SEGA SAMMY HOLDINGS INC.

Business Details

This segment covers the development and sale of Consumer Games (Full Games) and F2P titles, the development and sale of Amusement Machines, the planning, production, and sale of animated films, and the development, manufacturing, and sale of toys, among other activities. The segment comprises SEGA CORPORATION, ATLUS Co., Ltd., Rovio Entertainment Ltd., Sega Europe Ltd., and other companies, and deploys flagship IPs such as "Sonic," "Like a Dragon," "Persona," and "Angry Birds" globally. Under the medium-term plan, the segment is advancing a transmedia strategy (video adaptation, licensing, and merchandising).

Recent Overview

Revenue increased but profit declined. Rovio impairment and weak Consumer Games weighed on results, while Video and Licensing performed well.

In FY2026 (ending March 2026), revenue increased to ¥327,246 million (up 1.6% year on year), but ordinary income declined sharply to ¥34,447 million (down 17.8% year on year), and adjusted EBITDA fell sharply to ¥13,353 million (down 72.3% year on year). In the Consumer segment, some Full Game and F2P titles fell short of plan, and Rovio was affected by weakness in existing titles and delays in new title launches. On the other hand, the Video segment saw higher revenue and profit, driven by the theatrical film "Detective Conan" hit, which generated box office revenue of approximately ¥14.7 billion, and strong sales of animation works for streaming platforms. License-out revenue grew steadily, up 31.6% year on year. Impairment losses on Rovio goodwill and other assets of ¥31,993 million were recorded as extraordinary losses.

Key Products

Growth Drivers

• Continued progress in the transmedia strategy (video adaptation, character licensing, and merchandising) centered on the "Sonic" and "Angry Birds" IPs (license-out revenue up 31.6% year on year in FY2026 ending March 2026)
• Strengthening of "sales capability" through the launch of new Full Game titles based on flagship IPs and the reorganization of sales structure and promotional renewal (policy for FY2027 ending March 2027)
• Revenue contribution from the Video segment through sales of animation works to streaming platforms and box office revenue from theatrical animated films
• Building and expanding the GaaS (Game as a Service) revenue base through the launch of new F2P titles
• Full-scale rollout of transmedia initiatives, including video adaptations of the "Sonic" and "Angry Birds" IPs, from FY2027 (ending March 2027) onward

Risks

• Risk of additional impairment following the Rovio goodwill and other intangible asset impairment loss (¥31,993 million recorded in FY2026 ending March 2026) and uncertainty regarding the recovery of Rovio's business performance
• Risk that some Consumer Games titles fall short of plan (weak sales or development delays for new Full Game and F2P titles)
• Inventory valuation risk related to game content work-in-progress and software (work-in-progress balance of ¥78,486 million, a significant increase year on year)
• Risk of margin deterioration due to rising game development costs (higher personnel expenses and longer development periods) and increased advertising expenses
• Foreign exchange risk (high proportion of overseas revenue means a stronger yen has a significant impact on revenue and profit)
• Slowdown in growth of the Consumer Games market due to deteriorating economic conditions such as ongoing inflation

Business Details

This segment is centered on Sammy Corporation and covers the development, manufacturing, and sale of Pachislot Machines and Pachinko Machines. With the domestic gaming machine market as its primary market, this segment is positioned as a source of abundant cash flow generation for the Group as a whole. It functions as a foundational business that supports growth investment in the Entertainment Contents Business and the Gaming Business, and aims to expand profitability through the growing adoption of the Smart Pachislot standard and the launch of new titles leveraging popular IPs.

Recent Overview

Flagship Smart Pachislot titles performed well, with revenue up 36.0% and ordinary income up 58.8% year on year

In FY2026 (ending March 2026), sales were weighted toward the second half of the fiscal year due to the timing of regulatory approvals, but sales of titles such as "Smart Pachislot Tokyo Revengers," "Smart Pachislot Fist of the North Star: Chapter of Reincarnation 2," and "Smart Pachislot Kabaneri of the Iron Fortress: Sea Gate Decisive Battle" performed well, resulting in external revenue of ¥132,063 million (up 36.0% year on year) and ordinary income of ¥33,301 million (up 58.8% year on year). In addition, starting in FY2026 (ending March 2026), the segment began introducing a new cabinet (separated cabinet) and has embarked on building a new business model. Additional sales of "Smart Pachislot Bakemonogatari" and "Smart Pachislot Kabaneri of the Iron Fortress: Sea Gate Decisive Battle" are planned for FY2027 (ending March 2027). For FY2027 (ending March 2027), the segment expects a decrease in flagship titles and higher costs due to rising material prices, among other factors.

Key Products

Growth Drivers

• Establishment of a new business model through the growing adoption of the Smart Pachislot standard and the promotion of a new cabinet (separated cabinet) platform strategy
• Continued launch of new titles leveraging popular IPs (Fist of the North Star, Bakemonogatari, Tokyo Revengers, Kabaneri of the Iron Fortress, etc.)
• Continued revenue contribution from additional sales in FY2027 (ending March 2027) of titles launched in the prior fiscal year (Smart Pachislot Bakemonogatari, Smart Pachislot Kabaneri of the Iron Fortress: Sea Gate Decisive Battle)
• Securing profitability through cost improvement via parts commonization and reuse, and through greater development efficiency
• Efforts to improve the market environment to promote coexistence and mutual prosperity between the industry and manufacturers

Risks

• Risk of significant fluctuation in revenue and profit due to the rebound effect from the prior fiscal year's hit titles (characteristic of a hit-driven business); a decrease in flagship titles is expected in FY2027 (ending March 2027)
• Long-term contraction trend in the gaming machine market (declining number of parlors and installed machines)
• Risk of rising costs due to higher material prices, among other factors (expected to materialize in FY2027 ending March 2027)
• Risk of uneven sales timing and failure to meet plans due to the timing of regulatory approvals
• Risk of inventory valuation losses due to procurement risk for long-lead-time parts and disposal risk for dedicated parts
• Risk of delayed launch of flagship titles due to slow response to changes in user preferences

Business Details

This segment covers overseas online gaming-related businesses, the operation of an integrated resort, and the development, manufacturing, and sale of gaming machines. Starting in FY2026 (ending March 2026), the segment began consolidating the results of GAN Limited (U.S., B2B platform) and Stakelogic B.V. (Netherlands, B2B iGaming content), causing revenue to expand sharply, up 362.6% year on year. On the other hand, the segment recorded an ordinary loss due to integration costs associated with the two companies, among other factors. Sales of gaming machines reached a record high, and the equity-method income contribution from the equity-method affiliate "Paradise City" (South Korea) also reached a record high.

Recent Overview

Revenue expanded approximately 4.6-fold through the consolidation of GAN and Stakelogic, but an impairment loss of ¥18,054 million at Stakelogic caused the segment to fall into an ordinary loss.

In FY2026 (ending March 2026), the consolidation of GAN (23 subsidiaries) and Stakelogic (12 subsidiaries) drove external revenue up 364.3%, from ¥5,451 million to ¥25,312 million. On the other hand, the segment recorded an impairment loss on Stakelogic goodwill and property, plant and equipment of ¥18,054 million as an extraordinary loss, causing adjusted EBITDA to deteriorate sharply to -¥18,406 million. Sales of existing gaming machines reached record-high revenue, and the equity-method income contribution from Paradise City also reached a record high. Following the impairment, the company revised its capital allocation policy and decided to freeze large-scale M&A for the time being.

Key Products

Growth Drivers

• Continued strong sales of gaming machines in the North American market (expansion of existing and new series such as Railroad RICHES™ and Super Burst™)
• Strong performance at "Paradise City" in South Korea (revenue and profit at each stage for January to December 2025 reached record highs since opening, and the equity-method income contribution also reached a record high)
• Promotion of an omnichannel strategy and transformation into a comprehensive casino solutions provider through the group integration of GAN and Stakelogic
• Upfront investment to build a growth foundation in the Gaming Business (planned to continue in FY2027 ending March 2027)
• Increased revenue contribution through the expansion of investment in equity-method affiliates (¥33,032 million)

Risks

• Risk of rising integration costs and declining profitability at GAN and Stakelogic (a wider loss is expected in FY2027 ending March 2027 as well)
• Risk of additional impairment of goodwill and intangible assets (goodwill balances for GAN and Stakelogic remain on the books, with the possibility of additional impairment if business plans are not achieved)
• Risk of a need to revise growth strategy due to the shift to a policy of freezing large-scale M&A, and delayed monetization of existing acquisitions
• Risks related to compliance with laws and regulations in each country and region and to obtaining and maintaining regulatory approvals (including changes in iGaming regulations)
• Business uncertainty at "Paradise City" (impact on performance from trends in visitors to Japan and South Korea, changes in global conditions, and the low proportion of variable costs)
• Foreign exchange risk (impact of yen appreciation due to the increasing proportion of overseas business)