Entertainment Contents

In addition to drawing on our abundant IP assets to roll out content globally, we will work to expand business value by taking advantage ofour broad business portfolio.
External Environment

Business Overview

The global video game content market continues to grow against the backdrop of rising download sales and the proliferation of game distribution platforms. Although the Amusement Machine and Amusement Facilities Operations markets were hard hit by COVID-19, the prizes
began to rally in 2021 and the market is recovering gradually.
Video Game Content Market Size

212.4

(billion dollars)

93.8

37.8

31.1
12.3

13.8

’15
Japan

30.6

36.8

37.2

45.3

48.8

52.0

16.2

’16
Asia

10.1
27.2

8.4
22.2

7.1
21.1
27.6

5.9
19.5
25.1

9.4
26.7

’17

N. America

17.1
’18

Europe

51.0

47.6

71.3

65.7

17.3
’19

14.5
34.1

12.9
33.2

19.8
’20

21.8
’21

17.4

18.7

19.8
41.1

15.2
33.3

16.0
34.4

36.6

39.2

49.7

51.6

54.5

58.3

65.6

66.6

67.7

68.9

Others

19.7

19.1

19.1
’22

70.0

20.0

20.3

’24

’25

’26

(Forecast)(Forecast)(Forecast)(Forecast)

SEGA SAMMY’s Entertainment Contents Business has expanded into various entertainment domains, each of which presents different market growth potential and levels of competition. Leveraging its well-balanced portfolio, the Group is generating stable income
without relying excessively on any specific IP, title, or business activity.

Consumer Area

61.2

’23

Ensuring steady earnings through expansion across a range of areas(CY)

Source: SEGA SAMMY estimates based on data from Newzoo Global Games Market Data (July 2023)

Domestic Amusement Machine Sales and Revenues from
Amusement Facilities Operations

Sonic Frontiers

Number of Amusement Facilities and Amusement Machine
Units Installed©SEGA

Amusement Machine Area

(Billions of yen)

377,825 362,099
433.8

462.0

485.9

520.1

540.8

156.9

157.4

152.9

161.7

164.7

2015

2016

2017

2018

2019

Amusement machine sales

418.7
107.3
2020

449.2

354,463 349,835 340,383 342,211 334,239 340,454

4,856

4,542

4,381

4,193

4,022

3,931

3,882

3,894

2015

2016

2017

2018

2019

2020

2021

2022

Integrated Report 2023

SEGA SAMMY HOLDINGS

We will focus on expanding the scale of earnings by strengthening
the global branding of existing IPs.
To capitalize effectively on our abundant IP assets, including
dormant IPs, we will further develop these IPs by means ofremakes, remastering, and reboots, etc., as well as offering them tosubscription-based services and other forms of monetization
across multiple channels.

We will aim to improve profitability by focusing on strong-performing
prize categories.

152.0
2021

(FY)

Revenues from amusement facilities operations

Source: Japan Amusement Industry Association

Number of amusement facilities(CY)

Number of amusement machine units installed

Source: National Police Agency

UFO CATCHER 10

Anticipated Opportunities and Risks

Opportunities

Risks

Targeting opportunities

 ngoing growth in the videoO
game content market
In the global video game content
market, the market environment has
been changing drastically. Sales
methods for consumer games havediversified, as instanced by thegrowth in download sales. At thesame time, a broader variety ofmonetization methods, such as the
expansion of F2P and subscription
services, has led to an environment
where profits can be secured continuously over a long period of time.

I ntensification of the competitiveenvironment due to the emergence of titles using high-quality,
leading IP in the consumer area

 xpanding touchpoints with users
EProlonging product life cycles
Strengthening user engagement

 ossible reduced willingness ofP
facility operators to invest capital
due to changes in personal
consumption trends and userneeds in the field of Amusement
Machine Sales

Addressing risks

 eneration of surplus inventoryG
in consumer game software,toys, etc., when new products
cannot be launched during thesales season©SEGA

Responses

 ptimizing the number of titles under operation and the scale of newOtitle launches
Providing a profit model that improves the investment efficiency offacility operators and secures long-term stable earnings for the GroupStrengthening product development management

Animation and Toy Area
In the Animation area, in addition to producing animations ofour major IPs, such as Detective Conan, Anpanman, and LUPIN
THE 3rd, the Group is focusing on the animation licensing andmerchandising businesses.
The Toy area is expanding to encompass a broad target audience, including mainstay educational toys, character goods, andproducts for adults.

DETECTIVE CONAN: Black Iron Submarine©2023 GOSHO AOYAMA/DETECTIVE CONAN COMMITTEEAll Rights Reserved.

40

41Entertainment Contents

Progress of Medium-Term Plan

Achievements in FY2023/3 and future initiatives
Entertainment Contents Business Performance

Global Branding of Existing IPs

Goals

Overall segment
We will expand touchpoints with users and maximize earnings opportunities by reinforcing simultaneous worldwide
releases and the multiplatform deployment of content. We will also focus on remaking and remastering existing IPs andsupport subscription-based services to prolong product life cycles. Furthermore, we aim to strengthen user engagement
and increase the value of our IPs through a mix of media and other approaches to connect these IPs with more people.

1

2

Expansion of touchpoints

3

Prolonging the productlife cycle(Billions of yen)

305.0

282.8

Consumer Area

Amusement Machine Area

Animation and Toy Area

(Billions of yen)(Billions of yen)(Billions of yen)

235.9
15.6%

14.5%

14.8%

41.1

45.0

187.9

205.0

158.3

Strengthening ofuser engagement
36.8

32.8

29.3

2.5

2.9

2022

2023

Progress2022

1 Expansion of touchpoints
Made steady progress with global launches and multi-platform development. Achieved sales of about 6 million units with 7 titles in
FY2022/3, and about 8.8 million units with 10 titles in FY2023/3. In FY2024/3, we plan to release 12 titles, targeting sales of about 12
million units.

FY2022/3

7

10

titles (about 6 million units)

FY2023/3

12

titles (about 8.8 million units)

FY2024/3 (Forecast)titles (about 12 million units)

2 Prolonging the product life cycle
By promoting remakes/remasters and spin-offs/changes of theme, we achieved sales of approximately 4 million units in FY2022/3
and approximately 3.5 million units in FY2023/3. In FY2024/3, we are targeting about 5 million units. We will also continue to actively
promote subscriptions.
Released many titles with remake/remaster, spin-off/changes of theme (new titles)
FY2022/3

About

4

FY2023/3

Aboutmillion units

Sonic Colors: Ultimate
Super Monkey Ball Banana Mania
Lost Judgment, etc.

3.5

FY2024/3 (Forecast)Aboutmillion units

Persona 5 Royal (Remaster)Like a Dragon: Ishin!
Sonic Origins, etc.

5

million units

Sonic Origins Plus
Samba de Amigo: Party Central
Etrian Odyssey Origins Collection, etc.

3 Strengthening of user engagement
We strengthened our media mix, and worked to further raise awareness of the Sonic IP and expand our brand. Going forward,
Paramount Pictures will develop a third Sonic movie and an original TV series for Paramount +, its paid streaming service.
CY2020CY2022

Released the Sonic
the Hedgehog movie

Released the Sonic
the Hedgehog 2 movie

Sonic Prime launches
worldwide on Netflix

Global Box Office Revenue

Global Box Office Revenue

Released Sonic Frontiers$$Sold overunits worldwide

320

million400

CY2023 –million

3.2

millionFuture initiatives withPARAMOUNT PICTURES

 evelopment of a third feature filmD
Development of original TV series to be
distributed in Paramount+Released new title Sonic Superstars

2024

(FY)

(Forecast)

Net sales
Ordinary income
Ordinary income margin (%)

2022

2023

2024

(FY)

(Forecast)

Net sales

Operating income

Net sales

63.5
25.6 29.3 36.0
4.5
4.5
3.0

5.0
2024

(FY)

(Forecast)
Operating income

2022

2023

Net sales

2024

(FY)

(Forecast)
Operating income

Consumer Area
In terms of full games, we released new titles include Sonic Frontiers, Persona 5 Royal(Remaster), and Like a Dragon: Ishin!, and sales volume remained strong at 10.09 million
units (compared with 8.77 million units sold in the previous fiscal year). Sales of repeat
titles, however, remained soft due to weakness in the market, with 17.79 million copies sold(compared to 18.43 million in the previous fiscal year). As a result, overall full game sales
totaled 27.89 million units (compared with 27.20 million units sold in the previous year). In
F2P, Project SEKAI COLORFUL STAGE! feat. Hatsune Miku and ONE PIECE Bounty Rush*
drove performance, resulting in year-on-year sales and profit growth.
Going forward, we will work to advance our business development on a global scale. We
will concentrate our management resources toward this aim, and enhance our development
system by hiring and training talented human resources. We will also develop high-quality
content, and expand our library by creating and utilizing IP.
*Developed by SEGA CORPORATION and published by Bandai Namco Entertainment Inc.

Integrated Report 2023

SEGA SAMMY HOLDINGS

Multiple simultaneous worldwide releases and multiplatform deployment of content (new titles)

2023

64.9

49.7

36.0

Persona 5 Royal (Remaster)©ATLUS. ©SEGA. All rights reserved.

Amusement Machine Area
Sales and profits rose year on year due to strong performance in the prize machine category.
We will continue to strengthen the prize machine category, where demand remains strong,while responding to the effects of supply chain turmoil, exchange rate fluctuations, and soaring prices in raw materials.
EIKETSU TAISEN©SEGAAnimation and Toy Area

In the Animation and Toy area, in Animation we recorded revenues from animation production and distribution, including the newly released movie Detective Conan: The Halloween Bride. In Toy, sales were firm,
both for new products such as With a front camera! Fun to change mouse covers! Sumikkogurashi Personal Computer Premium Design by yourself and for mainstay products, resulting in year-on-year growthin sales and profits.
As well as strengthening various video distributions, we will continue to promote sales of new andmainstay products in the Toy area.
With a front camera! Fun to change mouse covers!
Sumikkogurashi Personal Computer Premium Design by yourself©2022 San-X Co., Ltd. All Rights Reserved.

42

43

Pachislot and Pachinko Machines

As an “innovator in the industry,” we will launch new initiatives and strive to generate stable profits by enhancing profitability.
External Environment

Business Overview

Along with the slow decline of the player population since 1995, there has been a long-term downtrend in the overall number of pachinkohalls, as well as in the number of machines installed and in annual machine turnover. On the other hand, the opening of large pachinko halls
and an increase in locations of major hall operators has been causing a rise in the number of machines installed per pachinko hall.
Market Size and Number of Pachislot and Pachinko Players

Numbers of Pachinko Halls and Installed Pachislot andPachinko Machines per Pachinko Hall

1,790

13,585

458.8

337.9

51.8

Leveraging development capabilities to offer products that meet demand
The Pachislot and Pachinko Machines Business draws on a powerful IP lineup and industry-leading development capabilities to supply products that meet the demands of adiverse fan base. We are working to develop and market machines with innovative gameplay that will help bring vitality to the market for both pachislot and pachinko machines.
We are also seeking to lower costs through measures centered on the standardization
and reuse of parts.

Sammy’s Strengths

7,665

720

©SammyMultiple well-performing series

41.1
33.9
’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

’14

’15

’16

’17

’18

’19

’20

’21 (CY)

Hokuto no Ken

39

Approx.
thousand units

ALADDIN

15

Approx.
thousand units

Beast King

16

Approx.
thousand units

SOUTEN-NO-KEN

16

Approx.
thousand units

Number of
titles in series

Cumulative unit sales

Hokuto Muso

12

Approx.
thousand units

Eureka Seven

7

Approx.
thousand units〈Monogatari〉
Series12

Approx.
thousand units

Code Geass

4

Approx.
thousand units

Series’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20
Number of pachinko halls (halls)
Number of installed pachislot and pachinko machines per pachinko hall (units)

’21

’22

(FY)

Source: White Paper on Leisure Industry 2022, Japan Productivity Center

Source: National Police Agency

Pachislot and Pachinko Machines: Number ofInstalled Machines, Unit Sales, and Annual Turnover

Pachislot and Pachinko Machine Approval Process
When marketing a new pachislot or pachinko machine,
manufacturers are required to go through multiple step approval
processes in accordance with the Act on Control and Improvement of
Amusement Business, etc.

1.11
5,484

0.49
1,754

Machinemanufacturer

1.	Application for
prototype testing
2.	Prototype testing
results issued
3.	Application for
installation approval
4.	Installation
approval issued

Nationally authorized testingorganizations
Public Safety Commissionin each prefecture

5.	Contract andproduct delivery’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 (FY)
Number of installed pachislot and pachinko machines (thousands of machines)
Pachislot and pachinko machine unit sales (thousands of machines)
Annual turnover (times)

Pachinko halls

6.	Application for approval

District police station

490

150
70

P. 97-98.

Lowering costs and raising profitability
Pachislot and pachinko businesses are characterized by a reliance on electronicparts that carry a high cost ratio.
The Group is working to raise development efficiency and lower costs, suchas through the reuse of parts.

Responses

Opportunities

Risks

Targeting opportunities

 ossibility of expanding user baseP
By setting standards that allow new
machines with a broader range of
gameplay, recent revisions to regulations may expand the user base.

I ssue of gambling addiction
Changing user preferences
Risk of inability to procuresufficient materials
Surplus parts

 reation of HitsC
Improvement of Business Efficiency

 rowing demand for machinesGthat take advantage of revised
regulations
If models that take advantage ofrevised regulations gain the supportof users, we can expect this totrigger greater demand among
pachinko hall operators and feed
into sales growth.

510

170

Note: As of March 31, 2023

Source: National Police Agency and Yano Research Institute Ltd. “Pachinko Manufacturer Trends 2023”(Research of Japanese Market)

Anticipated Opportunities and Risks

580

280

8.	Start ofoperations

7.	Final authorization

For more information on market data, see

3,040

Integrated Report 2023

SEGA SAMMY HOLDINGSOther leisure markets (trillions of yen)

3,563

48

Cumulative unit sales

14.6

Pachislot and pachinko market (trillions of yen)
Pachislot and pachinko players (ten thousands)

4,935

Number of
titles in series

SeriesAddressing risks
 aunch initiatives to tackle addiction across the industry
LEstablish a system for developing a product lineup that features
new types of gameplay and meets market needs
Standardization of parts
Cut procurement lead times
Strengthen inventory controls
Allow effective use of parts for other products

Value Chain of the Pachislot and Pachinko Machines Business
1 Average development lead time:
1 year–2.5 years

3 Average sales lead time:
1 month–In-house

1

2

3

4

Development

Manufacturing

Sales

Operations

Reuse of parts

Collection bytrade-ins or purchase

External

Sourcing parts throughdisassembly, etc.

Lower parts costs
Lower environmental impact

49

Pachislot and Pachinko Machines

Progress of Medium-Term Plan

Achievements in FY2023/3 and future initiatives

Achieve top share of total utilization of pachislot and pachinko machines
and maintain steady earnings

Goals

We aim to create hits and expand share of utilization by optimizing the product lineup, manufacturing machines from auser-centric perspective, and expanding communication with users through digital media. We will also improve businessefficiency and maintain steady earnings by promoting standardized imagery and parts between pachislot and pachinko
machines and promoting e-commerce.
Creation of Hits

1

2

Revising the product lineup

3

Increasing hit potential

Pachislot and Pachinko Machines Business Performance
Overall segment(Billions of yen)

115.0
94.2
75.8

293

Enhancing media functions

efficiency

2

3

Cost reduction(Thousands of units)(Thousands of units)

77

13.5%
20.7

Pachinko
Unit Sales & Number of Titles

10

328
360

Improvement of Business Efficiency

1 Improvement of development

1,583
1,879
22.0%
2,05021.7%

Pachislot
Unit Sales & Number of Titles
1,583

1,879
146
2,050

293
94

328

8

360
8

25.0

97

103

5

5

2022

2023

93
6

10.2

Promote online commerce

2022

Progress

2023

2024

(FY)

(Forecast)

Net sales
Ordinary income
Ordinary income margin (%)

Although Pachislot was strong, total utilization share decreased YoY due to struggle in Pachinko

2022

2023

2024

(FY)

(Forecast)

Unit Sales (Thousands of units)
Number of Titles

2024

(FY)

(Forecast)

Unit Sales (Thousands of units)
Number of Titles

Trend of our utilization share
FY2022/3

15.0

10.0

5.0

FY2023/3

1st

K Company

18%

1st

S Company

18%

2nd

S Company

18%

2nd

K Company

16%

3rd

Sammy

11%

3rd

S Company

14%

4th

S Company

9%

4th

Sammy

9%

 achislot: Increased due to strong sales ofP
No. 6.5 Model (+2p)

0.0March 2023

April 2022
Total (pachislot and pachinko)

Pachislot

Pachinko achinko: Decreased due to low utilization,
P
while sales were strong (-7p)

Future initiatives
Pachislot: Actively launch smart pachislot while continuously launch No. 6.5 Model, which utilization remains strong
Pachinko: Work on developing machines that will be supported by users* In-house estimation based on DK-SIS data (Data for 4 yen Pachinko and 20 yen Pachislot) of Daikoku Denki Co., Ltd.
* Utilization Share = Ratio of Sammy machine’s utilization out of total number of installed machine for each title × utilization of each title (Pachislot: Numbers of inserted medals, Pachinko:
Numbers of shot balls)* Calculated by average of the fiscal year (Exclude weeks falling in two fiscal years)

In the fiscal year ended March 2023, sales of pachislot machines were roughly 94 thousand units (compared with 77 thousand units sold in the previous fiscal year). This wasdue to strong sales of No. 6.5 model machines such as Pachislot Kabaneri of the Iron Fortress and Pachislot Saga of Tanya the Evil. In particular, Pachislot Kabaneri of the Iron Fortress has maintained a high level of utilization since its release in July 2022, and following
a series of additional sales, unit sales have been significantly above initial plan. Sales ofpachinko machines totaled 103 thousand units (compared with 97 thousand units sold in
the previous fiscal year), reflecting sales of flagship machine series such as P Shin Hokuto
Muso Chapter 4. As a result of these factors, the Pachislot and Pachinko Machines Business achieved year-on-year increases in sales and profits.
In the fiscal year ending March 2024, as well as No. 6.5 model machines, which show
good utilization, we will also actively launch smart pachislot titles such as Smart Pachislot
BIOHAZARD: VENDETTA starting with Smart Pachislot Hokuto No Ken. Based on theabove, we expect that, following on from the fiscal year ended March 2023, pachislot
machines will continue to drive sales and profit growth. Although parts procurement
conditions are improving, we will continue to monitor the situation closely. We will build aflexible and stable supply system to ensure our readiness to meet strong demand.

Integrated Report 2023

SEGA SAMMY HOLDINGS(%)

Smart Pachislot BIOHAZARD: VENDETTA©2017 CAPCOM/VENDETTA FILM PARTNERS.
ALL RIGHTS RESERVED.
©SammyUtilization level of Pachislot is significantly increasing
Major titles released in FY2024/3 (As of October 2023)

Utilization Trend (Pachislot & Pachinko)(%)

 achislot: Utilization level has increased due to installation ofP
No. 6.5 Model and smart pachislot, which responds to revision of regulation
Due to installation of Smart Pachislot Hokuto No Ken, etc.,
recent utilization is significantly increasing

140
120

Beginning of Smart Pachislot Installation

100
80

 achinko: Due to lack of new hit machines,Putilization continues centered on regular machines

Beginning of No. 6.5 Beginning of Pachislot Kabaneri of the Iron Fortress
Model Installation Installation

60
Apr. 2022

Jul.

Oct.

Jan. 2023

Apr.

Pachislot: Utilization Trend (YoY)
Pachinko: Utilization Trend (YoY)* In-house estimation based on DK-SIS data (Data for 4 yen Pachinko and 20 yen Pachislot) of
Daikoku Denki Co., Ltd.

50

Delivery month

Beginning of Smart Pachislot Hokuto No Ken Installation

Pachislot

Pachinko

Smart Pachislot Hokuto No Ken

Apr. 2023

Smart Pachislot BIOHAZARD: VENDETTA

Jul. 2023

Pachislot Kizumonogatari –Hajimari No Toki–

Sep. 2023

Pachislot Kabaneri of the Iron Fortress (Additional Sales)

Oct. 2023

P Aura Battler Dunbine 2 –ZEROLIMIT HYPER–

Apr. 2023

P Hokuto No Ken Bokyosei

May 2023

P Kabaneri of the Iron Fortress ~4,000Rengeki ver.~Jun. 2023

P BLACK LAGOON4

Jul. 2023

P Shin Hokuto Muso Chapter 4©Buronson & Tetsuo Hara／COAMIX 1983,
Approved No.KOU-423© 2010-2013 Koei Tecmo Games Co., Ltd. ©Sammy

51

ResortResort BusinessBusiness Overview

We are aiming to invest in the Gaming area as the third driver of earnings intandem with bolstering the profitability of existing resort facilities.

Through the operation of resort facilities in Japan and overseas, the Group is working to build up development and operational
expertise in areas such as hotels, golf, entertainment facilities, commercial facilities and casino operations, while examining
investment opportunities in the Gaming area.

Phoenix Seagaia ResortJapan’s leading resort complex

External Environment
Pandemic-related behavioral restrictions continue easing
Behavioral restrictions in Japan continue to ease. Travel restrictions overseas, which had caused a severe impact, have also been eased.

Anticipated Opportunities and Risks

Opportunities
Entry into the Gaming area
Entry into the Gaming area has thepotential to become a major source of
earnings for the Group.

Risks


Risk of lower customer numbers in
the event of a resurgence of
infections

Responses

Targeting opportunities
 pply know-how accumulated during the Japan IR entry study towardA
investing in the Gaming area

Addressing risks

As a result, net sales in this segment were ¥11,540 million (anincrease of 33.2% from the previous fiscal year) and ordinary
loss was ¥3,217 million (ordinary loss of ¥6,738 million for theprevious fiscal year).
We will continue to work on tactical measures to attract customers in Japan at the Phoenix Seagaia Resort and overseas at
PARADISE CITY. We will also apply the knowledge we haveaccumulated so far with the aim of investing in the Gaming area,a market that is expected to grow.

Phoenix Seagaia Resort offers a richly varied resort experience thattakes advantage of a beautiful natural setting. Surrounding it is avast, nearly 700-hectare grove of Japanese black pines spreading
roughly 11 kilometers north-south along the coast of the Pacific
Ocean in Miyazaki Prefecture. The resort has three accommodation
facilities, including the Sheraton Grande Ocean Resort. It also
boasts a world-class convention center and Phoenix Country Club,one of Japan’s preeminent golf courses.
In 2017, the largest renewal since the resort’s opening was completed, transforming it into New Seagaia, which pursues the quintessential resort experience. Aiming to offer the most delicious food inJapan, we continue to create new culinary experiences at the resort
by making use of its location in Miyazaki, which is well known inJapan as a treasure trove of food.

PARADISE CITY

©Phoenix Resort(Incheon Metropolitan City, South Korea)

South Korea’s first IR facility
PARADISE CITY, operated by PARADISE SEGASAMMY Co., Ltd., ajoint venture with the PARADISE GROUP of South Korea, is the firstIR facility in South Korea with hotels, casinos, convention halls, commercial facilities, and entertainment facilities. We aim to be the preeminent IR facility in northeast Asia by providing high-quality spaces
and services.

The North Country Golf Club

Integrated Report 2023

SEGA SAMMY HOLDINGSAs a measure against the COVID-19 pandemic, thoroughly implemented
preventive measures in accordance with national and local
government policies

Achievements in FY2023/3 and future initiatives
Phoenix Seagaia Resort achieved the highest sales and firstprofitability since it joined the Group due to the contribution of
the government and facility’s own measures to stimulate tourism
demand, as well as the implementation of various measures andthe enhancement of CRM focusing on individual customers.
Overseas, at PARADISE CITY, which is operated by PARADISE SEGASAMMY Co., Ltd. (an equity method affiliate), theeasing of travel restrictions from June 2022 brought a gradual
recovery of casino sales. From October 2022, drop amounts(the amount of chips purchased by customers) of Japanese VIPs
rebounded sharply, reaching pre-pandemic levels.

(Miyazaki City, Miyazaki Prefecture)(Chitose City, Hokkaido)

As part of its activities to promote sports and contribute to the community of Chitose City, the Company runs Sega Sammy Cup Golf
Tournament and operates it as a facility for snow activities, North
Snowland in Chitose, in winter.

52

53