Sega Under Pressure: Investors Against iGaming and Risky Deals
Sega Under Pressure: Investors Against iGaming and Risky Deals
The Japanese holding Sega Sammy has been at the center of serious pressure from investors and analysts. The reason is the strategy of recent years, in which the company has actively tried to expand beyond classic gaming, including iGaming and mobile projects.
In its report, the analytical platform Smartkarma directly points out: Sega should stop. In their opinion, the company was too carried away with expensive mergers and acquisitions (M&A), which did not give the expected result and began to hit financial performance.
Recent deals are cited as examples, such as the purchase of Rovio (the creators of Angry Birds) and the acquisition of iGaming developer Stakelogic. These steps were supposed to strengthen Sega's position in new segments, but in fact led to the opposite effect.
Over the past nine months, the holding's operating profit has decreased by 55%, and the net loss amounted to about $110 million.
The key complaint of investors is not the experiments themselves, but their price and priorities. Essentially, Sega Sammy is channeling revenues from its stable and profitable pachinko business into risky areas: the mobile market and B2B online casino solutions.
At the same time, the company already has the strongest assets — time-tested franchises that consistently bring money and have a huge audience. We are talking primarily about Sonic the Hedgehog, as well as the Persona and Like a Dragon series.
Investors are bluntly saying that instead of trying to "conquer everything at once", Sega should return to what it does best – develop its own IPs and release high-quality games based on them. This is a less risky and more predictable path in terms of profitability.
The situation looks like a classic conflict between the desire to scale and the need to maintain focus. Entering the iGaming and mobile segment is not a mistake in itself, but with the current results, it is obvious that the bet was too aggressive.
If investor pressure increases, Sega Sammy may reconsider its strategy in the near future. And then we will see a shift in focus back to major releases and the development of key franchises — instead of expensive experiments in adjacent markets.
