New Medium-Term Plan (FY2022/3-FY2024/3)
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SEGA SAMMY HOLDINGS INC. New Medium-Term Plan (FY2022/3-FY2024/3) 2021/5/13 Market forecasts, operating results forecast, and other information contained in these materials are based on judgements and projections of the Company’s Disclaimer managements from currently available information. Therefore, please understand that the contents herein involve risks and uncertainties, and the actual results could differ materially depending on various factors. © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Long-term vision Value (Mindset and DNA) “Creation is Life” × Mission (Raison d’être) “Always Proactive, “Constantly Creating, Forever Captivating” Always Pioneering” —Making life more colorful— Vision (Ideal self) Be a Game Changer Pachislot and Entertainment Pachinko Resort Sustainability Global Leading No.1 in Sales Opening Contents Provider and Utilization of IR Environment Empathy Edge Economics share -37- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. New Medium-Term Plan (3 years) Beyond the Status Quo Goal -Breaking the Current Situation and Target Becoming a Sustainable Company- FY2024/3: Ordinary income 45.0 billion yen, ROE Over 10% Consumer area Pachislot and Pachinko Strategy Certification as a Investment Solidification of business operator Key Strategy in growth earnings base of IR -38- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. New Medium-Term Plan (3 years): Management Policies and KPIs Improvement of ROE by shifting to the management focusing on capital efficiency ROE 2.9% 0.9% 4.6% 0.4% 5% 7% 10% (Forecast) (Forecast) (Forecast) 800 4,000 (Unit: Billion yen) 366.5 350.0 700 3,500 331.6 337.0 323.6 312.0 600 3,000 277.7 45.0 500 2,500 400 2,000 30.0 Sales1,500 25.2 300 20.0 1,000 14.5 200 Ordinary 7.4 100 Income 500 1.7 0 0 FY2018/3 FY2019/3 FY2020/3 FY2021/3 FY2022/3 FY2023/3 FY2024/3 Previous Mid-term Plan period (Road to 2020) Structural reform New Mid-term Plan -39- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. New Medium-Term Plan (3 years): Per segment breakdown Aiming for ROE10% and ordinary income of 45.0 billion yen in FY2024/3 FY21/3 Results FY22/3 Forecast FY23/3 Forecast FY24/3 Forecast (Unit: Billion yen) Sales 217.8 213.0 238.0 242.0 Entertainment Operating Income 27.9 23.0 28.5 39.0 Contents Ordinary Income 27.9 25.0 30.0 40.0 Sales 53.1 89.0 88.0 96.0 Pachislot and Operating Income -10.6 9.0 9.0 13.0 Pachinko Ordinary Income -11.3 9.0 9.0 13.0 Sales 6.3 9.5 10.5 10.5 Resort Operating Income -4.1 -3.0 -1.5 -1.3 Ordinary Income -8.9 -5.0 0.0 1.0 Sales 0.5 0.5 0.5 1.5 Other/ Elimination Operating Income -6.7 -9.0 -9.0 -8.7 Ordinary Income -6.0 -9.0 -9.0 -9.0 Sales 277.7 312.0 337.0 350.0 Operating Income 6.5 20.0 27.0 42.0 Consolidated Ordinary Income 1.7 20.0 30.0 45.0 ROE 0.4% 5% 7% 10% -40- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. New Medium-Term Plan (3 years): Strategic Frameworks Focused investment Investment Consumer area ◼ Creation of Super Game in growth IR business ◼ Certification as a business operator of IR Pachislot and Creation of Hits Ensure Pachinko × stable earnings Amusement Machine Animation / Toys Business efficiency -41- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Entertainment Contents Business Consumer Area -42- Long-Term Objectives To be a Global Leading Contents Provider FY2024/3 FY2026/3 Strengthen earnings base by making existing IPs into global brand Creation of Super Game Investment promotion period towards global players Proactive investment in growth (Additional investment of up to 100.0 billion yen in 5 years) -43- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Market Size and Growth Potential Market Size Trend (Forecast) Worldwide Game Player Population (Forecast) 21 3.2 (Trillion yen) (Billion person) 19 2 2.8 1 0.8 4 4 0.7 2.0 0.4 10 5 0.4 0.2 5 0.4 1 0.2 0.3 2 0.2 8 1.7 3 7 1.4 1.0 3.2 2 2 1 0.1 0.1 0.1 2015 2020 2023 2015 2020 2023 *Source: Created based on Newzoo Report January 2021, 1USD = 105JPY *Source: Created based on Newzoo reports, All people who played games in any of the platform following in the last six months; PCs, home videogame consoles, mobile devices and the cloud gaming services. Japan Asia NA EU Others © SEGA SAMMY HOLDINGS INC. All Rights Reserved. -44- Expansion of Platformers Barriers between devices and regions disappeared and point of contact with users are increasing NetEase Games Epic Games NETFLIX Xbox Game Pass Steam Apple Arcade Tencent WeGame Stadia PlayStation oculus Xbox Luna Nintendo Changes in the micro-transaction model One-off sales F2P Subscription Season pass + DLC -45- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategic Portfolio 【Key strategies】 Growth High Priority Strategies for potential (Global) Priority Strategies for 3 years 5 years Strategy 1: Strategy 2: Creation of Super Game Making existing IPs into global brand ⚫ Establishment of strong IP which is recognized as a ⚫ Creation of titles which can be expanded globally global brand ⚫ Expansion of past IP libraries Utilization of past IPs Support subscription Profitability Profitability High Low (Existing) (New) ⚫ Optimization of business scale and focus on profitability Domestic mobile Amusement Machines Growth Low (Domestic) potential -46- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategic Portfolio Strengthen existing IPs to build a solid structure in 3 years Create Super Game in 5 years Priority Strategies for 5 years Strategy 2: Creation of Super Game Priority Strategies for 3 years Earnings Strategy 1: Making existing IPs into global brand Utilization of past IPs Support subscription Domestic mobile Amusement Machine ~FY24/3 ~FY26/3 ~FY30/3 -47- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategy 1: Making Existing IPs into Global Brand Grow mainstay IPs which holds core fans as a global brand <Image of Brand Expansion> 1 2 3 Expansion of Prolonging the Strengthening of touch points product life cycle user engagement ◼ Strengthen global roll-out ◼ Utilization of IP assets ◼ Community management ◼ Multi-platform support ◼ Strengthen digital sales ◼ Strengthen media mix ◼ Multi-language support ◼ Multi-monetization -48- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategy 1: Making Existing IPs into Global Brand (Example) Expansion of ◼Expand sales areas with the first worldwide touch points simultaneous launch from Ryu ga Gotoku studio ©SEGA • Simultaneous global launch (scheduled for September 24, 2021) • Support platforms: PlayStation4, PlayStation5, Xbox One, Xbox Series X/S • Support 9 languages (Japanese, Traditional Chinese, Simplified Chinese, Hangul, English, French, Italian, German and Spanish) -49- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategy 1: Making Existing IPs into Global Brand (Example) Strengthening of ◼Expansion of recognition of Sonic brand by User Engagement strengthening Media Mix FY2020/3~ FY2023/3~ Sequel of the movie, and anime will be Made into a movie distributed in Netflix Released in March 2020 Box office $320 million ©SEGA -50- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Strategy 2: Creation of Super Game Challenge toward creating large-scale global titles FY22/3 FY23/3 FY24/3 FY25/3 FY26/3 ⚫ Development of new FPS title at European studio Creation of ⚫ Utilization of IP assets Super Game ⚫ Create aimed for three to five years from now Make into Global Online IP utilization Media Aim for life-time sales of 100.0 billion yen -51- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Utilization of IP Assets Holds a large number of globally recognized IP Utilizing these IPs after careful examination Examples of past IP groups Examples of active IP (Including dormant IPs) ⚫ Phantasy Star ⚫ Ryu ga Gotoku (YAKUZA) ⚫ Crazy Taxi ⚫ Shinobi ⚫ Sonic ⚫ Persona ⚫ Jet Set Radio ⚫ Virtua Fighter ⚫ Total War ⚫ Megami Tensei etc. ⚫ Space Channel 5 ⚫ Altered Beast ⚫ Football Manager ⚫ Rez ⚫ House of the Dead ⚫ Panzer Dragoon ⚫ Streets of Rage ⚫ NiGHTS ⚫ Soul Hackers etc. *Under examination of which IP to utilize 1 Remaster 2 Remake 3 Reboot Convert past titles Significant addition of new features Reconstruct to a new game while maintaining gameplay of while maintaining look and feel to HD animation the original game of the world of the IP -52- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Utilization of IP Assets © SEGA © ATLUS ©SEGA All rights reserved. -53- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Pachislot and Pachinko Machines Business Long-Term Objectives No.1 in Sales & Build a stable Utilization Share Earnings structure FY2024/3 Pachislot and Pachinko Maintain a stable earning No.1 in “Total Utilization Share” Improvement of Creation of Hits business efficiency -55- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Market Environment The number of installed machines are gradually decreasing. Turnover* rate trends at a low level. Trend of installed units and turnover rate in the market Sources: National Police Agency and Yano research Institute Ltd. (*The data for 2020 are in-house estimations) *Annual Turnover rate = Annual Pachislot and Pachinko machine unit sales / Number of installed Pachislot and Pachinko machine units in the market -56- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Sales Share Pachislot: Trends at around 15-20% in recent years Pachinko: Trends at around 10% Sales Share Trend (Sammy) Source: Yano research Institute Ltd. *Estimated by Yano Research Institute Ltd. With fiscal years from July of each year through June the following year as criteria. -57- © SEGA SAMMY HOLDINGS INC. All Rights Reserved. Utilization Share Pachislot: Under 10% in recent years Reference: