Sega has issued a financial warning after what it called “sluggish” and “weak” sales during the crucial holiday 2023 period.
Reporting its financial performance for the nine month period ending December 2023, Sega said it had revised its sales and profit forecast down “mainly due to weak sales” of new games released during the third quarter of the financial year.
“In the Consumer area, although we released some new titles in Q3, including Sonic Superstars, Endless Dungeon, and Total War: Pharaoh, sales went sluggish during the holiday sales season,” Sega said.
The company also recorded losses associated with an inventory write-down “in response to these sales conditions”. “As a result of these factors, etc., both sales and ordinary income are expected to be lower than previous forecast,” Sega said.
Other Sega games released during Q3 include Sports Interactive’s Football Manager 2024, Like a Dragon Gaiden: The Man Who Erased His Name, and Persona 5 Tactica.
It’s worth noting that the period Sega is reporting here does not include the recently released Like a Dragon: Infinite Wealth and Persona 3 Reload, both of which set sales records for their respective developers. However, it seems Sega does not expect these games, or the upcoming Unicorn Overlord, to prevent overall sales and profits for the financial year from coming in below expectations.
So, what’s going on at Sega then? The company said sales in Europe and the United States in particular were struggling. “Regarding the entertainment content industry, in the consumer area, the expansion of the market, mainly in Europe and the United States, has reached a plateau due to a worsening economic environment caused by inflation and other factors,” Sega said.
“In addition, game development costs continue to rise, and there is an urgent need to respond to these changes in the business environment. However, expectations for the growth of the game market continue as the diversification in terms of service provision resulting in an environment having been created in which content and services can be delivered globally over the long-term, regardless of device or platform.”
Sega did not reveal individual sales figures for its games, but in November admitted other games had a “significant” impact on Sonic Superstars, specifically. That was a clear nod to fellow 2D platformer Super Mario Bros. Wonder, which launched three days later on Nintendo Switch.
Elsewhere in its financial report, Sega signaled the continuation of significant “structural reform” of its game development business in Europe. Sega has already canceled Creative Assembly’s live-service shooter Hyenas, leaving its development team facing redundancy. Sega said it was reviewing its “medium-term lineup” and had revised the management structure of the European business.
Sega owns Total War developer Creative Assembly, which is now focusing on strategy games, Football Manager developer Sports Interactive, Two Point Hospital developer Two Point Studios, Endless Dungeon developer Amplitude Studios, and Angry Birds developer Rovio. Sega also owns Company of Heroes developer Relic Entertainment in Canada.
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.