Japan’s Sega Sammy Holdings has reported a steep decline in earnings for the six months ending September 30, 2025, citing slower video game sales, acquisition costs, and regulatory delays. Despite the downturn in its entertainment and mobile gaming divisions, the company’s gaming operations, including its casino and pachislot segments, achieved notable growth.

Financial Results Impacted by Lower Game Sales and One-Off Costs

According to the company’s financial report released Friday, net profit dropped 91% year-on-year to JPY2.75 billion (USD 18 million), down from JPY30.38 billion (USD 198.6 million) in the same period a year earlier. Operating income also fell by 69% to JPY10.06 billion (USD 65.8 million), while revenue decreased 5% to JPY201.1 billion (USD 1.31 billion). Adjusted EBITDA declined 54% to JPY16.0 billion (USD 104 million).

Sega Sammy attributed these results primarily to weaker-than-expected console and mobile game performance and underperformance at its mobile subsidiary Rovio Entertainment, best known for Angry Birds. The company also absorbed integration and restructuring costs associated with its recent acquisitions of B2B gaming providers Stakelogic B.V. and GAN Limited. Approval delays for new pachislot models further affected first-half performance.

Even so, the Tokyo-based group maintained its full-year forecast, anticipating net profit of JPY37.5 billion (USD 245 million), operating income of JPY53 billion (USD 346 million), and revenue of JPY475 billion (USD 3.10 billion) for the fiscal year ending March 2026.

Sales in the entertainment content division came in below expectations, though downloadable content and licensing revenue provided stability. The company said upcoming releases—such as Football Manager 26 and Yakuza Kiwami 3 & Dark Ties—are expected to bolster results in the second half of the fiscal year.

Gaming Segment Emerges as a Bright Spot

While most divisions underperformed, Sega Sammy’s gaming business was the only one to show substantial growth. As stated in the company’s Q2 FY2026 Results Presentation (pdf), segment sales surged 372% year-on-year to JPY8.5 billion (USD 55.4 million), driven largely by the consolidation of Stakelogic and GAN. However, the segment still posted a net loss due to amortization and restructuring expenses tied to the acquisitions.

The company credited strong performance from its casino gaming unit Sega Sammy Creation and from its 45% stake in South Korea’s Paradise City integrated resort. The firm highlighted Railroad Riches, its successful U.S. slot title, as a major contributor to the growth of its land-based and online casino operations.

Sega Sammy said it intends to maintain momentum by expanding in the North American market and introducing new products compatible with its slimmer Genesis Nova cabinet, which enhances installation efficiency. “As the first step in this roll out, ‘Railroad Riches’ has already been installed,” the company noted.

Additionally, Sega Sammy stated that business revitalization programs are underway at both Stakelogic and GAN to improve profitability and operational efficiency. The firm said it will review any potential changes to its full-year outlook after these programs progress further.

The company’s pachislot and pachinko division performed steadily, led by titles like Smart Pachislot Tokyo Revengers and e Tokyo Revengers. Sega Sammy also plans to release new models under the Hokuto No Ken series later this year.

At the same time, its Korean casino venture, Paradise City, achieved record-high drop amounts and hotel occupancy during August, largely due to strong demand from Japanese VIP and mass-market visitors. According to Asia Gaming Brief, Sega Sammy said these results will contribute to profits through equity-method earnings as casino activity remains strong.

As of the end of September, Sega Sammy reported total assets of JPY648.1 billion (USD 4.24 billion) and an equity ratio of 58.4%. The company declared an interim dividend of JPY27 (USD 0.18) per share and plans a full-year payout of JPY55 (USD 0.36) per share.