SEGA Sammy has released its Annual Report for 2015 this weekend. In a very fancy website available in English, the group explains its further strategies for the upcoming year, clear some concerns about their current situation, some forecasts for their plans, and how the group is finally structured after this year’s constant changes.
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.
Overseas, the United States and Europe market and Asia’s rapidly growing market each account for sales of about ¥1 trillion. In particular, we view traditional Chinese character areas such as Taiwan, Hong Kong, and Macau as extremely promising markets, partly because of their strong affinity with Japanese culture.
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.
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.
On the other hand, our focus is not only on games. We will concentrate efforts on fostering games’ intellectual properties. To give one example, in North America Cartoon Network began airing the animation series Sonic Boom in fall 2014. Based on the very favorable response the series has received, we have begun marketing merchandise with a range of different companies. We want to create further successes outside the game area to broaden the scope of business opportunities.
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 as continuing to create moving experiences. At the same time, we set out Game Changer as 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 a Game Changer.
SEGA Games is also aiming to launch their new NOAH pass system overseas. The Noah Pass system enables apps to send customers to each other and thereby increases marketing efficiency and reduces costs. The system is expanding rapidly.
Hop over to the SEGA Sammy Annual Report site to catch up on the topics of you insterest, it’s pretty explanatory.