Japan’s Sega Sammy Holdings says it will “suspend large-scale M&A for the time being” after reporting a JPY16.9 billion (US$110 million) loss attributable to owners of the parent in the nine months to 31 December – mainly on a JPY31.4 billion (US$296 million) extraordinary loss related to the underperformance of video game entity Rovio.
The company added that, although it saw strong results in gaming equipment sales and from its 45% stake in Korean integrated resort Paradise City, the Gaming segment also recorded a loss due to incorporating the financial results of other acquired companies GAN Ltd and Stakelogic.
Sega Sammy’s consolidated results for the nine months through 31 December 2025 include a 4.0% increase in sales to JPY335.2 billion (US$2.19 billion). However, the extraordinary losses and a significant decline in extraordinary income saw operating income fall by 58.6% to JPY23.8 billion (US$156 million) and Adjusted EBITDA plummet from JPY54.5 billion (US$356 million) a year earlier to JPY3.4 billion (US$22.2 million).
The Entertainment (video gaming) and Gaming (gambling) segments were to blame, with Entertainment falling short of forecasts due to the poorer than expected performance of Rovio – acquired in 2023 – plus few full game sales and lower take-up of free-to-play titles. Rovio is renowned as the developer of smash hit mobile game “Angry Birds”.
Sega Sammy said that segment sales in Entertainment grew slightly to JPY242.2 billion (US$1.58 billion) but operating income fell 31.5% to JPY23.7 billion (US$155 million) and Adjusted EBITDA by 95.1% to JPY2.0 billion (US$13.1 million).
Explaining the results, Sega Sammy stated, “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. Rovio found it difficult to advance its initially planned business development, and the profitability of this business has fallen below the initial forecast.
“Considering these circumstances, the Group reviewed Rovio’s business forecast and conducted an impairment test. This revealed that the recoverable amount related to Rovio significantly fell below its carrying amount. Consequently, impairment losses of approximately JPY31.3 billion on goodwill and other intangible assets were recognized in the consolidated financial results for the third quarter of the fiscal year ending March 2026.”
In the Gaming segment, an increase in gaming machine sales and higher equity earnings from Paradise City were offset by losses linked to GAN and Stakelogic, which results in a segment operating loss of JPY4.8 billion (US$31.4 million) – although Adjusted EBITDA of JPY100 million (US$653,000) was improved from breakeven last year. Sega Sammy explained that the improved gaming machines sales centered on its “Railroad Riches” and “Super Burst” slot machine titles in North America, while Paradise City’s growth was largely due to Japanese VIPs.
Separately, the company said it expects to report strong FY26 sales and profit in its Pachislot and Pachinko Machine segment and has revised its forecast upwards accordingly given strong recent take-up of new titles.
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