Japanese gaming veteran Sega has lowered its revenue and profit forecasts for the end of this fiscal year, citing increased competition and development delays for the revised projections.
Sega's revenue forecast for the fiscal year ending March 2016 has dropped by 65 billion Yen to 355 billion Yen. The impact on profit has been more dramatic, with operating income predicted to be 60 percent lower, dropping from 25 billion Yen to 10 billion Yen. Net profit - the actual amount of cash left at the end of the year after deductions - is going to be almost 90 percent lower than previously expected, dropping from 19 billion Yen to just 2 billion Yen.
So why has Sega so drastically changed its predictions? Well, its pachislot business is partly to blame, with sales expectations down from 265,000 units to 154,000 units. Its pachinko machine expectations are also down, dropping from 220,000 to 203,000 units.
Elsewhere, the "Entertainment Contents Business" - which is basically the division responsible for making video games - has felt the pressure of increased competition in the Japanese market. This has called for longer development times as a result, and that means less games to actually sell - the result of which is higher costs and less cash coming in to balance that.
Here's Sega's take on the revised projections:
Operating results of the Entertainment Contents Business for the current fiscal year is expected to fall below the initial forecast due to a delayed release schedule of mainstay titles against the initial plan in the packaged game software field and amusement machine field as well.
This is the second time that Sega has adjusted its forecasts in 2015. In September, it lowered its half-year revenue forecast by 22 percent, but ended up earning even less than that revised figure.