Sega Sammy Holdings has reported a 55% drop in operating income for the first nine months of its fiscal year, driven in part by challenges with its Rovio acquisition. Operating income fell to ¥19.8 billion ($129.3 million), while ordinary income dropped 52% to ¥23.8 billion ($155.4 million). These figures continue a downward trend from the previous fiscal year, which saw more modest declines of 21% and 14%, respectively.
The company attributed part of the decline to Rovio, which Sega acquired in 2023 for $775 million. According to Sega, the mobile game developer has struggled to meet its original business development targets, prompting an impairment loss of approximately ¥31.3 billion ($204.1 million) on goodwill and other intangible assets. The report noted that changes in the global mobile gaming market and increasing competition for player acquisition have created a challenging environment for Rovio.
Underperformance of Sonic Rumble
Sega’s mobile party game Sonic Rumble, launched last year after several delays, has also underperformed. The company acknowledged that the game fell short of expectations across key performance metrics, particularly in attracting and retaining new players. Despite these setbacks, Sega’s overall net sales for the first three quarters rose to ¥335.2 billion ($2.2 billion), a 4% increase compared to the same period last year. However, adjusted EBITDA experienced a steep 94% decline, falling to ¥3.5 billion ($22.7 million) from ¥54.5 billion ($355.4 million) the previous year.
Focus on Transmedia Growth
While mobile revenue and operating income faced challenges, Sega’s transmedia initiatives have shown positive results. Licensing revenue linked to the company’s transmedia strategy increased compared to the same period last year. The company continues to invest in its Sonic the Hedgehog film series, with two additional movies already in development.
Rovio is also pursuing a transmedia approach with The Angry Birds Movie 3, which has been moved up from its original 2027 release to December 2026. YouTuber MrBeast has been confirmed as part of the cast. Sega has indicated that it will continue to focus on leveraging both Rovio and its own IPs to generate revenue through media beyond mobile games.
Outlook for Sega and Rovio
Sega plans to concentrate on strengthening Rovio’s key franchises, particularly Angry Birds, while implementing measures to increase external payment ratios for its mobile apps. The company’s report underscores the broader challenge of maintaining profitability in the competitive mobile gaming sector, while highlighting transmedia projects as a potential growth avenue.
Source: PocketGamer
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Frequently Asked Questions (FAQs)
Why did Sega’s operating income drop so sharply?
Sega’s operating income fell 55% due in large part to an impairment loss related to its Rovio acquisition, which has struggled to meet profitability forecasts amid a competitive mobile gaming market.
How did Sonic Rumble perform after its release?
Sonic Rumble underperformed across key performance indicators, particularly in customer acquisition, falling short of Sega’s initial expectations.
Is Sega seeing growth in any areas?
Yes. Despite declines in operating income, Sega’s net sales increased slightly, and licensing revenue from transmedia initiatives, including the Sonic the Hedgehog and Angry Birds franchises, has grown.
What is the status of Rovio’s Angry Birds projects?
The Angry Birds Movie 3 has been rescheduled for December 2026, ahead of its original 2027 release, and will feature YouTuber MrBeast as part of the cast. Sega continues to focus on key Rovio franchises to drive revenue.
How is Sega adjusting its strategy moving forward?
Sega aims to strengthen Rovio’s primary franchises and increase external payment ratios for mobile apps while leveraging transmedia opportunities across both Rovio and Sega IPs to offset challenges in mobile game profitability.
