Business Overview
Entertainment Contents

Entertainment Contents Business
5 years

Visualized Earnings Growth

3 years

Strategy 2

Core Strategies

Creation of a “Super Game”

Strengthen the global branding ofexisting IPs

Mobile games forthe global market

Global branding of our IPs engenders solid
confidence in medium- to long-term growth

Utilize past IPs

Mobile games for
the Japanese market

Amusement machines

Animation

Toys

President and COO,
Representative Director
SEGA CORPORATION

Enhancement of the libraryof past IPs
Support subscription-based
services

Steady profit generation

By FY2026/3

By FY2030/3

Growing mainstay IPs into global brands

Progress on the Medium-Term PlanThe Entertainment Contents Business has set a long-term

engagement, we strategically promoted the development ofafter the COVID-19 pandemic. Business has been firm,

is a growth area, the diversified portfolio that we have built

goal of becoming a leading global content provider. To achieve

games, movies, animations, merchandising, and otherparticularly around sales of the UFO Catcher® crane gamehas given us a firm earnings base.

this goal and elevate the business to the next level, we arechannels. Through these efforts, we have achieved a certain

series and prizes for these games. Going forward, while

conducting R&D activities to create a “Super Game,” a major

degree of success with Sonic Frontiers, which has generated

steadily earning profits in the strong domestic market, we willin the post-pandemic business environment, after becoming

title that scales globally, by the fiscal year ending March 2026.

sales far above our initial plan.

continue to advance global expansion for markets such as

overheated by factors including stay at home demand,

The Entertainment Contents Business has slowed slightly

Under the current medium-term plan, we are actively investing

Furthermore, in August 2023, we welcomed into the Group

Asia, North America, and Europe, where the growing

especially in the Consumer area. However, from a medium- toin reinforcing our earnings base through the global branding of

the Finland-based company Rovio Entertainment Corporation

popularity of Japanese animation content has created thelong-term perspective, we expect the global game market toexisting IPs.

(Rovio), which owns the world-famous Angry Birds IP and

potential for growth in the prize machine market.

continue to expand. Helped in part by this market tailwind, up

In the fiscal year ended March 2023, the second year ofbrings advanced capabilities in mobile game development

In the Animation area, as well as video production andto the fiscal year ended March 2023 we have been able tothe medium-term plan, we were able to achieve ordinary

and operation. By gaining these capabilities, we will ramp up

allocated revenue led by the blockbuster movie Detective

achieve results far faster than expected in our original plan.

income of ¥41.1 billion from the Entertainment Contents

full-fledged global expansion in live operated mobile games,

Conan, the rise of Japanese animation in the global market

From a strategic standpoint also, we have been taking firm

Business, meeting the target for the final year of the medium-an area that has so far posed a challenge for us.

has fed into the distribution revenue we generate bysteps toward medium- to long-term growth. In the fiscal year

term plan one year ahead of schedule. In the Consumer area,

Details about Rovio’s entry into the Group are provided onproviding works to distribution platforms that carry that

ending March 2024, the final year of the current medium-termgenre. Business performance has also been steady in theplan, we will work to achieve steady results and to makeToys area. As well as standard products for the domestic

further progress in the next medium-term plan.

P. 38-39

we steadily advanced simultaneous worldwide releases of
new game titles and multi-platform development of content,

In the Amusement Machine area, although there werereleasing various remakes and remasters such as PERSONA

headwinds such as higher input costs caused by themarket, we continue to earn royalty income from product

5 ROYAL (Remaster) and spin-off titles. In our Sonic IP, in an

weakening of the yen and rising raw materials costs, theproposals based on our strong planning capabilities for

effort to expand the value of the IP and strengthen user

market has rebounded quickly as the economy picked up

overseas markets. In addition to the Consumer area, which

Integrated Report 2023

SEGA SAMMY HOLDINGSBy FY2024/3

Yukio Sugino

Strengthening development
resources

Earnings

Strategy 1

Top Message

30

Core Strategies31

IP value

The history of Sonic IP value growthEntertainment Contents

Born in 1991, Sonic is extremely popular in Japan and around the world, and has been at
the core of SEGA's IP strategy. In recent years, our transmedia strategy including
movies and animation has further raised awareness of Sonic, which has expanded
earnings opportunities.

Games at the coreof our IP strategy
became hits.

©2022 PARAMOUNT PICTURESCORPORATION AND
SEGA OF AMERICA, INC.

2020–

Successful transmedia
strategy

1991-2010

Birth and expansion of
Sonic IP

Sonic the Hedgehog

The action adventure game Sonic Frontiers, which was released
globally in 2022, became a huge hit, and has achieved cumulative
worldwide sales of over 3.2 million copies (as of March 31, 2023).

Expanding Sonic IP

2010s

TURNING POINT!
Sonic IP challenges and comeback
Sonic’s overwhelming popularity, especially in North
America, gradually began to wane. The 2010s were adifficult time for the Sonic IP. Even in North America, where
Sonic had been so popular, interest had faded among fans,retailers, and media, and the younger generation of fans
was dwindling. To tackle this challenge, the Sega ofAmerica (SOA) team led a complete review of the gamebuild, thoroughly examining how fans really want to playand enjoy Sonic.
Our social media strategy
involved posting not only gameinformation, but also content for
sparking conversations among
Sonic fans and encouraging them toshare. This attracted the younger generation of fans, helping
build a new community of fans. Out of this community wasborn Sonic Mania, which made use of a ground-breaking
method of building a game while communicating with fans.
Released in 2017, Sonic Mania has created a buzz among
fans, becoming a hit worldwide, which has driven a revivaland growth of the Sonic IP.

Carrying on the momentum of the global blockbuster
movies, we sped up our expansion of the Sonic IP on
several fronts. These included creating animation content
for global distribution platforms, collaborating with games
that enjoy worldwide popularity, and pursuing licensing invarious areas, including toys and apparel. These efforts
have increased user touchpoints, which has increased thefanbase globally.

MoviesSonic the Hedgehog and its sequel Sonic the
Hedgehog 2 were global box-office hits.

Integrated Report 2023

SEGA SAMMY HOLDINGSIn 1991, Sonic the Hedgehog was released in North
America. The game struck a chord with its frenetic
pace and cool main character, Sonic. It became ahuge hit, selling more than 4 million copies worldwide.
A series of sequels including Sonic the
Hedgehog 2 and Sonic the Hedgehog CD werereleased, becoming further hits. Later, we ventured
into 3D action gameplay and rolled out games on a
range of hardware platforms. These developments
were well received, and the popularity of Sonic
grew further. The Sonic IP came to be recognized
as the “face of SEGA,” and it has continued to growas an IP with many fans around the world.

2022-2023

2023
Sonic Superstars is a new game that preserves the nostalgic
feel of classic 2D Sonic side-scrolling action while
reimagining it with beautiful 3D graphics. For the first timeever in the Sonic series, the game can be played offline as acooperative multiplayer by up to four players.

© 2020 PARAMOUNT PICTURES AND SEGA OFAMERICA, INC. ALL RIGHTS RESERVED.

Animation
SONIC PRIME was released globally on
Netflix from December 2022.

Collaborations
Secured partnerships with mega-populargames and their massive audiences(Scheduled for release on October 17, 2023)

Minecraft

Licensing
Toys, games, food, apparel, etc.
Expanding IPs in various areas

Danone Mobile Partnership

2010
32

2017

2020
©SEGA

33

Entertainment Contents

Transmedia strategy
Movie

Top Message

Collaboration

Animation

Expanding our rich lineup of IPs
to markets worldwide will lead to growthIP

Licence

Mobile game

Shuji Utsumi

Comics

CS/PC
game

Co COO, Director of the Board
SEGA CORPORATION

Transmedia strategy for maximizing IP value

In the fiscal year ended March 2023, the Entertainment

marketing budget from the initial plan and significantly raising

As we roll out Sonic IP not only to games but also to movies,

with consumers expanded further. Through these efforts, we

Contents Business made significant strides toward achieving

sales goals to fully capture opportunities. We implemented

animation, and other media, promoting tie-ups with

were also able to build strong trust relationships withthe goals of the current medium-term plan and realizing thethe marketing plan on a scale that the Group had notcompanies in various industries, our presence in various

numerous global companies like Paramount Pictures andlong-term vision beyond that.

experienced in quite some time. Needless to say, the plan

markets continues to expand. This model of success with the

Netflix. My sense is that our presence in global markets today

The major topic for the year was the success of Sonic

helped to whet fan expectations before the game’s release,

Sonic IP is called a transmedia approach, and we areis at an unprecedented level. By building even stronger win-

Frontiers. In addition to incorporating elements of the existing

but internally as well, it caused all the team members involved

positioning it as a key strategy for expanding IP, exploring the

win relationships with partner companies in other industries,

Sonic series, this title also broke new ground in offering new

in the title, from development to marketing and publishing, toapplication of the strategy to IP other than Sonic going

we look for even more opportunities to further enhance theways to play. But because of this, right after releasing theset their sights higher and helped foster a firm commitment toforward. The transmedia approach itself is not an entirely newvalue of our IP going forward.

initial teaser movie, we realized we had failed to fully convey

make Sonic Frontiers a global hit. The upshot was that we hadconcept, but with the development of digital platforms in

We will also strategically apply the expertise gained

the game’s marketing message, and fan reaction was mixed.

recorded over 3.2 million units sold of this hit game as of therecent years, touchpoints with users are expanding at an

through the Sonic IP to other IPs, including our own popular IP

After doing careful testing, we found that long-standing Sonic

end of the fiscal year ended March 2023. In the culture of theunparalleled scale and speed.

series such as our mainstay Persona and Like a Dragon titles

fans in particular were extremely positive about the newGroup today, taking on the challenge of succeeding in global

gaming experience. Sonic is an IP supported by a worldwide

markets has become par for the course, and I think Sonicof millions of people around the world watching the Sonic

recently joined the Group. Because SEGA is a video gamefan base. Once we were convinced that this title would catch

Frontiers became an iconic title showing just how much ourmovies in theaters. Then, through further development oncompany, our premise is first to develop interesting games

on with fans, our confidence grew, and I internally announced

efforts can pay off.

video distribution platforms, we were ultimately able to exposethat captivate fans, but I also believe that by launching the best

hundreds of millions of users to Sonic IP. From blockbuster

games at just the right time in tandem with the development ofmovies to spin-out video productions and the distribution ofvideo productions and merchandise, we can not only groworiginal animation content on Netflix, the range of touchpoints

game sales but also maximize the value of our IP.

a marketing plan, the Go Big Plan. This entailed increasing the34

Taking the Sonic IP as an example, the first stage was tens

Integrated Report 2023

SEGA SAMMY HOLDINGS

Targeting global markets has become par for the course

as well as Angry Birds, the IP of Rovio Entertainment, which

35

PICK UPKey Persons in Expanding IP ValueEntertainment Contents

Launching revivals from our rich IP library and aiming for success with a “Super Game”
When the Group was working on its hardware business, we

We are also making steady headway in development of

had much more success in overseas markets than in Japan.

the “Super Game” that we are seeking to create in the medium

As a result, fans’ respect and deep affection for the titles andto long term. As the name implies, a “Super Game” involves thebrands we sold at the time still run deep, especially overseas.

concept of a game that stands head and shoulders above

With its strong brand awareness and numerous IP gems,

normal games. I encourage stakeholders to look forward to

SEGA SAMMY is truly like a kind of Treasure Island. I see thisthe fruit of our efforts, which include R&D to create a gameas a huge competitive advantage. We are currently movingthat builds a whole worldview involving the entire gaming

forward with plans to revive a succession of IPs. While

ecosystem, including not only players but also streamers who

retaining the nostalgic elements so beloved by fans from thestream the game and their viewers.

Like a Dragon IP

past, we will introduce innovative ideas and technologies thatappeal to the current market, aiming to surpass user
expectations by providing new experiences that merge
nostalgia with a sense of freshness.

The Group will come together as we continue to movefuture. The penetration rate of smartphones and PCs grows

ahead, aiming to be a global leading contents provider andevery year, even in highly populated developing countries withcreating innovative content that astonishes users aroundsizable young populations. Environments continue to emerge

the world.

Executive Officer
Head of 1st Development DivisionGame Content & Service Business HQ
SEGA CORPORATION

that allow people around the world to easily download andregions will naturally continue to increase and that the video
game market will thus continue to grow globally. I also believethat games are better positioned to benefit from technologicalinnovation than movies, music, or other media. Looking back,the introduction of 3D graphics yielded dramatic
improvements in the expressiveness and immersive nature ofgames. The development of online technologies also ushered
in greater diversity in the ways people interact with games andvastly expanded the industry ecosystem. As technology
progresses, it will become possible to provide unprecedented
forms of entertainment and create new business models. With
our sights fixed on this future world, we are actively examining
and rolling out new technologies, including investing in venture
startups that possess unique technologies.

Integrated Report 2023

SEGA SAMMY HOLDINGS

I have no doubt that the video game market has a very brightenjoy games. It is clear that the gaming population in these36

Masayoshi Yokoyama

Aiming to be a global leading contents provider

Since the first title was released in 2005, theLike a Dragon (originally Ryu ga Gotoku) series
has been adapted into numerous films andother media. However, the high popularity of theseries in Japan for many years did not reallytranslate into overseas markets. It was in thisLike a Dragon: Infinite Wealthcontext that the release of Yakuza: Like a©SEGA
Dragon (Ryu ga Gotoku 7) in 2020 ushered in a
major turning-point for the series.
Ichiban Kasuga is the new protagonist of Yakuza: Like a Dragon. While he is definitely old school, the lack of gender or age bias in his words and actions resonated withmany users overseas and led to the title becoming a global hit. I don’t think this was acoincidence by any means, but rather a sign that we as creators have come closer tomeeting international standards.
The Like a Dragon IP is a work that taps into the current state of society. Now that
we have broken out of the vague notion that the game is somehow limited to Japan, weare taking a big step out into the world. We have plans underway to astonish users
around the world not only with a new release that is just around the corner, but also withother developments in the works. I believe our stakeholders can expect big things as
the Like a Dragon IP continues to grow through our transmedia strategy.

Atlus IPs
With a commitment to being both “Unique &Universal,” Atlus is creating unique gameplaying experiences that touch the soul.
Our mainstay IPs, the Persona and Shin
Megami Tensei series, have found audienceswith users around the world as Japanese
Persona 3 Reloadrole-playing games that allow players to©ATLUS. ©SEGA. All rights reserved.
experience the feel of Japanese cities andculture. The Persona series in particular has
become a huge hit, with the bright, pop image of Persona 4 Golden getting even higher
marks from users in Europe and America than in Japan. In addition, the value of our IPs
has grown rapidly in recent years owing to our multiplatform deployment and aggressive strategy of remaking and remastering past titles.
To expand the value of our IPs even further, we will continue to pursue measures togain the even stronger loyalty of our fans, including strengthening horizontal promotions of the series and holding events, mainly live music shows, around the world. We
also plan to release a new IP in 2024, called Metaphor: ReFantazio—we took on a boldchallenge with this ambitious new title, capitalizing on Atlus’s strengths as an expert inrole-playing games. I’m confident the new title will delight users.

Naoto Hiraoka
Senior Managing Director
General Manager of Consumer Software Division
ATLUS CO., LTD.

37

Acquisition of Rovio Entertainment Corporation (Rovio)
Entertainment Contents

SEGA made a public tender offer for Rovio, a mobile game company headquartered in Finland,through our subsidiary SEGA Europe Limited. In August 2023, Rovio became a Group company.
Increasing our presence in the rapidly growing global video game market, including mobile games, will hinge upon strengthening our ongoing gamedevelopment system and operational capabilities. That is why we decided to make this acquisition.
By acquiring Rovio, which operates mobile games globally, we have brought onboard Rovio’s managed mobile gaming development capabilities andoperational expertise. This will enable us to accelerate our development of mobile game versions of SEGA’s existing IP as well as our coverage of multiple
platforms. In this way, we will strengthen the SEGA gaming portfolio and accelerate our global expansion more than ever.
Key Strength of Rovio

SEGA’s overseas mobile revenue up to around 45% of total mobile revenue

Development and Operational Capabilities regarding Mobile Gaming
A key strength of Rovio is its outstanding capabilities in developing
and operating mobile games. It has eight game studios focused on
casual games not only in Finland but also in Sweden and Canada.
Combined, they have achieved a 2022 average of 6.7 million daily
active users and a cumulative total of 5 billion downloads. Rovio
currently has a total of five titles that boast cumulative sales of over

EUR 100 million each, including Angry Birds 2 and Angry Birds
Dream Blast. Since the first Angry Birds game was launched in
2009, it has been animated and made into a movie. Merchandising
has been developed, as have theme parks through location-based
entertainment businesses.

Overseas

Rovio Mobile
Japan/Overseas Ratio
Japan

Japan

97%

3%

STUDIOS FROM ACQUISITION¥

Overseas

Japan

45%

55%

Revenue

53.8 billion¥

34.0 billion*

Revenue3

6.7

million

5.0

billionCumulative Downloads*1

8Live Service Games“Beacon”, the Tool for Live Service Game Operation
Beacon, a game operation support tool owned by Rovio, is a toolthat centrally provides the functions necessary for the operation oflive service games. It can help boost the efficiency of game operations as well as the accuracy of operational measures. By utilizing
this platform, which brings together the know-how that Rovio has

Data Lake*2*1 5 billion cumulative downloads include titles outside of Angry Birds*2 Method of storing large data as raw data
© Rovio Entertainment Corporation. All Rights Reserved

cultivated in the global mobile market, particularly in Europe andAmerica, and by leveraging also the power of the talent that supports it, we will accelerate the globalization of SEGA’s mobile
game business, which is currently Japan-oriented.

Player Recognition Analytics Advertising EffectivenessAB testing Live Operation Payment Personalization
Client Segmentation Ad mediation Cross-Promotion
Push Notification Research Privacy Framework
Game Server Infrastructure Machine Learning / AI

88.0 billion*3 €232 million (Assumption of €1=¥146.9)
Note: Calculated based on SEGA and Rovio’s cumulative figures as of Q3. Rovio’s revenue breakdown taken from data.ai

Integrated Report 2023

SEGA SAMMY HOLDINGS

88%

Simple consolidated basis
Japan/Overseas Ratio

Overseas

Revenue

NEW ORGANIC STUDIOS

that overseas sales will grow to account for 45% of SEGA’s mobile
business (on a simple consolidated basis for the two companies).

¥

Daily Active Users (2022 Average)

38

SEGA Mobile
Japan/Overseas Ratio

12%

Game Studio Portfolio
HISTORIC FOOTHOLD

Overseas sales currently account for a 12% share of SEGA’s
mobile game business. In contrast, Rovio generates 97% of its
sales outside of Japan. With Rovio joining the Group, we expect

Pursuing synergies based on shared values and complementary capabilities
With our clear complementary relationship and shared values,
there could not be more well-suited partners than Rovio and
SEGA. SEGA has the ability to develop and operate large-scale
titles for consoles and PCs, a lineup of globally recognized IP
including Sonic, and results and expertise in the Japanese mobile
game market. In contrast, as well as its Angry Birds IP, which has a
global fan base centered on Europe and America, Rovio also hascapabilities in developing and operating global mobile games and,backing these capabilities, its game operation support platform
Beacon. In addition, Rovio and SEGA share a common set ofvalues that emphasize improving IP value from a long-term perspective. Going forward, we will pursue new synergies based onthese complementary capabilities and shared values.

 lobal development and operation capabilities forGlarge-scale PC/Console games

 evelopment and operational capabilities ofD
global F2P games

Wealth of popular IPs such as the Sonic series

Globally recognized “Angry Birds” IP apability and expertise in expansion of IP toCvarious media

 rack record regarding IP licensing to moviesTand merchandising evelopment and operational capabilities forD
mobile games in Japan

Strong fanbase in the US and Europe
Proprietary game operation platform, “Beacon”

Rich M&A experience centered around Europe

Red: Categories where synergies can be most expected

Shared values that nurture IP over the long term
39