A Message from the CEO
What does it mean for SEGA SAMMY to continue creating experiences that move 
the heart?

The second year of the medium-term plan saw 
significant strides in business performance
In the Consumer area of the Entertainment Contents Business,

The SEGA SAMMY Group Mission / Purpose (Raison d’être)Sonic Frontiers and Persona 5 Royal (Remaster) were hits andis Constantly Creating, Forever Captivating —Making Life Moreperformance in F2P titles was also brisk. In the Pachislot andColorful—. For our Group, whose business is grounded in

Pachinko Machines Business, sales of pachislot machinesentertainment, creating experiences that move the heart is thewere robust, especially Pachislot Kabaneri of the Iron Fortress,

very purpose of our existence.

driving a significant year-on-year increase in both sales andMoreover, creating experiences that captivate and move theprofits. The Resort Business also experienced recovery, withheart only once is pointless. To pursue sustainability, it is equally

Phoenix Seagaia Resort achieving profitability for the first time

vital that we continue creating such experiences. Two notions go

since it joined the Group. Segment sales were up significantly

into the word “colorful” in the second half of the Mission. One isyear on year as a result, and the loss margin narrowed.
In this way, sales and profits were up significantly year on

different values, cultures, genders, and races. The other notion

year across all of our businesses, while losses narrowed. The

involves facing up squarely to negative aspects including

result was net sales of ¥389.6 billion, ordinary income of

addiction that emerge in the course of the Group’s business that¥49.4 billion, and ROE of 14.7%—in other words, we were

we cannot simply pretend not to look at. Rather, by facing up toable to reach our targets for the final year of the medium-term

and minimizing these aspects, we add bright hues to society byplan a year ahead of schedule. Thus, for the fiscal year endingmeans of the experiences that move the heart that we offer. This

March 2024, the final year of the plan, we have significantly

is the kind of Group we are striving to be.

revised our performance targets upward.

Integrated Report 2023

SEGA SAMMY HOLDINGS

to respect diversity, putting value on empathy with people ofMedium-Term Plan: Changes in Ordinary Income (FY2015/3–FY2024/3)

Growth in Entertainment Contents and Pachislot and Pachinko Machines businesses
drove achievement of targets a year ahead of schedule
Entertainment Contents Business
Pachislot and Pachinko Machines Business
Other/Elimination
Consolidated Ordinary Income(–FY2020/3)
ROE

Billions of yen

Resort Business

Mid-term Plan

12.7%
9.2%
2.9%

1.8%

4.6%
0.9%

0.4%

33.3

16.4

25.2
14.5

President and Group CEO,
Representative Director
SEGA SAMMY HOLDINGS INC.

7.4

20.0

41.1

10%
45.0

25.0

9.0
36.8

7%

20.7

1.7

27.9

(Announced on May 2021)

5%

10.2
28.5

16.8

58.0

49.4

–3.4%

Haruki Satomi

14.7%

Beyond the Status Quo

30.0
9.0

45.0
25.0

13.0

30.0

40.0

–11.3

Steady growth in both sales and profit as we moved towardachieving our slogan: Beyond the Status Quo
14

Road to 2020
FY2015/3 FY2016/3

FY2017/3(Structuralreform)Beyondthe Status Quo

FY2018/3 FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3 FY2024/3(Forecast)

FY2022/3 FY2023/3 FY2024/3(mid-term) (mid-term) (mid-term)

15

Review of Entertainment Contents BusinessFurther acceleration of the IP strategy

SEGA has the ability to develop and operate major titles

Smart pachislot offers significant benefits for both users

The Sonic IP, which arose out of our games, has seen steadyfor video game consoles and PCs, a lineup of globallyand pachinko halls. It allows users to play in comfort, with

Creating worldwide hits

expansion into movies, anime, and other media. Sonic hasrecognized IPs like Sonic, and a track record and expertise inless obtrusive sounds and no need to insert medals. Halls,

In the mainstay Consumer area, new Japan-based titles such

now grown into a huge IP, the most successful example of our

the mobile games market in Japan. Rovio, meanwhile,

meanwhile, are freed from tasks such as carrying medals

as Sonic Frontiers and Persona 5 Royal (Remaster) are

IP strategy. More than anything else, the secret behind thispossesses the Angry Birds IP, which boasts a global fan baseback to machines, and can lower power consumption. For

enjoying significant sales growth overseas. On the other hand,

success lies in our continued pursuit of the sheer fun of thecentered in Europe and North America. It also has the ability

this reason, we see growing moves at various halls tothe sales of new Europe-based titles that we had looked forgame where it got its start.

to develop and operate global mobile games and has the

expand their floorspace dedicated to smart pachislot. The

game operation support tool Beacon, the platform supporting

popularity of smart pachislot and smart pachinko are
outstripping initial expectations.

failed to materialize, shedding a light on some issues. In

For the hugely popular Sonic Frontiers title, thetoday’s game market, users increasingly tend to readdevelopment team tested the game over and over again, evenits games. Our two companies clearly have a mutuallynumerous reviews and media information before they buy a

postponing the release date, insisting on raising the quality of

beneficial relationship.

game. Talked-about titles with high ratings can record

the game to the utmost limit. As a result, Sonic Frontiers has

SEGA has now built up a track record in acquisitions,

phenomenal sales worldwide, but we see a growing number

become one of the best games in the entire Sonic IP gamemainly in Europe. Going forward, we will aim to generate new

Machines Business, developing new hit machines is essential.

of cases where sales are sluggish for games that fail to catch

series, winning over many new Sonic fans.

synergies by capitalizing on complementary capabilities

The crucial point here is for the development department tobased on the shared values of both companies.

adequately gauge the various demands of a diverse range ofthe attention of users. The key to making hit games that

Success with Sonic IP has equipped the Group with a

To fully capture these market tailwinds and changes in theindustry and sustainably grow the Pachislot and Pachinko

wealth of knowledge regarding IP development, which we

players. To support this, we launched a project, called Parlor

before-seen experiences, increase engagement with users,

plan to harness in actively pursuing measures to expand other

Sammy, setting up a mock hall on company premises. Here,and get widely talked about.

excellent IPs on a global scale as well. SEGA has created

In addition, as playing games via downloading has become
mainstream, digital distribution platforms are now available

many compelling IPs over its long history. To maximize their

Review of Pachislot and Pachinko Machines Business

potential, we will further advance and pursue our IP strategy.

employees can freely try out machines and provide feedback
about their impressions and suggestions for improvement to
the development department. By gathering and analyzing theThis has surely increased the odds of creating a worldwide hit.

Acquisition of Rovio Entertainment Corporation

Birth of hit titles and full recovery toa growth trajectory

Even in Southeast Asia and the Middle East, where we expect

We completed our acquisition of Rovio Entertainment

In the Pachislot and Pachinko Machines Business, revised

to see major expansion of the games market going forward,

Corporation in August 2023, bringing the company into theregulations have made it possible to develop machines thatuser access to our games has become much easier than ever

SEGA SAMMY Group.

meet user demands better than ever before, paving the way

the increase in the number of hit machines. In the fiscal

for the creation of hit titles.

year ended March 2023, we were unable to fully meetthat allow games to be delivered instantly around the world.

before. We will take full advantage of this opportunity.

Established in Finland in 2003, Rovio develops andvarious opinions coming out of Parlor Sammy and establishingsteadily enhancing the quality of our machines.

a flow for refining machines under development, we are
Another key issue is responding quickly and flexibly tooperates mobile games—it is most known for Angry Birds. It

The medal-based No. 6.5 model Pachislot Kabaneri of the

maximize the value of our powerful IP lineup, delivering high-also engages in a licensing business to expand its IP into areas

Iron Fortress became a huge hit in the fiscal year ended Marchsemiconductors and other parts—this is an ongoing issue.

quality products and services to game users around the world.

other than games.

2023, maintaining high utilization rates and generating

Going forward, we plan to further refine our demand

Given this context, we believe it is important to continue to

Integrated Report 2023

SEGA SAMMY HOLDINGS

generate huge sales is to create games that offer new, never-robust demand for machines due to shortages ofRovio has particular strengths in the mobile games field,

multiple additional sales after debuting in halls. Furthermore,

forecasts, ensure the sufficient supply of parts, andwhere it is positioned to compete in the growing global market.

following its April 2023 launch, Smart Pachislot Hokuto No Kenstrengthen the framework for the stable supply of products

We believe Rovio is the ideal partner to fill in the missing

continues to have the kind of high utilization rate that has been

by introducing standardized parts.

pieces in our quest to achieve further growth for the Group.

unprecedented in recent years. The new Smart Pachislot

Our structural reforms have succeeded in improving

Hokuto No Ken machine is a remake of the historic hit ofprofitability in the Pachislot and Pachinko Machines

around two decades ago, Pachislot Hokuto No Ken, with newBusiness, and the segment is returning to a growthelements added. Many dormant users who had moved away

trajectory. To take this business forward even further, we willfrom pachislot and pachinko machines for quite some time arecontinue to carry through with the various measures that

returning to the pachinko halls. The smart pachislot game has

have borne fruit so far.

also gained support across generations, offering compelling
gameplay and interesting production elements that havecaught on even among young new users. It is no exaggeration
to say with pride that Smart Pachislot Hokuto No Ken is driving
current growth in the smart pachislot market.

16

17

Actively pursuing human capital managementresources. In addition, in employment rankings sponsored by
Mynavi and newspaper publisher Nikkei, SEGA ranked 6th

Making governance stronger is 
a never-ending goal

The essential element in achieving the Group Mission /among university students in the sciences, 11th among

Purpose (Raison d’être) is personnel who can “light a fire

students in the humanities, and 8th overall. Our rise to the top

At present, half of our board of directors is made up of outsidebusinesses operating around the world, SEGA held a Global(passion)” in their hearts. We believe that the ideal employee

10 in these rankings is a welcome change.

officers. Of the outside directors, more than half are women

Legal Meeting at its Osaki head office in May 2023, the first

and the group also includes foreign nationals. We havetime in four years. SEGA staff from Japan, America, andis someone who can gradually transfer that fire to others andOn the other hand, it is also true that the public in some

importance of global governance increases year by year. With

respects still has a negative impression of the Group’s

ensured adequate diversity. We have also established a Group

Europe came together to share information on legal mattersempowering them to play an active role in the business is thebusiness. This is why we must face up to social issues evenManagement Committee for the sole purpose of carrying out

and intellectual property. We were able to share issues faced

linchpin of the Group’s human resources strategy. To this end,

more rigorously than other companies, and create new value

discussions before Board of Directors meetings. In the fiscal

by each site and reinforce the collaboration needed to

we are working on various reforms to our personnel systems,

that has a positive impact on society. By continuing to act withyear ended March 2023, the committee held a total of aroundaddress them. We will expand these events to provide more

including revising our compensation system and doing away

this conviction, we can gain empathy from people, and as we

32 hours of discussions on management issues. The quality ofopportunities for communication and proactively strengthenwith seniority-based job assignments. Furthermore, we aredo, our employees will be even more proud of the Group. I

our discussions has improved dramatically compared to

global governance.

working to enhance various training programs offering

want all of our employees to do their jobs with pride. This has

before, with lively and sometimes unexpected opinions being

language education and other opportunities for staff tobeen my unchanging desire since I took over leadership of theexpressed from a variety of perspectives. Outside directors

acquire new skills to enable them to make contributions evenGroup. We will continue to actively promote human capital

sometimes offer extremely critical opinions, which generates

in times of rapid change.

management so that we can go on building a team of people

a healthy sense of tension at meetings.

Thanks in part to these efforts, we are seeing gradualimprovement in our engagement score, which we set as a

who can “light a fire” in their heart and enable them to play anactive role in the business.

non-financial indicator for the material issue of human

In September 2022, internal and external directors,

The Group has steadily expanded its sales and profits over the

executive officers, and executives from major Group

period of the medium-term plan. Our slogan, Beyond thecompanies all gathered at Phoenix Seagaia Resort in Miyazaki

Status Quo, is quickly becoming a reality.

Prefecture for a two-day management retreat. The aim was to

The fiscal year ending March 2024, the final year of thefoster extended discussions around management from aplan, will be a pivotal year in which we will continue thislong-term perspective. In an atmosphere of speaking to one

favorable trend while further accelerating growth as we work

another in a thoroughly candid way, the discussions wereto realize our long-term vision. To make this happen, it will beoften heated, even on topics that are difficult to address atvital to further boost the motivation of our employees, who are

regular Board meetings. It was a very meaningful event.

the driving force behind all our actions. As Group CEO, I have

We are also actively developing a framework formany roles and responsibilities, but the most important thingsustainability governance. One part of this involved setting

for me is to get our employees to fully understand andup a Group Sustainability Subcommittee in April 2022

empathize with our Mission and Vision, and to help bring out

under the Group Management Committee, which is atheir passion and energy. I believe an ideal organization is one

voluntary committee in the Group. The subcommittee has

in which every individual takes on tasks and issues with aallowed directors to more accurately grasp thesense of purpose, which causes both employees and thesignificance of our material issues and gauge the progressCompany to grow.

attention going forward.

While minimizing the negative impact we have on society,
we strive to maximize the positive impact our businesses
generate to a far greater extent

In ClosingIntegrated Report 2023

SEGA SAMMY HOLDINGS

spread it throughout the Group. Valuing such personnel andof initiatives. It also enabled us to visualize issues requiring

18

Moreover, as uncertainties mount throughout the world
and the Group’s businesses become more global, the critical

We will continue working to minimize the negative impact
we have on society, including the issue of addiction. At theAt all of these meetings, we will continue to take onsame time, we will strive to maximize the positive impact ourboard the opinions of outside directors and other experts,

businesses generate to a far greater extent. As the Group’s

considering them as invaluable feedback from ourrepresentative, I will personally work to guide management

stakeholders, and will actively reflect them in ourwith integrity and humility, and would like to ask all of ourmanagement plans.

stakeholders for their empathy with the Group’s businessactivities and for their continued support as I do so.

19Message from the CFO
Trend of ROE, COE and Equity Spread

Proceeding with a financial strategy
that balances proactive growthinvestments with shareholder returns
to enhance corporate value

ROE

COE

Per business ROIC trend

Equity spread

14.7%

Entertainment Contents BusinessResort Business
WACC

Pachislot and Pachinko Machines Business

42.6%
37.4%

12.7%
11.4%
7.8%

9.1%

12.2%

10.1%
23.5%

6.4%

+4.6pt

4.6%

2.9%

0.4%

0.9%

+0.5pt–4.5pt–4.9pt

8.8%
8.5%

14.3%
10.2%

5.2%

18.6%

5.2%

7.4%

–7.7%

–8.8%

–9.7%

–5.5pt

11.1%

10.1%

–12.5%–19.4%

19.9%

14.8%

8.4%

6.5%

19.8%

9.3%

0.0%

–7.6%

–16.2%–11.0pt

Koichi Fukazawa

FY2018/3 FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3

Senior Executive Vice President andGroup CFO, Director of the Board* ROE: Return on equity
COE: Cost of equity (Source: Bloomberg)
Equity spread: ROE-COE* Per business ROIC: Adjusted profits per business/Investment capital per businessahead of schedule. This strong performance is the fruit of theappropriate hurdle rates for such acquisitions, and expect

thereby rectifying the strong domestic weighting of the busi-

growth strategies we have carried out so far in each business,

ROIC to improve over the longer term.

ness model to date. We expect to be able to secure profits

which were well timed for these favorable market conditions.
In the medium-term plan that began in the fiscal year ended

For the fiscal year ending March 2024, the final year of thegoing forward by realizing synergies with our existing business at an early stage.

March 2022, we have been aggressively expanding ourplan, we expect continued profit growth with net sales ofsignificantly to future business growth. The global games

equity spread and shareholder returns with the aim of maxi-¥433.0 billion and ordinary income of ¥58.0 billion.

market has been growing rapidly in recent years, with mobile

a total return ratio of 50% or more or a dividend on equity ratio

games expanding to account for half of the market. In con-(DOE) of 3% or more, whichever is higher. Based on thistrast, the mobile games business accounted for only about

policy, we decided to pay a dividend of ¥59 per share (includ-

30% of sales in the Consumer area before the acquisition,

ing an interim dividend of ¥20) for the fiscal year ended

most of which was generated in the Japanese market. With

March 2023. Also, in 2023, we resolved to buy back ¥10.0
billion in treasury stock (up to 8 million shares).

mizing the Group’s corporate value.
In the fiscal year ended March 2023, we achieved steadyprofit growth in the Entertainment Contents Business, partic-

Balancing profit growth and efficiency

ularly in the Consumer area. In the Pachislot and Pachinko
Machines Business, earnings rebounded sharply, fueled by

We are pursuing profit growth, including through aggressive

Rovio joining the Group, we will be able to greatly expand

growth in sales of new No. 6.5 model pachislot machines thatgrowth investments. At the same time, we aim to maintain asales in the overseas mobile games business, a huge market,

take advantage of revised regulations. Given the current

certain level of capital efficiency using ROIC as an indicator.
In the Pachislot and Pachinko Machines Business, thefurther growth in the fiscal year ending March 2024, when the

structural reforms we undertook in the fiscal year endedroll-out of new titles will be fully underway.

March 2021 have led to substantially lower fixed costs. On topof that, by efficiently developing machines and increasing theinvested capital (ROIC) for each business segment is on an

volume of machines sold, we have been able to achieve a

upward trend, and a lower tax burden has led to a large

sizable return on invested capital. I am confident that theincrease in ROE and, as a result, equity spreads are trending

Pachislot and Pachinko Machines Business going forward will

positive. Total shareholder return has also continued to rise

be able to maintain consistently high ROIC.

as the share price maintained its upward trajectory on the

The Entertainment Contents Business has also steadily

back of significant improvement in business performance.

increased ROIC, although we expect somewhat lower ROIC

We were also able to achieve ordinary income of ¥45.0

in the near term due to goodwill amortization associated withbillion—the target for the final year of our medium-term plan—

our recent acquisition of Rovio. Still, we have put in place

Our basic policy regarding shareholder returns is to adopt

Shift to the management focusing on capital efficiency

Maximization of
the Corporate Valuerobust performance of smart pachislot machines, we expect

In addition to this growth in profitability, the return on

20

With the acquisition of Rovio, we have filled in a crucial
missing piece in this business, which we expect to contribute

Integrated Report 2023

SEGA SAMMY HOLDINGS

Solid performance across businesses boosted total shareholder return

FY2018/3 FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3 FY2024/3(Forecast)

Expansion ofequity spread

Expansion of TSR

ROE: Over 10%

Shareholder return
Total return ratio: 50% or more

Investment focus on Consumer business

Growth of profit
Ordinary Income: Over ¥50.0 billion

Improvement ofasset efficiency

ROIC management
Management of business portfolio

Improvement of per business company ROIC

Optimization ofcapital cost
D/E ratio: around 0.5-0.6(Net D/E ratio: around 0.2-0.3)

 educing of WACC through optimalR
capital structure
Active use of debt according to the risk
Reduction of long-term risk throughenhancement of ESG

21

Concept of Investment in Growth (–FY2026/3)

impact on finances. We must ensure that our human

Areas of consideration for investment
Strengthen development resources

Consumer Area
Approx. ¥100.0 billion

Gaming Area
Approx. ¥100.0 billion

Other
Approx. ¥50.0 billion

Investment in
new ecosystem

Expansion of organic development pipeline
Strengthen global mobile and online games
 trengthen CRM functions to revitalizeS
user communities
Investment in newly emerging business areas

Progressresources strategies and business strategies are aligned. We

The role of the CFO is to help enhance 
corporate value

have set up SEGA SAMMY College, a program for developing stablishment of SEGA
E
Sapporo StudioTOB of Rovio Entertainment
Corporation

the Group’s core human resources. The College offers a full

We have a longstanding emphasis on engaging with the capi-

range of seminars on personnel development for all levels,

tal markets. Through dialogue with investors and sharehold-starting with Satomi Cram School, a program for staff in man-ers, we seek to gain understanding of our management andagement positions.

business strategies. Such dialogue also allows us to reflect

We will continue to verify whether these various human

the thinking of investors and shareholders in our manage-

Careful assessment of investment
opportunities in the Gaming area

Online casino and sports betting overseas
Land-based casinos overseas
Both domestic and overseas IR tep back from domestic andSoverseas IR
Considering online gaming area

resource development measures have a positive impact onment strategy. We see this as an essential process for

the Group over the longer term, and adjust them accordingly.

enhancing corporate value. I see the role of the CFO as one of

Expand CVC investment limit(Total limit: ¥15.0 billion)

 trengthen open innovation activities,
S
including investment in start-up companiesI mplement 18 new investments,
approx. ¥3.0 billion

As our network of overseas subsidiaries grows in line with

Exit from existing investment portfolio x 4

Creation of new business,acquisition of IPs, etc.

 stablishment of joint ventureEwith PAPYLESS CO., LTD.
“GAPOLI” service released

Total ¥250.0 billion

steering this process so that it functions smoothly. Going

our accelerating overseas expansion, the SEGA SAMMY

forward, I will fulfill my duties as a CFO in terms of finance asGroup Mission Pyramid, the shared model expressing thewell as in a wide range of areas that affect corporate value,Group’s significance to society, will take on an even more criti-

including formulating management strategies, ESG, andcal role. By sharing this set of values across our international

engaging with capital markets. I appreciate your interest inoperations, while also preserving the outstanding corporate

the ongoing growth of the Group.

Continuing to invest in future earnings drivers

we can greatly contribute to enhancing corporate value.
casinos) in North America. So far, only a limited number ofstates have lifted their bans on such casinos, but discussions

The Rovio acquisition used around ¥100.0 billion out of theare unfolding in many areas. To be able to adapt to such

¥250.0 billion we had earmarked for growth investments indevelopments at an early stage, we are exploring entry into

the medium-term plan. The allocation of the investment

the B2B business, including both consumer side and platform

amount indicated in the plan is not strictly determined, and we

strategies. Whichever approach we take, making further

are still around the halfway mark.

inroads into global markets has to start with building a foun-

Going forward, depending on the level of accumulated
cash and the growth potential of an investment target, we will

Integrated Report 2023

SEGA SAMMY HOLDINGS

culture unique to each business company, I am confident that

dation in North America, so we will actively move forward withinvestments with an eye toward possible acquisitions.

consider increasing the investment budget.
Apart from the Rovio acquisition, we are consideringother aggressive growth investments that will significantly
change the balance sheet. We will thus need to consider

Linking financial indicators and
business strategies

reviewing our financial strategy framework. Now more thanever, we must also work together with Group companies to

We are always looking for ways of measuring the impact ofimprove capital efficiency, including ROIC management andnon-financial factors on our finances.

business portfolio management.
Regarding leverage, even after the Rovio acquisition, we

narios showing how the strengthening of non-financial capital

have room to make use of borrowing to raise funds. To

will contribute to and support our business strategies. We areachieve sustainable growth for the Group in the next five tocurrently developing such scenarios with a view to incorpo-

ten years, we will continue to maintain an aggressive invest-

rating them into our next medium-term plan.

ment stance that includes the use of debt, so that we can

22

For this reason, the Group’s first priority is to clarify sce-

Quantitatively analyzing the financial impact of climate

reinforce existing businesses and develop new businesses.

change, particularly in terms of carbon credits related toMoreover, we are continuing our strategic investments incarbon neutrality, is relatively straightforward. However, in

the Gaming area, which we expect to become a third driver ofdeliberations going forward, it will be vital to consider how theearnings for the Group. A specific target is iGaming (online

improvement of our human capital indicators exerts a positive

We will clarify scenarios showing how the strengtheningof non-financial capital will contribute to and support
our business strategies
23