| Type | Public |
|---|---|
| Traded as | TYO: 6460 |
| Industry | Japanese Sega/Sammy holding |
| Founded | October 1, 2004 |
| Headquarters | Tokyo, Japan |
| Key people | Hajime Satomi (Chairman and CEO) Hisao Oguchi (CCO) |
| Revenue | ¥ 429,194 $ 4,50 billion [1] |
| Employees | 3,600 (2009) |
| Subsidiaries | Sega Sammy |
| Website | Sega Sammy Holdings Inc. |
Sega Sammy Holdings Inc. (セガサミーホールディングス株式会社 Sega Samī Hōrudingusu Kabushiki Gaisha, TYO: 6460) is a Japanese holding company formed from a merger of Sega and Sammy. They were both very involved in the arcade business (Sega with games, Sammy with Pachinko), and Sega's main fame comes from their console systems.
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In 2004, Sammy acquired noted game company Sega under a new company called Sega Sammy Holdings Inc.
In 2005, Sammy Golf Entertainment Inc. was renamed Sega Sammy Golf Entertainment Inc.
On March 7, 2005, Sammy Studios, Inc. broke away from Sammy and renamed itself High Moon Studios.
On February 29, 2008, Sammy Europe, Ltd. broke away from Sega Sammy Holdings Inc.
On March 31, 2008, Sega Korea, Ltd. broke away from Sega Sammy Holdings Inc.
Sega Sammy operations take place in four distinctive segments
Although previous to the merger Sammy produced games itself and even had a small chain of arcade operations that business was integrated into Sega.
The most important segment of the company is Sammy's Pachinko / Pachislot segment. In the past 80% of profits was generated in the Pachislot business. The companies former flagship Hokuto No Ken is estimated to be produced 630,000 times. However, a change in regulations lead to deemphasizing the gambling aspect of Pachislot and allowed for more flexibility in the creation of Pachinko machines so that starting in 2007 the Japanese Pachislot market decreased from approcimately 2,000,000 annually sold machines to 800,000 in 2009. Although the Pachinko market did not grow in unit terms better machines appeared and prices increased ca. 25%. Sammy managed to rebuild its traditionally weak Pachinko segment with its September 2008 release of CR Hokuto No Ken, one of the best selling Pachinko machines of the last couple of years and further strengthened the segment by the acquisition of Taiyo Elec. Sales targets for the business year ending in March 2010 are 450,000 Pachinko and 180,000 Pachislot machines.[2] Currently the segment is returning to profitability after successfully shifting from Pachislot to Pachinko as only now scaling effects and savings from recycling parts are starting to be felt at the bottom line.
Sega's Amusement Machines segment may have much less earnings and much lower profitability than the Sammy owned segments. But it surely is the best segment in Sega from an investors point of view as the profitability is still much higher than that of the general market. Having nearly no competition the segment has much lower earnings volatility than the Pachinko / Pachislot segment so that one could think of it as a hidden gem in Sega / Sammy.
The Amusement Facilities segment is the segment having the lowest return on capital as the operation of arcades is very capital intensive. Sega is closing and reopening facilities on an ongoing basis using a scrap and rebuild strategy. However, in the past year several hundred loss-making facilities were disposed of. Though a bad segment from the investors point of view millions of visitors are enjoying Sega's arcades each year and surely the Amusement Machines segment could not make its huge profits without those facilities.
Sega's Consumer Business segment is producing and distributing games for consoles and pc. The financial year 2010 plan is calling for sales of approximately 30 million games. While the segment is not earning money it is not in that bad of a situation as the low profitability can be traced back to the industry in which the segment is operating.
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