Sega is set to dial down the number of digital games it develops after seeing lower-than-expected results from that particular area of business last year. Instead, its focus will shift towards its existing IPs.
Sega Sammy Holdings, Sega's parent company, has said that its digital games segment fell "significantly below the initial plan" in its recent annual financial briefing. GamesIndustry.Biz reports that Sega has attributed this to both external factors - including intensified competition in the domestic market - and internal factors such as a lack of hits and various delays which saw four of the 12 digital games planned for the period be pushed back.
Despite achieving a 5.9% increase in digital sales for the year ending 31st March 2019, grossing $366.5 million in total, Sega reported a $17 million loss from digital games over that period. Physical games "exceeded the initial plan" in the same time frame, however; despite physical revenue falling by 4.2% to $490.4 million, Sega saw a 26.1% increase in operating income.
In a bid to capitalise on this development, Sega has revealed that it will start to develop fewer titles and place more emphasis on games which are based on existing IPs. GamesIndustry.Biz also notes that Sega has identified an "increase to global expansion, strong performance of both domestic and overseas properties, and an improvement in product quality" as the reasons for its physical sales success, all of which will likely play key parts in its strategy going forward.
It looks like we might be seeing plenty more of Sonic and co. in the near future, then. Just as long as it's not a video game of the movie which is kind of based on the video games, we're up for seeing what's next.
Getting better... Learning through pain is a good teacher.
The company that has been fated for bad luck oftenly...
Sonic movie 2019 will not help to cover the money loss.
At this point I'm just waiting for Nintendo to buy then out
what does it mean by "digital games"? Phone games? Stuff without physical retail releases?
And why won't they sell me Persona 5 on Switch then? They choose not to make easy money!
This is actually a more interesting development than it seems on the surface. Sega is far from one of the "big players" these days, but if their numbers are showing a slowdown of digital and a resurgence of physical games, that's a pretty unexpected and significant turn of events, especially in the "streaming is the future" mindset of the industry at present.
Though I don't know if by "physical" they mean digital+physical sales of retail available games as compared to digital-only titles.
Oh! A chance to joke about Sega making a "Sonic The Movie The Game"!!!
Wait..it's already at the end of the article?! No fair!!! ;w;
Sad irony - you'd think the digital distribution would be more profitable since it's usually in decent demand AND cheaper in production. But here we are, at least for now. On the one hand, the focus on the existing IP may further boost the odds of existing IP predecessors (like with Valkyria Chronicles) as well, but on the other hand, there's no telling what the current trend may change in the short-term strategies for stuff like Sega Ages. Time will show.
@CrazyZelda79 as long as nobody takes it as a hint to sway to the opposite extreme. I think even the most adamant physical distribution advocates are aware that "physical only" begets much higher risks for general long-term availability than "digital only". Sure, digital store shelves are susceptible to plagues like license expiry and whatnot, but medium production and stock remain even harsher masters.
@Radbot42 that's one exotic way of wishing for Persona games on Switch. 😆
@Radbot42 You and me both.
I really hope this doesn't mean the death of the SEGA Ages lineup, I really want them to keep going until they get to the really juicy stuff like Phantasy Star 2-4 and Shining Force 1-3.
Gotta slump fast.
Sad to hear that they're struggling, but glad to hear that they're going back to their roots. Other companies are already taking us back to their glory days - https://www.youtube.com/watch?v=gDPFtY7l57I
U gaiz! It's ok! The new Sonic movie will print money!!
Time for resurect Vectorman !
The company in the world with the biggest back catalogue of hit franchises is still tyrying to figure out how to make that cash, even though everyone is clamouring for their 'Ages' releases. So so dumb.
Well, they'd probably better prepare for a heck of a lot of more millions lost, once the Sonic... err... "furry blue abomination that's supposed to look like Sonic" movie comes out...
@SenseiDje That wasn't by SEGA.
Honestly, it's pretty rare that I find a SEGA game that I really enjoy. They're certainly not the only major third party in that boat though.
@Mando44646 Yes, non physical games.........DIGITAL.
They have a great back catalogue of IP yet refuse to use it wisely. It's taken other companies and teams to produce good games around them. Give panic button Alien isolation to port so I can poo/soil/defecate myself in bed... Sure my wife would be happy with that...
Please mind your language - Octane
Quick edit to appease the mods... Sorry for use of language. Bad Beermonkey... Bad bad Beermonkey...
Maybe SEGA should dig into their rich well of neglected IPs?
Yeah, who am I kidding, they'll just spit out endless Sonic games instead.
JET SET RADIO
SUPER MONKEY BALL
All wanted, but this will never happen. The movie will make them lose more.
That sucks I’ve always been a big Sega fan, when I was a wee little lad I thought the Sega dreamcast was the coolest counsel ever with amazing games like power stone, jet set radio, ready 2 rumble boxing, cmon Sega get your shyt together I’m rootin for ya!!
Release a new Skies of Arcadia game you cowards! That’s an existing IP!
@Expa0 I think it won't happen. Sega Ages is pretty cheap to develop in comparison with other games. I don't know how much the Ages lineup has sold, but I love it and I've bought some of them. I hope they keep releasing them
Not that they are going to do less games, but develop new IPs. That's not a bad thing. Many of us Sega fans actually want more games based on classic franchises.
Sega should sell some of their ips or license them out to have all the games they have and not use them is just bad business sense and they also need to release games on all platforms instead of this stance they have where they think like only PS4 players will play yakuza and games like skies of Arcadia outrun 2 golden axe shinobi the list goes on
@nhSnork No extreme is ever good, no matter which side it is.
Having said that, I'll take physical over digital any day of the week, because for the end user, it offers far more certainty of being able to keep playing your games for however long you wish to do so.
And you forgot to mention servers going down in the cons for digital. Games in digital format will only ever be available for as long as the publisher/developer/console manufacturer will want them to or is allowed to.
And besides that, there's no way you'll ever be able to trade in a used digital game, so that's another score against the digital only market.
Sure discs and cartridges will ultimately fail, but so far, none of my old games, no matter whether it's on disc or cartridge, are subject to any kind of deterioration, whereas certain smaller games that I did buy digitally, have long since been removed from their respective digital stores, or are simply not available anymore, because the entire console isn't supported anymore.
Some games are okay to be digital only, especially the indie type of games, because making those physical would probably not even be worth the investment (edit: most of the time), both for the developer and the consumer, but for most of the bigger and/or triple A games, physical will always be my preferred format.
But of course, some people don't care about all that, so objectively, I don't need or want a "physical only" future, but maintaining a good mix of both options, also for the upcoming generation of consoles, would certainly be nice.
Sega has so many great IPs that just lie dormant, dead, because at a certain point after going all software they seemed to put all their eggs in the Sonic basket. Such a shame.
JUDGEMENT and the new Sakura Wars.
Do more stuff like that.
Phantasy Star remakes 1-4; Panzer Dragoon remakes; Skies of Arcadia remake. Ban making Sonic games for a few years & make a new AvP & Virtua Tennis game.
Guess one way we could keep the Sega Ages line alive is by voting with our wallets. I, personally, bought each and every game of the Sega Ages line even if I am only moderately interested in the said titles (Phantasy Star, Alex Kidd).
But sometimes, you wonder about Sega's marketing... Like when they uses the original US title Lightening Force instead of the Japan title - Thunderforce IV. How many of us, still remember Lightening Force?
Can we please get a new Super Monkey Ball game in the same style as the original 2 on the Gamecube?
I’d have liked to known what game didn’t do well..... who knew people preferred retro games in physical form
Retro and physical going together.... never
The fact that games companies don’t seem to realise that speaks volumes about common sense in the games industry
Yes, focus more funds in the movie industry inste..... oh
@Radbot42 - If Sammy weren't a pachinko giant, Nintendo might be in a position to purchase Sega and Atlus from them.
Sega should continue revisiting their older IPs that aren't Sonic, and at least do remakes or Ages releases. As @techdude said, buying the Sega Ages releases might just do the trick. Maybe make a new IP or two, as well. Aside from Sonic Mania, I haven't bought a newly-released Sonic game since All-Stars Racing Transformed, as I kinda lost interest in the franchise.
As long as the "focus on existing IPs" doesn't equate to "churn out another Sonic game every year and call it a day".
Welp. Say goodbye to Atlus.
I imagine SEGA being one of those companies that has a lot more of "physical only" fans which I can see being a contributor to this. Add to that, SEGA's games are mostly ignored by everybody outside of the latest (usually awful) Sonic release, Yakuza and Football Manager (which is actually one of if not the most profitable franchises they have, surprisingly).
Nice to see they'll be focusing on existing franchises though. I do still follow SEGA seemingly more than most people (who are often surprised to hear they release more than just Sonic games). They have a habit of letting their existing IP's gather dust though when there's a lot that could be done with them.
@Tao When they say "Existing Franchises", that probably just means 10,000 more Yakuza games and spinoffs.
Sega has been in financial trouble for nearly a decade.
Do Sega own Atlus now? It’s a worry for me if it affects them too.
@Magician I don't think Sony would sit idley and watch Atlus go away or have someone like Nintendo and MS take it. Especially seeing as the mainline Persona games and such is synonymous with PlayStation. It would be bidding war.
Hopefully that's not the case and Atlus can remain where it is.
I'm a tad concerned for the Sega Ages games, since I was really hoping to see a Sonic 3+Knuckles Sega Ages release or at least the full Phantasy Star series.
Part of the problem currently with the digital distribution is that under most cases there isn't a big incentive to actually go digital if a physical alternative already exists. What we need are more sales for digital releases, similar to what Steam does with their huge Steam sales.
sega should just let nintendo have bayonetta ip since nintendo keeps on funding for more sequels for it.
Oh boy, more sonic games!
I'm not complaining, but they still should work on their other IPs from time to time.
Maybe if they didn't waste money on the Sonic film.. they would have more to spend on other ips and more SEGA AGES
In response, seems like Sega will be porting more of its big franchises, like Persona, to PC:
Sega truly DON'T do what NintenDO.
@YANDMAN i’m having quite an habit of being irrevelant, thanks you for correcting my mistake !
Anyway. A new vectorman, on switch or steam , por favor !!
well looks like Nintendo is winning again. And Im glad Sorry Sega fans..
Sell. To. Nintendo.
Seriously, probably the only way Sonic will consistently be good and break the cycle.
The Sanic movie will be the final nail in the coffin.
I've been saying this for years but I'll say it again - GIVE US PHANTASY STAR ONLINE, SEGA!
If Sega makes a Sonic movie game, then they will have done what Nintendon't. C'mon Nintendo give us a SMB movie game!
Since the suits at SEGA are too daft to figure it all out, it seems I‘ll have to smack them with a decent business plan, so here goes ;D
I guess I could go on for AGES (TM) but you prolly get my drift.
I hope the Sega Ages continue. It would be a crying shame not to.
I hope they selling well, and making a profit.
Not sure if these appeal to all or just Retro lovers
Nintendo could use a new parnter with PS5 on the horizon. Quality games over heavyweight consoles any day.
Sega, all you have to do is make a GREAT AAA Sonic game! Seriously, that's ALL YOU HAVE TO DO! Don't rush it and don't base it on a gimmick no one wants! Ask Nintendo to help you! Please! We're all rooting for you!
@Expa0 arent PS 2-4 already on switch in the genesis collection though?
It's simple, walk on stage at E3 say "Skies of Arcadia 2", drop mic and walk off
(and before someone says AGAIN "but they lost the source code to Skies of Arcadia so they can't" YOU DON'T NEED THE CODE FOR THE OLD GAME TO MAKE A NEW ONE, IT WILL HAVE IT'S OWN BECAUSE IT'S A DIFFERENT GAME)
"Improvement on product quality"
Then they release the sonic trailer......oops
Since they`re doing so well, I see no reason to port Yakuza to the Switch. Clearly they`re on the right path lol.
Yes, as are Shining Force 1 and 2. But those are just standard emulated versions, the Ages line up has thus far introduced big quality of life improvements in the games released making them vastly better to their original counterparts. They actually managed to turn the super dated Phantasy Star 1 into a very enjoyable old school JRPG. I'd love to see the other entries given the same treatment.
@ThanosReXXX servers are hardly a concern for stores in the age where practically every game can be dumped and stored - and before we even think of roms and images in this context, there are multiple platforms that allow it legally, from PS4 external drives and Switch MicroSDs to Vita's officially programmed "PC backup" functionality. And yes, I'm personally one of the weird folks who have little interest in selling their games in any form. I don't even sell my books which some would argue are a medium of "finite entertainment" as well. A collection is a collection, and digital games take up a lot less physical space than books do.
Regarding the pitfalls of digital availability, the better examples here would be streamed games (which remain dragged down as a phenomenon by the general internet infrastructure anyway) and entirely server-crutched games including freemiums where you can have all the game data locally and still not be able to move between mere menus (or even past the title screen) unless online. And let's face it, unless the latter examples add some offline single player content down the road (like World of Tanks), their own physical editions won't help much through a shutdown either.
That said, despite almost nonexistent interest in physical media nowadays (even in limited editions with fancy stuff I wouldn't mind download codes for less hassle - it's cases that literally sell a digital code with nothing physical apart from the package plastic that puzzle me), I consider coexistence of both formats the best case scenario myself.
how about ages sega rally and daytona usa?
maybe a virtua fighter ages release?
maybe no more sonic games for about 5 years?
@nhSnork Agreed on co-existence of the two, as I basically already mentioned at the end of my previous comment, and for clarity's sake:
I don't sell any of my games (or consoles/handhelds) either, but the option should be there if you'd want to do so, and even if you don't sell your own games, you might still want to purchase some used games yourself, but if the future truly is all digital, then it's bye-bye to those options.
I just like options, basically. Even if I don't make use of all of them, it's still nice to have them...
As someone who largely prefers physical games, I also find these cases with a code in them to be extremely useless, a waste of paper and plastic, and I don't see any collectible value in them either, even though I'm not a die hard collector myself, so in that regard, I could be wrong.
Concerning digital games support, I simply cant and don't agree.
In my honest opinion, a lot of people see this digital future in a far too positive perspective. In comparison to the relative hassle free ownership of physical games, there's no guarantee whatsoever, that I'll be able to play any of my Xbox One games, for example.
And that even concerns being able to play the physical ones, in any kind of legal way, seeing as we know, that much like PS4 games, these too must currently also be installed to be able to play them in the first place, and Microsoft and/or the publishers/developers of the game can simply disable the games remotely if they'd choose to do so, or send out a patch/update to remove certain options in the game, like multi-player/online support.
Or, like I said before, simply stop supporting the game altogether, such as can easily be seen in the backwards compatible original Xbox games, that have little or no online capabilities anymore.
Some games will still function just fine without the online component, but companies might still decide to disable/cripple the entire game, regardless of that fact, meaning that all you'd be left with, is a bunch of useless one's and zero's.
Space-hogging data on your hard drive, and definitely not part of a carefully selected collection that you can still cherish for several decades to come...
The only option left would then be to hack/softmod a console, and play with patched versions of these updates, that will undo all the official restrictions put on games for whatever reason.
Another simple example is all the pre-online consoles: I own quite a few, and I take great care of them, and can (and do) still use all of them on a regular basis. From the cartridge based N64 to the Sega Dreamcast and the GameCube. I can still play ALL the games I ever bought for those, since they aren't susceptible to modern day's gaming restrictions, such as the ones I mentioned before.
I don't like someone else being able to cripple the game that I bought and paid for with my hard-earned money. I still want to be able to play that whenever I want, for decades to come, much like I'm now doing with my N64. Dreamcast and GameCube.
It would seem that in that respect, the future is looking pretty bleak indeed, for me and other people who feel the same way.
On a brighter note, I might finally be able to have more than enough time to address that by now truly MASSIVE backlog of mine, so I could basically choose become a "retro" gamer...
Then again: the future might surprise us all, and I did buy a current gen console, even though I knew full well what the implications were and were going to be for me, so maybe I'll still give in to the upcoming generation as well. No, make that probably...
Existing IPs? So much for revival of dormant IPs I guess...
My mental energy to rant about Sega leadership is dried up.
Sega owns Atlus, and Atlus makes some good physical only deals. I wonder if it has anything to do with it.
Anyways, no new IPs from Atlus is bad news too. I just hope they don't dig themselves deeper with blue hedgehog games no fan asked for
Sega relies so much on that GD hedgehog to keep their business afloat and yet they hardly make any good games bearing its name. Add to the fact that they rely so heavily on retro collections rather than building brands that it's no wonder they find themselves in the position that they are now in.
I wanted the Hatsune Miku game on 3DS, but I was overseas at the time of its release. I returned to Australia a month later and there were none to be found. Not a single one. Why was there not a restock? What kind of company doesn't replenish supply when a game sells out in less than a month?
Another example of Sega's consistently stupid business decisions.
@YANDMAN I think the ages titles are slightly overpriced plus I really think that there is point where people get a little tired of getting the same titles. They really have an opportunity to bring back some titles that either haven’t been released in years or at all but so far some of the choices has been a bit standard. I think that megadrive classic plug n play will sell boatloads as well.
Maybe a live-action Sonic movie would help.
Sega is repetitive. They threw away their magic. Jet set radio, yakuza, streets of rage, Crazy Taxi... they gave me a feeling only sega where able to give. It felt all so unique! And now they are going all on sonic and valkaria...they are not bad, but sega isn't releasing its full potential and this is getting repetitive. pffff at least we have Sega heroes...
They've said the same crap before. Focus on existing IPs. And what do they do? Continue putting out sub-par Sonic games, and beat Yakuza into the ground. Ports of Jet Set Radio and JSRF would sell gangbusters. They could also do an AM2 arcade collection. VF2, Fighting Vipers, Daytona USA, Super GT, Sega Rally. That would sell gangbusters. A Panzer Dragoon collection I imagine would also do wonderfully. They're just sitting on a goldmine, and I'm afraid we'll never see these come to fruition. For shame.
I’m pretty sure according to the financials
Digital = Mobile Game
More great Sega IP's lying in mothballs that have only seen arcade releases back in the 90's and early 2000's please? Sega make it happen. I mean Outrunners should have been ported to a modern console ages ago.
Shenmue, Skies of Arcadia for Switch over Sonic all day long.
Well, this sucks! Now their great back catalog of IPs will be even more underused!
Meanwhile, please tell me "Streets of Rage 4" hasn't been cancelled.
Welp, guess I'll be buying Sega Ages compilation carts.
Welp, time for Nintendo to finally just up and buy SEGA.
Just make sonic adventure 2 and mischief makers for switch and bam... your billionaires again. Just do it sega and atlus. I will buy 5 copys each
I wish them a good recovery.
Just... just give me VF 6 sega.... please. And put 5FS on the Switch.
Y’all know this just means more sonic. Sigh
I don't know if it will help their sales but I'd sure love them to give attention to an IP that isn't Yakuza or Sonic (though I do buy all of those)
SEGA is mad about physical sales exceeding digital? MAYBE THAT SHOULD TELL YOU SOMETHING SEGA. People still want to play physical games, even when digital age is strong. I rarely ever buy digital games, especially from Sega. I'm never buying a sonic game ever again. I hope the series dies. They have focused way too much on that, and turned it into a horrible mess. Think about how much IPs they could have worked on if they would have stopped making Sonic games.
Well, hopefully this means Sega actually will stop being braindead when it comes to multiplatform releases for certain franchises. I know Xbox owners have asked for games from the Yakuza team, I've seen some on the Nintendo side say they'd like these games on Switch... Bring them over. Same with mainline Persona. Unless Sony is funding the production of these games (we know they're not) there's absolutely no reason they should be exclusive.
Hopefully this means we get some more Billy Hatcher, Panzer Dragoon, Jet Set Radio, Sega Swirl, Crazy Taxi, and Chu Chu Rocket.
They should just override Atlus' weird exclusive decisions and put Persona on Nintendo and SMT on PlayStation. You can't tell me Persona wouldn't sell on Switch, same for SMT on PS. Persona Q games and Scramble prove that Sony doesn't have any exclusive deal for Persona. Just seems like Atlus(Sega ultimately) is leaving money on the table by not releasing their games as multiplats.
Yikes, hope the SEGA Ages series won't get too effected.
@Mr_Pepperami I think going forwards we are going to see the Ages line really grow into something fantastic, with as you say games that we haven't seen released before. I would love for them to do Enduro Racer amongst many others. Indy 500, Scud Racer, Le Mans 24hr, House of the Dead. We need to start seeing some of those Model 2 and 3 system games.
@SenseiDje It's a great idea, vectorman is a fantastic franchise.
existing IPs... how about a crazy taxi collection? Or a Jet Set Radio remaster?
@YANDMAN totally agree. There has to be a ceiling on how many times SEGA can release the same titles and achieve great sales from them. They should have been expanding their portfolio for years but it’s been the same megadrive/genesis collections and mediocre sonic games year after year while they sit on the games and franchises that people really want to see come back. Hopefully they will be a bit braver and release those arcade classics that never got home ports as id snap them up, as would many people I think.
@Mr_Pepperami Put all the classic racing games on one physical compilation and it would sell by the boatload fact. lets hope they see sense and get it moving. Also they need to step-up these 'Ages' releases, they are far too slow. By their own quoted timeline i think they are currently about ten releases behind.
@YANDMAN yeah I wish we’d get a compilation as well but it looks like those days are gone. They love milking the single releases stuff for more than what they should be. Think as it’s M2 doing all of these they are perfectionists so take their time. They are probably bogged down with work as well. As well as all these titles they are on the megadrive mini as well.
@Mr_Pepperami Megadrive Mini will of been finished long ago, thats a tiny process it only requires programming functionality and menus. With it releasing in four months it will already be in poduction and stored at warehouses.
@Agramonte really looking forward to the Sakura Wars reboot and everything team Yakuza does (though I was a bit bored with fist of the North star). I think western fans would also love a remake of valkyria chronicles 3 and another sequel.
Sega's so much more than Sonic.
Does this mean we will start getting non-Sonic games for a change?
Sega needs to make more games for the Switch.
Hopefully they wake up and give Sonic a break for once. I want more from you Sega than just Sonic ya know.
@michellelynn0976 The real problem with Sega is not because they had a lot of old great IPs that are underused but they also had developers that are too ignorant or are barely even interest in making games anymore like they lose the passion to even excite their own fans of their games.
Just weeks ago the Skies of Arcadia dev says she think the game is good the way it is and that there's no point in doing more with the IP then I believe last year or so ago the Yakuza dev stupidly refuse to bring any Yakuza games to Nintendo system in the future just cause people on a freaking island didn't buy his games on Wii U. Ignorant devs like these are what is killing Sega.
Usually if you're a struggling company like Sega you need to teach your devs to stop being negative when it comes to discussing fan favorite IPs otherwise fans who are interested in those IPs will walk away and you lose trust and profit.
@retro_player_22 that is a great point. It seems like Sega needs to do something to change this.
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