Sega released its annual integrated report for 2018, providing a lot of interesting information on the situation of its video game business and the strategy for the future.
In the current fiscal year, the company is continuing to targeting earnings growth in the packaged gams business by strengthening the global release of Japanese games, creating new IP, and leveraging repeat sales of existing titles.
According to President and Group COO Haruki Satomi, the publisher intends to maximize the value of its IP portfolio, including new ones, dormant IP, and third-party ones.
The introduction of the latest Yakuza game in the western market is part of the initiative to “fatten” existing IP through “lateral rollouts.” Shenmue I & II and the revival of Sakura Wars are part of the initiative to bring back dormant IP that still have “many enthusiastic fans.”
As part of the “Road to 2020” strategy, Sega intends to leverage the distinctive characteristics of each IP to achieve multi-channel sales on mobile, PC, and consoles. They also aim to strengthen its publishing and localization arms with the goal of releasing games simultaneously worldwide.
Interestingly, post-release operations are becoming as important with packaged games as they are with digital games due to the rising online compatibility of the titles. Repeat sales of catalog games are also becoming increasingly important. “Long-tail sales patterns” are seen as “increasingly emergent.”
Among the opportunities going forward, Sega sees the expansion of the packaged games market due to the spread of current-generation platforms, a trend toward high-end digital content due to the advancement of device functionality and telecommunications infrastructure, and the growth potential of the digital games market overseas.
Risk factors are the intensification of competition in the Japanese digital games market, and the fact that globally popularity for digital games is only focused on major games, creating an oligopoly situation.
A very interesting part of the report comes from Sega Games President and Chief Operating Officer Kenji Matsubara. He mentions that in recent years sales have remained brisk as a result of leveraging the strength of the business overseas. With his as a growth driver, earnings have been trending upwards worldwide.
Matsubara-san mentions that Sonic is the group’s most recognized IP, and Sonic Mania has become a major hit with over one million downloads worldwide. Sales on the western market have been strongly influenced by reviews, and Sonic Mania has very positive scores on Metacritic.
Persona 5 ranked first among PlayStation 4 games in 2017 within a huge number of games available, including titles by mega-publishers. The game is a “successful hit” with more than 2.2 million units sold worldwide, and overseas sales are more than double the sales in Japan. Matsubara-san points out that the game was successful despite being an RPG based on Japanese culture.
“I would like to stress that this title’s success came despite being a RPG based on Japan’s view of the world, with Japanese high school students as the main protagonists of the story. “
Yakuza 6: The Song of Life also shows a similar situation:
“In Yakuza 6: The Song of Life, although the main character is played by the legendary Yakuza and set in Tokyo and Hiroshima, it has sold as many copies overseas as it has in Japan.
In the past, the Japanese market has generated the bulk of sales for these series, and although it has elements that are appealing to overseas, however the game was not developed with European and U.S. markets in mind.
Thanks to painstaking efforts to create a game that Japanese fans will appreciate, the title has become popular not only in Japan, but also won over fans ovrseas who praise the refined game sense of the title. I believe this is why Yakuza 6: The Song of Life has become such a popular hit around the world”
Matsubara-san also stresses the importance of the quality of the localization, as a game with an insufficient localization is unlikely to win fans around the world regardless of its popularity in Japan. Sega’s localization studios make a “huge difference” and Atlus USA understands both Japanese and western games very well,” being able to localize Japanese games in a way that accurately conveys the unique world views of Japanese titles.” They’re also able to maximize the entertainment value of localized games, leading to positive reviews.
Content is shared with them during development so that it can be translated in parallel, and this collaboration will be improved with the aim of releasing games simultaneously worldwide.
The release of Shenmue I & II was also the culmination of the cooperation across studios with Sega Europe, which was directly involved in publishing. According to Matsubara-san, the group has only crossed the start line in improving earnings. Taking a multi-pronged approach of growing existing IP, reviving dormant IP, and effectively utilizing third-party IP, Sega will be able to deliver “more moving experiences to more people around the world.” The group is confident that there is considerable potential for growth in each of these fields.
Below, you can check out a summary of lifetime sales of major series published by Sega. If you’re interested in Sega’s latest results, you can check out our dedicated article from July.
