For fiscal 2023 ending 3/31/23, Sega Sammy Holdings (6460.T-JP: Tokyo) saw overall revenue grow 21% over 2022 to ¥390 billion. The Consumer Entertainment Content division that focuses on home video games had YOY growth of 19% for fiscal 2023 and 17% in the fourth quarter. For fiscal 2023, Consumer Entertainment Content accounted for 48% of total revenue and 70% of operating income.
For fiscal 2024 which ends 3/31/24, Sega Sammy is forecasting 55% revenue growth for full games in North America and Europe with a decline in its Japan F2P business. Full video game revenue for fiscal 2024 is forecasted to account for 53% of video game revenue versus 39% in fiscal 2023.
Analysis
Like many Japanese companies, Sega Sammy is seeing growth in its high-end video game business. The new Sonic Frontiers title sold over 3.2 million units and the remaster of Persona 5 Royal sold over 1.7 million units.
Sega’s home video game business is about $1.5 billion annually. However, it is split into two different parts, a Japan-focused free-to-play business and a full AAA video game business that generates most of its revenue from North America and Europe. The full-game business is the area expected to see substantial growth.
In April Sega announced it was acquiring Rovio publisher of the Angry Birds game. This is an interesting acquisition because Rovio focuses on free-to-play, with a major presence in North America and Europe (90% of revenue). The Rovio acquisition has yet to be included in the forecasts with the deal expected to close by the end of the second quarter in September.
Sega Sammy is a prime example of a Japanese company that in recent years has focused on free-to-play mobile games. This is an area that has been stagnant, and the growth focus is now on premium console and PC games in Western markets. The Japan companies that will be successful with this strategy are the ones that can up their marketing and live service capabilities outside Japan.
