SEGA SAMMY HOLDINGS Discussion Points
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SEGA SAMMY HOLDINGS Discussion Points The SEGA SAMMY Group endeavors to reflect the viewpoints of diverse stakeholders in management strategy by providing the Group’s management team with feedback on the various requests and opinions received from shareholders, investors, and other stakeholders. These Discussion Points comprise excerpts from Integrated Report 2018 that are designed to provide the starting points of discussions as well as summarized information on market conditions and environmental, social, and governance factors that are intended to supplement the main report. SEGA SAMMY HOLDINGS Overview of the SEGA SAMMY Group’s Businesses The SEGA SAMMY Group offers moving experiences across a wide range of fields. Our businesses include the Pachislot and Pachinko Machines Business; the Entertainment Contents Business, comprising digital games, packaged games, amusement machines, amusement center operations, animation, and toys; and the Resort Business, focused on realizing successful inte- grated resorts. Pachislot and Pachinko Entertainment Contents Resort Machines Business Business Business • Pachislot machines • Digital games area • Hotels and golf courses • Pachinko machines • Packaged games area • Integrated resorts • Contents for smartphones and PCs • Amusement machines sales area • Amusement center operation area • Animation and toys area Detective Conan: Zero the Enforcer ©Phoenix Resort ©2018 GOSHO AOYAMA/DETEC- TIVE CONAN COMMITTEE All Rights Reserved. SONIC FORCES ©SEGA Pachinko CR Shin Hokuto Muso Chapter 2 ©Buronson & Tetsuo Hara/ NSP 1983, Approved Pachislot Hokuto No Ken ©PARADISE SEGASAMMY Co., Ltd., No.KOK-115 Shindensetsu souzou All rights reserved. © 2010-2013 Koei Tecmo ©Buronson & Tetsuo Hara/ “ANPANMAN” D.I.Y. Moving Games Co., Ltd. NSP 1983,©NSP 2007 ANPANMANGO-CAR UFO CATCHER TRIPLE ©Sammy Approved No.YBJ-918 ©Takashi Yanase/ ©SEGA ©Sammy Froebel-kan,TMS,NTV Medium-to-Long-Term Performance Trends (Fiscal 2015–Fiscal 2019) Growth due to intro- Cost structure Business structure Return to earnings Effect of regulatory duction of No. 6 reform reform growth trend revision pachislot machines Net sales ¥390.0 billion 366.8 366.9 347.9 323.6 Operating income 8.0 margin 5.4% 5.1 5.5 4.7 29.5 Operating income ¥21.0 billion 17.4 17.6 17.7 ’15 ’16 ’17 ’18 ’19 (Plan) (FY) 1 【Road to 2020】ロゴデザイン案(修正) 2017/5/8 サミー㈱盤面デザイン GR KOTAKE ■design concept■ 3つの矢印は「株主・従業員・協力会社」のステークホルダーを表しています。 3者が一体になり、同じ方向を向き、同じ目標に向かっていく様子をイメージしました。 INTEGRATED REPORT 2018 使用フォント /Geo 957 Extended Bold Italic Road to 2020 provides a medium-term road map aimed at the realization of our long-term vision and covers fiscal 2018 through fiscal 2020. We are advancing measures that are based on Road to 2020 and which we have embedded into a mission pyramid that comprises the unchanging components of our DNA: a value, a mission (raison d’être), a vision (ideal self), and a goal (specific target). Value (Mindset / DNA) “Creation is Life” × “Always Proactive, Always Pioneering” Mission “Continuing to create moving experiences” (Raison d’être) —Making life more colorful— Be a Game Changer Pachislot and Vision Entertainment Contents Resort (Ideal self) Pachinko Machines Sammy…the wellspring of new ideas as an Be a Game Changer Be an Experiential Innovator innovator in the industry Operating income margin: At least 15% ROA*1: At least 5% Goal Operating Net sales: At least ¥300.0 billion Succeed in IR businesses (Specific target) income margin: Operating income: At least ¥30.0 billion Enhance brand value At least 30%*2 Operating income margin: At least 10% *1 ROA = Profit attributable to owners of parent ÷ Total assets *2 Operating income margin of the Pachislot and Pachinko Machines Business excluding other and eliminations Review of Fiscal 2018 Based on Road to 2020 Pachislot and Pachinko Machines Business Entertainment Contents Business Resort Business • Responded to regulatory revision • Reorganized intellectual property • Opened PARADISE CITY • Advanced reuse studios • Completed largest renewal of Phoenix • Improved development efficiency • Enhanced global rollouts Seagaia Resort since its opening • Acquired gaming machine licenses in Billions of yen / % Billions of yen / % the U.S. State of Nevada Billions of yen 258.0 13.0 148.2 205.7 208.0 9.9 10.0 122.0 7.1 105.6 17.7 5.4 5.2 15.2 26.3 11.3 18.5 14.8 13.5 11.9 11.1 –2.2 –2.5 –3.0 ’17 ’18 ’19 (Plan) (FY) ’17 ’18 ’19 (Plan) (FY) ’17 ’18 ’19 (Plan) (FY) Net sales Operating income Operating income margin Net sales Operating income Operating income margin Net sales Operating loss Although regulatory revision impacted Earnings have been trending upward since We continued advance investment with a results in fiscal 2018, in fiscal 2019 we aim structural reform. We aim to expand the view to entering the integrated resort to expand the business through the intro- business by marketing new digital game business in Japan. duction of No. 6 pachislot machines. titles in fiscal 2019. 2 SEGA SAMMY HOLDINGS Road to 2020 Business Strategies Pachislot and Pachinko Machines Business Business Strategy that Turns Change into Opportunities The regulatory revisions in February 2018 have broadened opportunities to tap into demand from people during their free time. In light of this, from the second half of fiscal 2019 through fiscal 2020, we plan to release a series of new pachislot machines (No. 6 machine models) that appeal to a broad base of customers. In pachinko machines, a major strength is our lineup of several models based on older regulations that have already been approved. In fiscal 2019, our sales strategy will focus on older models, starting with Pachinko CR Shin Hokuto Muso Chapter 2. While keeping an eye on trends in new models at other companies, we will continue to develop new-format machines with our sights set on a strategy for fiscal 2020. Pachinko CR Shin Hokuto Muso Chapter 2 ©Buronson & Tetsuo Hara/NSP 1983, Approved No.KOK-115 ZEEG, a Key Driver of Road to 2020 © 2010-2013 Koei Tecmo Games Co., Ltd. ©Sammy Reuse is key to achieving our targets under Road to 2020, and our central player in reuse is ZEEG Co., Ltd. a joint venture established between Sammy and Universal Entertainment Corporation. ZEEG is advancing efforts to gener- ate significant synergies by improving product capabilities that combine the technologies of both companies, and by creating an efficient earnings struc- ture by reducing procurement costs. For example, Universal Entertainment Corporation uses cabinets recov- ered from Sammy, expanding the scale of reuse beyond reuse on an individual company level. This will also lead to a significant reduction in procurement costs. We expect profits to improve (through the use of general-purpose cabinets) as more companies participate in this platform. ZEEG has also started to develop software development kit (ZSDK) with an eye on the future of the pachinko and pachislot machine industry. ©ZEEG • Reuse Flow ZEEG’s Area of Development and production Trade in by each company at manufacturers Responsibility Sammy Sammy Component companies Universal Universal Distribution (Suppliers) Entertainment Entertainment centers of each company Direct Other manufacturers Pachinko hall Other manufacturers delivery Components supplied on a unit and machine cabinet basis ZSDK Initiative Utilizing ZEEG cabinets increases the reused component ratio and the ratio of cabinets used, thereby cutting purchase costs on an The ZSDK initiative aims to enable the reuse of software components in addi- individual component basis tion to hardware components by unify- ing software development tools and selling it as a package in the future. 3 INTEGRATED REPORT 2018 Entertainment Contents Business SEGA’s Passion for World-Class Creativity Persona5 SEGA Games Co., Ltd., has a passion for quality that is evident in all facets Persona5 Unit Sales / Downloads cumulative unit sales of its business. By leveraging this passion in overseas businesses being strengthened under Road to 2020, the company’s earnings are gradually Over 2.2 million improving on a global scale. Persona5, released by ATLUS. CO., LTD., became a hit title, with more than 2.2 million copies sold around the world. Moreover, overseas sales of this title were more than double domestic sales. ® The PlayStation 4 version of Persona5 ranked No. 1 overall on a game Persona5 review website in 2017. Yakuza 6: The Song of Life has sold as many copies ©ATLUS ©SEGA Release of English version All rights reserved. (North America, Europe) overseas as it has in Japan. The title mostly represents a Japanese world view, but its quality has won over fans overseas as well. The steady repeat Release of Hangul version sales reflect our growing reputation for product quality. (Korea) ATLUS. CO., LTD., has studios in the U.S. with excellent localization Release of traditional Chinese version capabilities, which have been winning over strong support from fans of the (Hong Kong, Taiwan) game around the world and this also drives firm growth in sales. Release of Japanese version (Japan) System for Designating Responsibility for Profit in Projects 2Q 3Q 4Q 1Q 2Q Fiscal 2017 Fiscal 2018 In the packaged games area, we aim for all developers to autonomously control development costs while creating games that thrive on the market. Therefore, we have clarified responsibilities for profits (operating income) in each develop- Earn Profits Globally with Localization ment project, and this has led to significant improvement in the profitability of that Wins over Fans in Foreign Countries packaged games in recent years. Global versions of Persona5 ATLUS localization studio in Japanese California version of Persona5 Global versions Japanese version of Yakuza 6: The of Ryu ga Gotoku 6: Song of Life Inochi no Uta Resort Business Acquiring Expertise to Ensure Success of the Integrated Resort Business With our sights set on participating in the integrated resort business in Japan, we will acquire know-how in the operation of resort complexes through PHOENIX RESORT while accumulating expertise in the development and operation of integrated resorts through our business partnership with the PARADISE GROUP of South Korea.