Sega sales down 23% as Rovio falls short of expectations

• Sega made a loss of $23.2m as net sales fell to $552.6m in Q1.
• Free-to-play sales grew 5% Y/Y.

Sega Sammy’s net sales fell to ¥81 billion ($552.6 million) in the first quarter of its 2026 fiscal year, down by 23% year-over-year.

In its latest financials, the publisher also reported a loss of ¥3.4bn ($23.2m) for the quarter overall.

Sega’s entertainment contents business - which includes games - performed as expected, but Rovio was highlighted in its financials for performing "weaker compared to expectations".

The Angry Birds maker is due for a "major update" and strengthening of its mainstay title operations over the rest of the year.

At the same time, Sega's free-to-play sales grew by 5% Y/Y, up to ¥11.5bn ($78.5m) in Q1. Persona 5: The Phantom X went global during the quarter with a "stronger-than-expected launch", meanwhile pre-established free-to-play titles met expectations.

Sega expects sales in this segment to hit ¥67bn ($457.2m) for the full financial year, which would mark a 42% increase from FY2025. The company reaffirmed plans to launch Sonic Rumble globally in 2025 following multiple delays.

It also expects full game sales to grow Y/Y despite falling 24% in Q1, when the category generated equal revenue to free-to-play.

Sega sums

Sega’s overall operating income and ordinary income both declined in Q1, into the red at -¥0.5bn (-$3.4m) and -¥2.1bn (-$14.3m), respectively. Its entertainment contents business was the only segment to remain in the green for operating income, at ¥7.1bn ($48.5m), but this still marked a 40% Y/Y decline.

Meanwhile, Sega’s pachinko machines and Pachislots business fell by 136% to -¥3.8bn (-$25.9m).

Earnings from toys also fell, but Sega has opened its Sega Store in Shibuya early into its second quarter as it looks to further promote IP.

"Although the number of newly released titles was limited, net sales were in line with expectations, while the operating loss was narrower than expected," said Sega Sammy.

"Going forward, the group will pursue a transmedia strategy aimed at creating a virtuous cycle of IP value enhancement and revenue expansion. This will involve diversifying the IP portfolio globally, including Sonic, as well as engaging in game sales and service provision, animation production and character licencing businesses."

We recently spoke to Angry Birds Bounce game lead Bryan Cook about the title's Q2 launch, roguelike gameplay and why this was the right fit for an Apple Arcade exclusive.