordinator

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    To be consistent, does this mean Sega will stop all non-sports game development on Xbox?
     
  6. BrianB

    BrianB Producer

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  7. Eric C. Mylonas

    Eric C. Mylonas Stunt Coordinator

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    Factoring in that the sports games are merely ports from a lead platform, that should indicate that the original titles certainly cost more to do than throwing some token ports to the GC.

    The sales of non-sports games on Xbox have been anemic and I can't imagine Jet Set Radio came anywhere near breaking even, as well as Gun Valkyrie and most of the others--they're not packing in Jet Set and Sega GT because they were super-hot sellers.
     
  8. Jeff Kleist

    Jeff Kleist Executive Producer

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    I have a feeling that their franchise sales will pick up soon with XBLive
     
  9. Damien

    Damien Supporting Actor

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    sega, to be blunt, has no one to blame but themselves, they've been releasing a LOT of crap lately...they shouldn't just give EA a console like that
     
  10. Eric C. Mylonas

    Eric C. Mylonas Stunt Coordinator

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    I dunno, as far as I'm concerned, Sega is almost as good as they've ever been. I've been enthralled with many, many of their titles this year:

    *Shinobi
    *PSO
    *Jet Set Radio Future
    *Sonic Adventure 2 Battle
    *Gun Valkyrie
    *Beach Spikers

    And on and on and on. Not being a sports game fan, I can't say whether or not their sports games are worth anything (going on the DC revs, though, I'd imagine they're great too), but most of their original stuff has been terrific.
     
  11. Jeff Kleist

    Jeff Kleist Executive Producer

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    Don't forget ToeJam and Earl 3
     
  12. BrianB

    BrianB Producer

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  13. Andre F

    Andre F Screenwriter

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  14. Iain Lambert

    Iain Lambert Screenwriter

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    The fact of the matter is that Gamecube owners don't seem to want to buy Sports games in anything like the quantity that XBox ones do, and certainly not the Gridiron, Basketball and Ice Hockey ones that Sega concentrate on most of the time.

    I suspect that a new Virtua Tennis would do ok, but the big flops for them so far have been in sports that are very American in their appeal, and this is the market that the Gamecube seems to struggle the most in. Certainly, I'd never bought any of these sports games for my Dreamcast until I was introduced to the multiplayer fun of NBA 2K1 by an American friend two weeks ago.
     

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