*SEGA Networks Company’s goal is to become one of the world’s top three digital game companies. The key to achieving this goal is creating “medium hit” products steadily. Companies cannot create major hit products at will. However, steadily generating “medium hit” products heightens the probability of a hit product. In aiming for a place on the podium in the global market, making headway in overseas markets is extremely important. Accordingly, we intend to grow SEGA Networks Company’s overseas sales as a percentage of net sales from fiscal 2015’s 10% to 50% as soon as possible.
*In fiscal 2016, we expect to boost the SEGA SAMMY Group’s sales in the entire digital game area 58% year on year. As well as contributions from numerous existing titles, the marketing of approximately 20 new titles— including mainstay titles that we decided not to release as scheduled in fiscal 2015 and whose quality we have been heightening rigorously—will support this significant growth. We are rolling out a series of highly appealing titles packed with features that we view as critical to success in the current market: multiplayer compatibility, a greater sense of real action enabled by operability and user interface advances, and intellectual properties that create immersive worlds.
*he SEGA Group’s mindset is changing.
Until the 1990s, by remaining an innovator the former SEGA CORPORATION adhered to its founding principle: “CREATION IS OUR LIFE.” However, I feel that during the long slump in the 2000s we perhaps lost some pride in the illustrious history that our predecessors built. When launching the SEGA Group, I urged all employees to rediscover this pride and create the next chapter of the company’s history in their generation.
Previously, we had quite a strong tendency to interpret “CREATION IS OUR LIFE.” as meaning the creation of new products and services. This might explain why we failed to appeal to the world despite being in the vanguard of the latest developments. We should change our mindset from focusing on creating new products and services to focusing on creating moving experiences for fans. Therefore, with “CREATION IS OUR LIFE.” as our most important value, we redefined our role and mission ascontinuing to create moving experiences. At the same time, we set out Game Changeras a target profile.
To better communicate the new SEGA Group’s mission and target profile, we produced a mission video and distributed it widely in-house. As a result, I have a real sense that employees are steadily regaining pride.
Although the SEGA brand that we established around the world has weakened, we still have name recognition. By pursuing quality rigorously and continuing to exceed expectations, I want to regain trust and restore the SEGA brand’s luster.
The new SEGA Group’s future is promising. We have begun moving forward with our sights set on creating new paradigms for games, industries, and society as aGame Changer.
*In contrast to the digital game area’s focus on existing titles in fiscal 2014, we have been rolling out mainstay titles, such as MONSTER GEAR, since the beginning of fiscal 2015. Furthermore, we will exploit a powerful marketing support tool, the Noah Pass system, to enhance our standing as one the industry’s leading digital game providers.
As for the packaged game software area, we will release new titles centered on mainstay intellectual properties. At the same time, we will improve profitability through reorganization of the North American business, which is a task we need to address.
*Our strategies fall under two broad categories: those for the United States and Europe and those for Asia. In Asia, rolling out domestic titles is comparatively easy because of the region’s greater cultural affinity with Japan. However, the United States and Europe call for a different approach that involves adapting titles to suit Western culture. For each region, optimal operational management of titles and business models is different. Therefore, while sharing management resources, independent business management systems in each market will pursue independent strategies. To prepare for implementation of this approach, we made an all-out effort in fiscal 2015.
As part of preparations, we acquired or took stakes in four studios. In the United States, we made Demiurge Studios, Inc., a wholly owned subsidiary. This studio’s representative titles include Marvel Puzzle Quest, which is a fixture at the upper end of sales rankings. In another U.S. investment, when a group of individuals boasting impressive development track records at major companies and expertise in free-to-play (F2P) business models established Ignited Artists, Inc., we took a stake in it. As for Europe, we invested in Space Ape, Inc., the parent company of Space Ape Games (UK) Ltd.
In Asia, we concluded a capital and operational tie-up with Auer Media & Entertainment Corp. of Taiwan. This company increases our options, particularly in areas that use traditional Chinese characters. Specifically, we can undertake conventional licensing out, have Chinese or Korean companies localize titles for areas that use traditional Chinese characters, or distribute titles under our own brands.
Based on local development capabilities that now include four new studios, in fiscal 2016 SEGA Networks Company will triple the size of its development pipeline at a stroke by implementing four main strategies:(1) Have local studios develop, distribute, and conduct management for local markets, (2) Distribute and manage apps from Japan overseas, (3) Have overseas studios localize, distribute, and manage titles produced in Japan, and (4) License out to local partner companies and delegate publishing to them. Through these strategies, we aim to lift sales dramatically, achieving year-on-year increases of 256% in the United States and Europe and 463% in Asia
*As well as its in-house development team, the SEGA Group benefits from the capabilities of its powerful development companies. These include ATLUS. CO., LTD., which develops the Persona series in Japan; The Creative Assembly Ltd., which develops Total War in the United Kingdom; Sports Interactive Limited, which develops the Football Manager series in the United Kingdom; and Relic Entertainment Inc., which develops Company of Heroes in Canada. The download-type digital distribution of PC games, such as Steam, is steadily growing in size in the United States and Europe. Against this backdrop, our titles are performing well, and we aim to continue growth. In Japan, the online network RPG PHANTASY STAR ONLINE 2, marketed three years ago, continues to perform steadily as we advance cross-platform rollouts. In addition to a PC version, a PlayStation® Vita version, and a smart phone version, which account for 3.5 million registered IDs, we recently announced the release of PS4™ version.
We also see opportunities in packaged game software. Although conditions in Japan remain tough, overseas PS4™ has become the fastest-spreading PlayStation®home video game console in history. Even in Japan, sales of the new home video game console promise to grow as the SEGA Group and the other companies add titles to their lineups in earnest. From a global perspective, business opportunities are emerging. In Asia, for example, there is increasing reluctance to purchase copied products in areas that use traditional Chinese characters.
However, we do not intend to try matching major overseas publishers who initially invest tens of billions of yen in a single title. While keeping costs at an appropriate level, we will combine rollouts of packaged game software and digitally distributed or downloaded content to establish a business model that generates earnings reliably. Furthermore, the recently released traditional Chinese character version of Ryu ga Gotoku 0: Chikai no Basho is selling well. Adopting this approach for other titles, we will heighten investment efficiency by planning games not only with Japan in mind but also with a view to their translation into multiple languages and roll out in a wide range of countries.
