Sega Sammy Projects Lowered Revenue, Increased Profit

Japanese headquartered publishing conglomerate Sega Sammy (Sonic The Hedgehog) revised its full fiscal year 2010 financial outlook today, expecting improved profit margins to offset a decline in game software and pachinko machine sales. The company informed investors it expects revenue for the year that ended March 31, 2010 to total 380 billion yen ($4.08 billion), down nearly 10 percent from the original estimate of 420 billion yen ($4.51 billion), but profits are projected at 18 billion yen ($193 million), up 20 percent from the original estimate of 15 billion yen ($161 million). A decline in video game sales contributed to the revenue projection decrease, with volume now pegged at 26.3 million units rather than the original 29.7 million. The decrease was largely due to the North American market. The company gave no indication as to what games caused the overall software underperformance, and why the North American market was a particular issue for the company versus its original sales figures. In recent months, Sega has released games including Rebellion's Aliens vs. Predator, PlatinumGames' Bayonetta and Infinite Space, The Creative Assembly's Napoleon: Total War, and Sumo Digital's Sonic & Sega All-Stars Racing, among others. Sega Sammy says the decrease is also due to a significant decrease in sales volume of pachinko and pachislot machines, which will total 510,000 rather than the original plan of 630,000. Despite those two areas of decreased demand, the company says it has "improved profit margins in the pachislot and pachinko machine business" as well as in its arcade segment, after cost-cutting related adjustments of numerous factors including pricing, marketing spend, and material cost reductions.