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Sega reports income jumps even as retail game sales decline

Sega Sammy, the parent company of publisher Sega, reported impressive financial results for the first quarter of its 2014 fiscal year today, with income increases in a number of categories in spite of lower retail video game sales.

Operating income for the quarter that ended June 30 totaled 16.1 billion yen ($163.85 million), 197.7 percent higher than the same period last year. Net income came in at 12.9 billion yen ($131.6 million), a 408.8 percent year-over-year jump.

The impressive results were buoyed by the performance of Sega Sammy's consumer business segment, which includes the video games published by Sega, and its Japanese pachislot and pachinko machine division. According to Sega Sammy officials, uncertainty in the Japanese economy led to "continuing strong replacement demand" for pachislot machines, pushing operating income in that branch of the company up 138.5 percent to 18.7 billion yen ($190.2 million).

Sega Sammy's consumer business segment encompasses the video game publisher Sega, as well as mobile and Windows PC products, animation production and toys. The publisher sold 380,000 copies of the real-time strategy title Company of Heroes 2 in the U.S. and Europe. Sega's only other major retail release was the Japan-only PlayStation Portable title 7th Dragon 2020-2, and the company saw a year-over-year decrease of 9.7 percent in the total volume of retail packaged goods sales to 1.21 million units.

"Favorable" performance of digital games for Windows PC, PlayStation Vita and mobile devices — including the PC and PlayStation Vita title Phantasy Star Online 2 — helped bring the operating income of Sega Sammy's consumer business division up to 39 million yen (approximately $396,000), or essentially flat.

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