The news inside Sega’s third quarter earnings report today was not great for the Entertainment Contents division or, really, any component of Sega Sammy Holdings.
The company overall reported profit for Q3 2019 of ¥681 million, or just $5.6 million. That is a 95 percent decline from the same period in FY2018. The profit was earned on revenue of ¥250.3 billion, or more than $2.3 billion–also a decline, albeit of just four percent.
That comes despite the Entertainment Contents division showing a rise in sales to about $1.5 billion, an increase of more than five percent. Still profits in the division were shaved by more than a third year-over-year, to about $96.5 million.
A big factor in that success was Sega’s packaged games sales, both new and catalog. Sales rose 22 percent in that field to 18.5 million units. But the big drag was in digital. Though sales also increased a tad in digital, the company took what’s called an impairment loss on the sector, accounting for money lost by terminating some of Sega’s digital titles and initiatives.
That impairment loss is so substantial, paired with losses in the Resorts division, Sega Sammy is now forecasting a loss for the year of nearly $14 million. The company was once expecting profits for FY2019 to exceed $100 million.