Sega blames falling profits on 'challenging conditions' in Europe

Sega has attributed a downturn in profits to "challenging conditions" within its European consumer (games) business, but feels a recent spate of layoffs and project cancellations will help steady the ship.

The Japanese company shared those sentiments in its fiscal report for the year ended March 31, 2024, where it revealed that net sales in its Entertainment Contents segment (home to its game business) increased by 12.4 percent year-on-year to 318 billion yen ($2.05 billion). Ordinary income fell by 25.3 percent year-on-year to 30.7 billion yen ($197.5 million) over that same period.

Sega explained sales increased due to the "steady performance" of the consumer area in Japan and Asia, as well as Rovio's entry into the group. It said profit decreased due to those aforementioned struggles in Europe.

Full-game software sales remained flat year-over-year at 27.9 million units. New releases bolstered that total, with both Persona 3 Reload and Like a Dragon Infinite Wealth shifting 1 million units apiece during their respective launch weeks.

Unicorn Overlord achieved sales of 500,000 units and Football Manager 2024 attracted 9 million players (presumably shifting a few copies in the process).

Where do Creative Assembly and Relic fit in?

Structural reforms in Europe resulted in layoffs at studios like Creative Assembly and Relic Entertainment, which has since split from Sega. The Japanese company also torched multiple projects including multiplayer shooter Hyenas. Those cuts have so far cost Sega around 24.4 billion yen, but the company remains adamant they will improve earnings by eliminating certain "management issues."

Looking ahead, Sega is predicting an increase in Entertainment Contents sales and ordinary income during the fiscal year ending March 31, 2025, due to "growth in the consumer area."

It expects its Entertainment Contents division to deliver sales of 335 billion yen and ordinary income of 40 billion yen over the coming year thanks to the release of a new Sonic title, the debut of a new IP from Atlus, and growing free-to-play sales on mobile.