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Sega Sammy struggling to weather the pandemic despite strong game sales

The COVID-19 pandemic has attributed to declining net sales and profits at Sega Sammy, despite an uptick in video game sales.

The COVID-19 pandemic has attributed to declining net sales and profits at Sega Sammy, despite an uptick in video game sales. 

According to the company's fiscal report for the six months ended September 30, 2020, consolidated net sales fell by 33.4 percent year-on-year to 110.2 billion yen ($1.06 billion). Profits also evaporated, with Sega instead reporting a loss of 21.7 billion yen ($209.4 million). 

In Sega's Entertainment Contents division, which houses its video game operations, net sales dropped by 16.2 percent year-on-year to 97 billion yen ($936.2 million), while ordinary income increased by 31.7 percent to 16.8 billion yen ($162.1 million). 

Those numbers are the result of COVID-19 affecting some Digital Entertainment sub-divisions, including Sega's amusement center and animated film and toy field operations - with the pandemic also forcing the company to sell off its arcade business.

Sega's video game business (housed in the 'consumer' sub-division), however, remained strong. Software sales rose to 19 million units compared to 12.1 million units during the same period last year, largely thanks to the "strong performance" of catalog titles and new releases like Total War Saga: Troy

Sega also revealed its free-to-play roster has been performing well, and commended Re:Zero − Starting Life in Another World: Lost in Memories and Project Sekai Colorful Stage for making a "flying start." Looking ahead, Sega is expecting more strong performances in the consumer area, explaining that "mainly because of strong sales of repeat titles and F2P (free-to-play) titles, forecast of consumer area is expected to significantly exceed the previous forecast."

Based on those factors, including strong game sales and the downturn caused by the coronavirus pandemic, the company has revised its fiscal forecast. It now expects to record net sales of 283 billion yen ($2.7 billion), and a loss of 24 billion yen ($231.6 million) by the end of the fiscal year on March 31, 2021. 

It has also called for the voluntary retirement of employees and a reduction in the amount of compensation for directors to help it weather the COVID-19 storm. Sega is specifically asking for 650 full-time and contract workers to apply for voluntary retirement, and has created a 'Structural Reform Committee' to oversee the process.

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