Sega warns of financial trouble due to poor sales of key games

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News Team

Sega recently issued a financial warning due to lower than expected sales during the 2023 Christmas season. The company reported that sales and profit forecasts had to be revised downwards, mainly due to weak sales of new games launched in the third quarter of the year. Some of the new titles that underperformed during the holiday season include Sonic Superstars, Endless Dungeon, and Total War: Pharaoh.

The company also experienced losses due to a reduction in inventory in response to these poor sales conditions. As a result, both sales and revenue are expected to be lower than previous forecasts. Other games released during the third quarter, such as Football Manager 2024, Like a Dragon Gaiden: The Man Who Erased His Name, and Persona 5 Tactica, also did not meet sales expectations.

It’s important to note that the period Sega presented does not include the recently released Like a Dragon: Infinite Wealth and Persona 3 Reload, which broke sales records for their respective developers. However, Sega does not expect these games, or the upcoming Unicorn Overlord, to prevent overall sales and profits for the year from falling below expectations.

Sega attributed the sales difficulties to the worsening economic environment in Europe and the United States, as well as the increasing costs of video game development. The company also acknowledged the need to adapt to changes in the business environment. Despite these challenges, Sega remains optimistic about the long-term growth potential of the video game market, especially with the increasing diversification in service provision.

While Sega did not disclose specific sales figures for its games, it’s clear that the company is facing challenges in selling complete games. In November, Sega admitted that other games had a “significant” impact on Sonic Superstars, particularly referencing the launch of Super Mario Bros. Wonder.

In addition to the sales challenges, Sega also noted the continuation of a major “structural reform” of its game development business in Europe. This includes the cancellation of Creative Assembly’s shooter Hyenas, which left the development team without work. Sega is also reviewing its “medium-term planning” and the management structure of its European business.

It’s worth mentioning that Sega owns several well-known game development studios, including Creative Assembly, Sports Interactive, Two Point Studios, Amplitude Studios, and Relic Entertainment. Despite the recent sales challenges, Sega remains a major player in the video game industry with a diverse portfolio of game developers and franchises.

Entertainment, Gaming, Finance

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