Sega Records $200M Loss on Rovio Acquisition

Sega Sammy has officially revised its financial forecast following a difficult quarter largely driven by the underperformance of its mobile gaming investments — particularly its acquisition of Rovio Entertainment.

In 2023, Sega made headlines with its $776 million purchase of Rovio, the studio behind Angry Birds. The deal was positioned as a major step in expanding Sega’s presence in the mobile gaming market. At the time, the company emphasized Rovio’s proprietary “Beacon” technology and live-service expertise as key assets that would accelerate growth across Sega’s broader portfolio. However, the mobile market has proven increasingly volatile, and integrating a major mobile studio into a traditionally console-focused publisher has presented significant challenges.

¥31.3 Billion Impairment Loss

In an official notice released on February 13, Sega confirmed it had recorded an impairment loss of ¥31.3 billion (approximately $200 million USD) during the third quarter of the fiscal year.

While the company acknowledged Rovio’s strong development and operational capabilities, it noted that the mobile gaming environment has deteriorated rapidly. Intensified competition, rising user acquisition costs, and market saturation have made it harder to attract and retain players. As a result, Rovio’s profitability fell well below expectations set at the time of the acquisition, prompting Sega to reassess the asset’s value and record a substantial write-down.

Financial Impact

Despite a 4% year-on-year increase in net sales, which reached ¥335.2 billion ($2.1 billion USD), the impairment significantly reduced profitability. Operating income dropped by 54.6% compared to the previous year, falling to ¥19.8 billion ($129.2 million USD).

The Entertainment Contents segment, which includes Sega’s gaming operations, saw operating income decline by 31%. In addition to Rovio’s struggles, the report cited weaker-than-expected sales of new full-price releases as a contributing factor.

During the quarter, Sega launched Football Manager 26 and the mobile title Sonic Rumble. While Football Manager 26 performed consistently, Sonic Rumble fell short of expectations, highlighting the increasingly competitive nature of the mobile market — even for globally recognized brands like Sonic.

Strategic Shift and Leadership Changes

In response, Sega announced a strategic pivot. The company plans to refocus development efforts on its core intellectual properties, including franchises such as Persona and Like a Dragon, while continuing to expand its successful transmedia initiatives — particularly the Sonic the Hedgehog film franchise.

Rovio has also undergone a leadership change. Daniel Svärd, formerly head of live game studios at King (known for Candy Crush), has been appointed as the new COO. Sega aims to leverage his experience in mobile live-service operations to stabilize Rovio’s performance and guide future projects toward profitability.

Updated Full-Year Forecast

Sega has revised its full-year outlook accordingly. Net sales are now projected to reach ¥490 billion ($3.2 billion USD), slightly higher than the previous forecast of ¥475 billion. However, operating income expectations have been reduced from ¥53 billion to ¥40 billion ($261.5 million USD) due to the impairment and continued weakness in the mobile sector.

The updated forecast reflects a company still generating strong overall revenue — supported in part by licensing and its pachislot business — but facing pressure on margins as it recalibrates its mobile strategy.