Sega’s operating income down 55% as it takes $200m impairment loss on Rovio

• Sega's operating income fell by 55% year-over-year in the first nine months of its fiscal year.
• Profits are down, but transmedia revenue specifically is on the rise.

Sega Sammy recorded declines of more than 50% across operating income and ordinary income during the first nine months of its fiscal year.

Operating income fell to ¥19.8 billion ($129.3 million), down 55% year-over-year. Meanwhile, ordinary income fell to ¥23.8bn ($155.4m) at a 52% decline. Both figures also decreased in the first nine months of Sega’s previous fiscal year, though only by 21% and 14%, respectively.

The company has highlighted Rovio as a factor in the latest results, as the Angry Birds maker has "found it difficult to advance its initially planned business development".

Sega acquired Rovio in 2023 in a $775m deal, but the mobile games maker’s profitability has fallen below initial forecasts. This has resulted in an impairment loss of approximately ¥31.3bn ($204.1m) on goodwill and other intangible assets.

"Following Rovio’s integration into the Group, the business environment in the global mobile game market rapidly changed, with multiple major titles emerging within a short period, and competition for customer acquisition intensifying," Sega added.

Going forward, Sega stated that it will focus on Rovio’s businesses related to Angry Birds and implement "measures to increase the ratio of external payment for each app".

Financials fall but transmedia triumphs

Sega’s adjusted EBITDA over the first three quarters of the year amounted to just ¥3.5bn ($22.7m), a 94% drop Y/Y from ¥54.5bn ($355.4m).

The publisher's net sales saw an increase over these three quarters, reaching ¥335.2bn ($2.2bn). This marked a 4% rise Y/Y, after the previous fiscal year saw an 8% decline during the period.

Sega noted that its mobile party game Sonic Rumble, launched last year after numerous delays, S "fell short of expectations" across each KPI, especially customer acquisition.

On the other hand, licensing revenue specifically associated with Sega’s transmedia strategy increased versus the same period of the previous fiscal year. Two more Sonic the Hedgehog movies are already in the pipeline.

Rovio’s own transmedia strategy includes The Angry Birds Movie 3, with a theatrical release pulled forward from 2027 to December 2026. YouTuber MrBeast has been confirmed as part of the cast.