SEGA Sammy Holdings shared an update during its Q&A session on the financial results for the second quarter of fiscal year 2025, with a strong performance from its flagship franchise, Sonic the Hedgehog.

Why it matters: Sonic remains the crown jewel of their entertainment business, driving revenues not only in gaming but also in animation and related media.

The big picture: The Japanese conglomerate is doubling down on its transmedia strategy, positioning its animation division as a key growth area.

  • The company is balancing cinematic investments, like Sonic films, with lower-risk licensing deals to expand its IP footprint.

The officially-translated transcript below includes responses from SEGA president Haruki Satomi and board director Koichi Fukazawa.

Q: The new titles, Metaphor: ReFantazio and SONIC X SHADOW GENERATIONS have sold over 1 million units on their release date. Please tell us the initial forecast and outlook for these titles.

A: Both titles are performing well compared to the initial forecast, and we are aiming to achieve the forecast without fail. Since a Sonic movie is scheduled to be released in the future, we are expecting synergistic effects for SONIC X SHADOW GENERATIONS.

Q: New titles SONIC X SHADOW GENERATIONS and Metaphor: ReFantazio are both doing well. What's behind this?

A: We believe this success is due to the high quality of the products being highly acclaimed and the effectiveness of our promotional strategies. Both titles have been highly acclaimed by industry professionals as well as users at Metacritic. In terms of promotion, we are actively engaging on ways to boost sales by participating in various video game evens and partnering with influencers, mainly in Asia.

Q: What was the reason for the steady repeat sales in Q2?

A: Unicorn Overlord and Persona 5: Royal (Remaster), which also performed well in Q1, continued to be sold well, and the Total War series saw a recovery. In addition, we are strengthening our digital distribution, and our strategic efforts to reorganize the lineup and enhance pricing are boosting overall repeat sales.

Q: What is the reason for the decrease in "Other" sales in the Consumer area compared to the first quarter?

A: We believe that this is mainly due to a decrease in the positive impact of foreign exchange rates as well as the fact that large sales from subscription and other sources occurred in the first quarter.

Q: Have the European structural reforms been completed? What are the effects of them?

A: The structural reforms in Europe have been finalized with the MBO of Amplitude. Each studio is now focusing on organizing a lineup that highlights its core strengths. In the Total War series, the introduction of additional DLC to Total War: WARHAMMER III, supported by enhanced dialogue with the user community, has received positive feedback. Furthermore, improvements to the main game are showing promising results, with sales performance surpassing expectations.

Q: What factors enabled the swift and judicious decision to cease the development of HYENAS in FY2024/3?

A: We made our decision based on quantitative information. There were positive comments in the preliminary tests, and we considered launching the game to let the players to decide its fate, however, we faced several challenges, such as it being a new IP, the European studio’s lack of experience in online game development and operation, and a deteriorating cost structure due to inflation. In light of these circumstances, the decision was made to discontinue the project, considering the profitability of post-launch operations and additional development.

Q: Titles from ATLUS are performing well globally. Are you considering strengthening ATLUS’s development resources to increase the weight of Full Game?

A: ATLUS is one of the most successful M&A transactions our group has conducted. In the past, ATLUS used to often sell its products in a limited number of countries, regions, and platforms under its limited resources. However, after joining SEGA group, they gained the capability to expand their reach. As for Metaphor: ReFantazio, its impressive launch was driven not only by its exceptional product quality but also by the strategic use of SEGA’s publishing power, enabling a seamless, simultaneous global release across multiple platforms.

Q: You mentioned that you have been cooperating with platformers by providing launch titles on each platform. Can we assume the same for the next generation platforms?

A: Due to our Group's strong development capabilities and adaptability across a wide range of platforms, we have been cooperated with platformers by providing titles during the launch of various new hardware and platforms. By supplying launch titles, we are also able to receive significant support from platformers.

Q: Will the Animation area gain increased significance in the future?

A: We have established it as an independent sub-segment from FY2025/3 and aim to strengthen it further as part of our transmedia strategy. TMS ENTERTAINMENT, which serves as the core of this sub-segment, is now focusing on producing cinematic works in addition to its traditional animation production. They are aiming to expand their pipeline by involving not only the companies within the Group but also external production companies. Furthermore, as a group, we aspire to expand this business while maintaining a balance between bold investments, such as in the case of Sonic movie, and adopting risk-mitigation strategies such as licencing out.

Q: The drama adaption of Like a Dragon: Yakuza (Prime Video) appears to be receiving mixed reviews. Has it already impacted repeat sales of the Like a Dragon series?

A: We are aware that the drama adaptation of Like a Dragon has received both positive and negative reviews. This is not limited to Like a Dragon, but we are expanding the development of our IPs into cinematic works and other formats. For instance, Like a Dragon has successfully attracted new fans, who do not necessarily play the game, but have engaged with it through gameplay video distribution. We as a group intend to expand our fan base by promoting the cinematic production and other initiatives.

Q: The Full Game market is currently weak. How do you anticipate this changing over the next year?

A: We recognize that while the market in Japan is limited in its enthusiasm, global market growth continues unabated. We believe that there is potential for growth, as the expansion of digital distribution has increased price flexibility and our measures to boosting sales. On the other hand, the concentration of popularity on existing major IPs poses a challenge, making it difficult for the industry as a whole to venture into new IPs. We as a group will address this by leveraging Legacy IPs and creating new ones, all while maintaining a balance with our core IP titles.