Sega has explained the abrupt cancellation of Football Manager 25 (FM25) and delays to two new free-to-play titles means sales are now expected to fall below its previous fiscal forecast.
Breaking down its Q3 performance in its latest fiscal results, Sega said its Entertainment Contents business remains “strong” after both sales and profits increased year-on-year.
Looking specifically at the Consumer sub-segment (which houses Sega’s video game operations within Entertainment Contents), sales increased to 164.8 billion yen ($1.1 billion) from 149.1 billion yen ($983.3 million).
Operating income within the sub-division also increased to 25.1 billion yen ($165.6 million) from 11.6 billion yen ($76.5 million) over the same period.
Sega noted that upswing was due to strong catalog sales of titles like Persona 5 Royal (Remaster) and Unicorn Overlord. It also heaped praise on new releases Sonic x Shadow Generations and Metaphor: ReFantazio, which have now topped 2 million and 1 million sales, respectively.
Metaphor, specifically, is currently exceeding sales expectations.
Sega upbeat about prospects of game business despite high-profile cancelation
Despite those positives, Sega has downgraded its Consumer sales forecast following the FM25 cancellation, but noted ordinary income is now expected to surpass expectations due to solid digital and catalog sales.
“Due to the development cancellation, the Group recorded a loss in the third quarter by work-in-process assets write-downs,” Sega added.
“This decision was made because, despite aiming the development for significant advancements in the standard series through the renewal and the addition of new features for the UI and graphics, it was determined that it would be difficult to ensure sufficient product quality expected by the March release.
“With carrying over the development assets to its sequel, the Group will continue development efforts to produce and serve higher-quality works.”
Sega also recorded an extraordinary loss of approximately 6.1 billion yen in the second quarter following the sale of Amplitude Studios through a management buyout.
Looking ahead, the company is forecasting full-year net sales of 320 billion yen (down from 335 billon yen) and ordinary income of 44 billion yen (up from 40 billion yen) within its Entertainment Contents division.