Entertainment Contents Business

Top Message

Visualized Earnings Growth

Strengthening development

resources

Enhancement of the library

of past IPs

Steady profit generation

By FY2024/3 By FY2026/3 By FY2030/3

Strategy

Strengthen the global branding of

existing IPs

Strategy

Creation of a “Super Game”

Earnings

Animation

Mobile games for

the Japanese market

Support subscription-based

services

Utilize past IPs

Mobile games for

the global market

Toys

Amusement machines

Core Strategies

years

Core Strategies

years

Growing mainstay IPs into global brands

Entertainment Contents Business

Business Overview

Yukio Sugino

President and COO,

Representative Director

SEGA CORPORATION

Progress on the Medium-Term Plan

The Entertainment Contents Business has set a long-term

goal of becoming a leading global content provider. To achieve

this goal and elevate the business to the next level, we are

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

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

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

in reinforcing our earnings base through the global branding of

existing IPs.

In the fiscal year ended March 2023, the second year of

the medium-term plan, we were able to achieve ordinary

income of ¥41.1 billion from the Entertainment Contents

Business, meeting the target for the final year of the medium-

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

we steadily advanced simultaneous worldwide releases of

new game titles and multi-platform development of content,

releasing various remakes and remasters such as PERSONA

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

effort to expand the value of the IP and strengthen user

engagement, we strategically promoted the development of

games, movies, animations, merchandising, and other

channels. Through these efforts, we have achieved a certain

degree of success with Sonic Frontiers, which has generated

sales far above our initial plan.

Furthermore, in August 2023, we welcomed into the Group

the Finland-based company Rovio Entertainment Corporation

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

brings advanced capabilities in mobile game development

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

full-fledged global expansion in live operated mobile games,

an area that has so far posed a challenge for us.

Details about Rovio’s entry into the Group are provided on

P. 38-39

In the Amusement Machine area, although there were

headwinds such as higher input costs caused by the

weakening of the yen and rising raw materials costs, the

market has rebounded quickly as the economy picked up

after the COVID-19 pandemic. Business has been firm,

particularly around sales of the UFO Catcher® crane game

series and prizes for these games. Going forward, while

steadily earning profits in the strong domestic market, we will

continue to advance global expansion for markets such as

Asia, North America, and Europe, where the growing

popularity of Japanese animation content has created the

potential for growth in the prize machine market.

In the Animation area, as well as video production and

allocated revenue led by the blockbuster movie Detective

Conan, the rise of Japanese animation in the global market

has fed into the distribution revenue we generate by

providing works to distribution platforms that carry that

genre. Business performance has also been steady in the

Toys area. As well as standard products for the domestic

market, we continue to earn royalty income from product

proposals based on our strong planning capabilities for

overseas markets. In addition to the Consumer area, which

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

has given us a firm earnings base.

The Entertainment Contents Business has slowed slightly

in the post-pandemic business environment, after becoming

overheated by factors including stay at home demand,

especially in the Consumer area. However, from a medium- to

long-term perspective, we expect the global game market to

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

to the fiscal year ended March 2023 we have been able to

achieve results far faster than expected in our original plan.

From a strategic standpoint also, we have been taking firm

steps toward medium- to long-term growth. In the fiscal year

ending March 2024, the final year of the current medium-term

plan, we will work to achieve steady results and to make

further progress in the next medium-term plan.

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Global branding of our IPs engenders solid

confidence in medium- to long-term growth

The history of Sonic IP value growth

©SEGA

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.

IP value

2010 2017 2020

Sonic IP challenges and comeback

Sonic’s overwhelming popularity, especially in North

America, gradually began to wane. The 2010s were a

difficult 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 of

America (SOA) team led a complete review of the game

build, thoroughly examining how fans really want to play

and enjoy Sonic.

Our social media strategy

involved posting not only game

information, but also content for

sparking conversations among

Sonic fans and encouraging them to

share. This attracted the younger generation of fans, helping

build a new community of fans. Out of this community was

born 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 revival

and growth of the Sonic IP.

Expanding 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 in

various areas, including toys and apparel. These efforts

have increased user touchpoints, which has increased the

fanbase globally.

In 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 a

huge hit, selling more than 4 million copies worldwide.

A series of sequels including Sonic the

Hedgehog 2 and Sonic the Hedgehog CD were

released, 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 grow

as an IP with many fans around the world.

CORPORATION AND

SEGA OF AMERICA, INC.

Sonic the Hedgehog

Movies

Sonic the Hedgehog and its sequel Sonic the

Hedgehog 2 were global box-office hits.

Animation

SONIC PRIME was released globally on

Netflix from December 2022.

Collaborations

Secured partnerships with mega-popular

games and their massive audiences

Minecraft

Licensing

Toys, games, food, apparel, etc.

Expanding IPs in various areas

Danone Mobile Partnership

1991-2010

Birth and expansion of

Sonic IP

2010s

TURNING POINT!

2020–

Successful transmedia

strategy

(Scheduled for release on October 17, 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 time

ever in the Sonic series, the game can be played offline as a

cooperative multiplayer by up to four players.

2022-2023

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).

Games at the core

of our IP strategy

became hits.

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Top Message

Movie

Animation

Comics

CS/PC

game

Mobile game

Licence

Collaboration

Transmedia strategy

Shuji Utsumi

Co COO, Director of the Board

SEGA CORPORATION

Targeting global markets has become par for the course

In the fiscal year ended March 2023, the Entertainment

Contents Business made significant strides toward achieving

the goals of the current medium-term plan and realizing the

long-term vision beyond that.

The major topic for the year was the success of Sonic

Frontiers. In addition to incorporating elements of the existing

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

ways to play. But because of this, right after releasing the

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

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

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

fans in particular were extremely positive about the new

gaming experience. Sonic is an IP supported by a worldwide

fan base. Once we were convinced that this title would catch

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

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

marketing budget from the initial plan and significantly raising

sales goals to fully capture opportunities. We implemented

the marketing plan on a scale that the Group had not

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

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

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

in the title, from development to marketing and publishing, to

set their sights higher and helped foster a firm commitment to

make Sonic Frontiers a global hit. The upshot was that we had

recorded over 3.2 million units sold of this hit game as of the

end of the fiscal year ended March 2023. In the culture of the

Group today, taking on the challenge of succeeding in global

markets has become par for the course, and I think Sonic

Frontiers became an iconic title showing just how much our

efforts can pay off.

Transmedia strategy for maximizing IP value

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

animation, and other media, promoting tie-ups with

companies in various industries, our presence in various

markets continues to expand. This model of success with the

Sonic IP is called a transmedia approach, and we are

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

application of the strategy to IP other than Sonic going

forward. The transmedia approach itself is not an entirely new

concept, but with the development of digital platforms in

recent years, touchpoints with users are expanding at an

unparalleled scale and speed.

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

of millions of people around the world watching the Sonic

movies in theaters. Then, through further development on

video distribution platforms, we were ultimately able to expose

hundreds of millions of users to Sonic IP. From blockbuster

movies to spin-out video productions and the distribution of

original animation content on Netflix, the range of touchpoints

with consumers expanded further. Through these efforts, we

were also able to build strong trust relationships with

numerous global companies like Paramount Pictures and

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

is at an unprecedented level. By building even stronger win-

win relationships with partner companies in other industries,

we look for even more opportunities to further enhance the

value of our IP going forward.

We will also strategically apply the expertise gained

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

series such as our mainstay Persona and Like a Dragon titles

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

recently joined the Group. Because SEGA is a video game

company, our premise is first to develop interesting games

that captivate fans, but I also believe that by launching the best

games at just the right time in tandem with the development of

video productions and merchandise, we can not only grow

game sales but also maximize the value of our IP.

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Expanding our rich lineup of IPs

to markets worldwide will lead to growth

PICK UP

Key Persons in Expanding IP Value

Since the first title was released in 2005, the

Like a Dragon (originally Ryu ga Gotoku) series

has been adapted into numerous films and

other media. However, the high popularity of the

series in Japan for many years did not really

translate into overseas markets. It was in this

context that the release of Yakuza: Like a

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 defi-

nitely old school, the lack of gender or age bias in his words and actions resonated with

many users overseas and led to the title becoming a global hit. I don’t think this was a

coincidence by any means, but rather a sign that we as creators have come closer to

meeting 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, we

are 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 with

other 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.

With a commitment to being both “Unique &

Universal,” Atlus is creating unique game-

playing experiences that touch the soul.

Our mainstay IPs, the Persona and Shin

Megami Tensei series, have found audiences

with users around the world as Japanese

role-playing games that allow players to

experience the feel of Japanese cities and

culture. 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 aggres-

sive strategy of remaking and remastering past titles.

To expand the value of our IPs even further, we will continue to pursue measures to

gain the even stronger loyalty of our fans, including strengthening horizontal promo-

tions 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 bold

challenge with this ambitious new title, capitalizing on Atlus’s strengths as an expert in

role-playing games. I’m confident the new title will delight users.

Like a Dragon IP

Atlus IPs

Masayoshi Yokoyama

Executive Officer

Head of 1st Development Division

Game Content & Service Business HQ

SEGA CORPORATION

Naoto Hiraoka

Senior Managing Director

General Manager of Consumer Software Division

ATLUS CO., LTD.

Like a Dragon: Infinite Wealth

©SEGA

Persona 3 Reload

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

had much more success in overseas markets than in Japan.

As a result, fans’ respect and deep affection for the titles and

brands we sold at the time still run deep, especially overseas.

With its strong brand awareness and numerous IP gems,

SEGA SAMMY is truly like a kind of Treasure Island. I see this

as a huge competitive advantage. We are currently moving

forward with plans to revive a succession of IPs. While

retaining the nostalgic elements so beloved by fans from the

past, we will introduce innovative ideas and technologies that

appeal to the current market, aiming to surpass user

expectations by providing new experiences that merge

nostalgia with a sense of freshness.

We are also making steady headway in development of

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

to long term. As the name implies, a “Super Game” involves the

concept of a game that stands head and shoulders above

normal games. I encourage stakeholders to look forward to

the fruit of our efforts, which include R&D to create a game

that builds a whole worldview involving the entire gaming

ecosystem, including not only players but also streamers who

stream the game and their viewers.

Aiming to be a global leading contents provider

I have no doubt that the video game market has a very bright

future. The penetration rate of smartphones and PCs grows

every year, even in highly populated developing countries with

sizable young populations. Environments continue to emerge

that allow people around the world to easily download and

enjoy games. It is clear that the gaming population in these

regions will naturally continue to increase and that the video

game market will thus continue to grow globally. I also believe

that games are better positioned to benefit from technological

innovation than movies, music, or other media. Looking back,

the introduction of 3D graphics yielded dramatic

improvements in the expressiveness and immersive nature of

games. The development of online technologies also ushered

in greater diversity in the ways people interact with games and

vastly 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.

The Group will come together as we continue to move

ahead, aiming to be a global leading contents provider and

creating innovative content that astonishes users around

the world.

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Acquisition of Rovio Entertainment Corporation (Rovio)

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 game

development 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 and

operational 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

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.

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

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

that overseas sales will grow to account for 45% of SEGA’s mobile

business (on a simple consolidated basis for the two companies).

6.7 million

Daily Active Users (2022 Average)

5.0 billion

Cumulative Downloads*

Live Service Games

Player Recognition Analytics Advertising Effectiveness

AB testing Live Operation Payment Personalization

Client Segmentation Ad mediation Cross-Promotion

Push Notification Research Privacy Framework

Game Server Infrastructure Machine Learning / AI

Red: Categories where synergies can be most expected

Data Lake*

*1 5 billion cumulative downloads include titles outside of Angry Birds

*2 Method of storing large data as raw data

*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

Overseas

12%

Overseas

97%

Overseas

45%

Japan

88%

Japan

55%

Global development and operation capabilities for

large-scale PC/Console games

Wealth of popular IPs such as the Sonic series

Capability and expertise in expansion of IP to

various media

Development and operational capabilities for

mobile games in Japan

Rich M&A experience centered around Europe

Development and operational capabilities of

global F2P games

Globally recognized “Angry Birds” IP

Track record regarding IP licensing to movies

and merchandising

Strong fanbase in the US and Europe

Proprietary game operation platform, “Beacon”

Shared values that nurture IP over the long term

“Beacon”, the Tool for Live Service Game Operation

Beacon, a game operation support tool owned by Rovio, is a tool

that centrally provides the functions necessary for the operation of

live service games. It can help boost the efficiency of game opera-

tions as well as the accuracy of operational measures. By utilizing

this platform, which brings together the know-how that Rovio has

cultivated in the global mobile market, particularly in Europe and

America, and by leveraging also the power of the talent that sup-

ports it, we will accelerate the globalization of SEGA’s mobile

game business, which is currently Japan-oriented.

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 has

capabilities 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 of

values that emphasize improving IP value from a long-term per-

spective. Going forward, we will pursue new synergies based on

these complementary capabilities and shared values.

SEGA Mobile

Japan/Overseas Ratio

Rovio Mobile

Japan/Overseas Ratio

Simple consolidated basis

Japan/Overseas Ratio

HISTORIC FOOTHOLD NEW ORGANIC STUDIOS STUDIOS FROM ACQUISITION

Game Studio Portfolio

Revenue

53.8 billion

Revenue

¥34.0 billion*

Revenue

88.0 billion

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