Sega Sammy Reports Strong Earnings, But Warns of Pandemic Related Delays

There is plenty of good news to extract from Sega Sammy’s fiscal year 2020 earnings report, released today.

Both physical and digital game sales were up significantly and contributed to yearly sales of more than $2.3 billion, and profits of more than $138 million. Both are double-digit increases, and the latter is a more than 50 percent jump.

Physical releases, in particular, were good for Sega. More than 26 million copies of current and legacy titles were sold during the fiscal year. That is a 43 percent increase from FY2019. Titles like Team Sonic Racing and Mario and Sonic at the Olympic Games Tokyo 2020 were cited as key contributors.

In all, the mothership’s profits more than doubled year-over-year – to the tune of $257.8 million – on sales of $3.4 billion.

But Sega Sammy’s fiscal year ended on March 31st, so the company was largely shielded from the impacts of the global coronavirus pandemic. That was then, and this is now, and Sega Sammy simply cannot predict what could happen in the months ahead. Understand that Sega Sammy is exposed due to its diverse holdings, including amusement centers, pachinko and pachislot machines, and resort getaway hotels – all of which have been closed or face severely restricted operation terms in the wake of the current health crisis.

Sega Sammy, which typically releases earnings guidance for the following year in these presentations, declined to do so this time around. Instead, the company has laid out several obstacles the pandemic has created in its earnings presentation. On the game development side, Sega Sammy has all teams around the world working from home, but is now concerned that “development efficiency has begun to decline”–implying that productivity is down. Sega is warning of future delays of upcoming titles and initiatives “if the current situation is prolonged.”

That, potentially, could encompass a portion of Sonic’s 30th anniversary, which begins next year and is partially included in Sega’s current fiscal year. The company has already warned that on the digital games side, “the development schedule is becoming delayed.”

Of most concern, due to the pandemic, the company has said it is “Reconsidering the business plan for fiscal year ending Mar 2021 [….] and postpone the announcement of them.”

The Sonic movie, which has still not released in Japan, was not specifically mentioned anywhere in Sega Sammy’s earnings report.

Originally written by the author for TSSZ News.