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Issue Date: Vol. 50, No. 11, November 2010, Posted On: 11/10/2010


Sega Sammy Rebounds To Record Profits; Coin-Op Game Sales Rise 9.4%; Japanese Arcade Net Income Up Nearly 400%


Marcus Webb
Sega Sammy, Sega Amusements, American Sammy, Sega Japan, Sega Sammy profits, Sega fiscal year, arcade games, videogame, arcade video game, coin-op video game, Border Break: Sega Network Robot Wars, massively multiplayer online game, RingEdge arcade board, MMO, pachinko, pachislot, pinball

TOKYO -- Sega Sammy reported that it has returned to profitability during the first six months of fiscal 2010 (April 1 to Sept. 30). Officials said the company generated a record $302.1 million in profits on $3.4 billion in revenues, compared with a $78.3 million loss during the same period last year. [download report]

Sega Japan said its amusement machine sales during the period "remained solid" with net sales up 9.4% over the same period last year to $258 million. Officials said a key reason for improved coin-op videogame sales was the introduction of Border Break: Sega Network Robot Wars into the Japanese market in September 2009.

The title, configured as a massively multiplayer online game, is the first videogame to run on Sega's new RingEdge arcade board, which is based on PC architecture. Like many of Japan's most technologically advanced and expensive coin-operated videos in recent years, Border Break is not yet available in the U.S.

Strong as coin-op game sales were between April and September, Sega's arcade operations in its homeland were even stronger. The division boosted its profits by what can only be termed a spectacular margin of nearly 400%. At the same time, arcade operational revenues dropped 18% to $292.5 million, suggesting a leaner and more efficient operation. Sega said it has closed 10 arcades and opened only two new sites this year. The arcade operation now comprises 252 venues.

Sega's assessment of the current state of the worldwide amusement industry is worth quoting in full: "In the amusement machine and amusement center industry, conditions remained difficult. While awaiting the development and launch of new innovative machines that could boost the market, the industry itself is undergoing a changeover to new business models, which simultaneously enhance investment efficiency for amusement center operators and secure sources of stable earnings for amusement machine manufacturers."

Also for Japan's fiscal first half, Sega Sammy's home videogame sales rose 2% to $481.2 million; the consumer game division reported an operating loss, but it was far lower than last year's. The company said demand for home videogame software in the U.S. and Europe was weak due to "sluggish personal consumption."

Sega Sammy's strongest performers for the spring and summer months were pachinko and pachislot games, which combine pinball and slot machine style gameplay. Sales of these devices nearly doubled while operating revenues more than tripled. Sega Sammy maintains a separate chain of pachinko and pachislot locations.

Looking to 2011, Sega Sammy plans to increase its focus on videogames for smartphones and social networks, which officials noted continue to be strong growth sectors for the global economy beyond the amusement industry.


Topic: Music and Games Features

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