Sega has drastically cut its net profit estimate by 72% for the fiscal year that ends in March of 2003. The new figure of 5 billion yen ($41.11 million USD) is substantially below the 18 billion yen estimate it offered last May.
The company now expects to sell 12.6 million units of software worldwide this year, a 14 percent drop from the prior forecast of 20 million. Sega president Hideki Sato explained the revised targets bluntly: "We miscalculated financial targets for this year because of overconfidence stemming from results last year and a lack of experience as a third-party software publisher."
The downgrade was further blamed on poor U.S. sales of Sega Sports NFL 2K3 and the delay and cancellation of several games that were due to launch before the end of March. Sega has been trying, so far unsuccessfully, to directly challenge the Madden football games and other game categories from Electronic Arts.
Sega, which is perhaps best known for its Sonic the Hedgehog game, was once a powerhouse in videogame consoles and software, particularly in the era of 16-bit game consoles with its Sega Genesis. Successors to that product never quite met with market success, however. Sega's most recent game console, the Dreamcast, never really caught on despite high-quality graphics, a built-in modem, and a launch date six months before Sony's Playstation 2.
Last year, Sega jettisoned the Dreamcast to focus on being a console software publisher. Chief Operating Officer Tetsu Kayama said that the company would try to boost profits by reducing the number of games under development and reducing the amount of money spent on promotion. "Our goal to become the world's leading game software publisher remains unchanged", Kayama said.
SOURCE:
Game Market Watch
