Sega to Venture Beyond Games

Sega to Venture Beyond Games

Sega said on Tuesday it would tap into nongaming fields and aim for $81.40 million (10 billion yen) in sales in 2004, as it seeks to boost profitability by leveraging its entertainment expertise.

The move reflects Sega's efforts to expand its horizons in the software sector after its high-profile pullout from its unprofitable Dreamcast game-console business earlier this year.

Munehiro Umemura, a general manager for Sega's future entertainment division, told a news conference that Sega's computer graphics technology and know-how in content development and in managing arcade facilities should present opportunities. "We have been told that Sega has a lot of hidden treasures," Umemura said. "We will dig them up one by one, and will offer them to our customers." Umemura said the new businesses will include educational software that uses computer graphics, and training software such as computer simulations of earthquakes.

For the past business year ending March 31, Sega posted a net loss of around $421 million. It also announced in April a three-year restructuring plan to cut its workforce and seek more business alliances.

Tetsu Kayama, Sega's co-chief operating officer, said the restructuring measures had been implemented and financial conditions were improving. He did not give details. Kayama said he expected new businesses to contribute more than 10 percent of sales in the next five years.

Despite the announcement, Sega shares fell 7.68 percent to $15.85 as investors turned cautious after recent rallies. The stock has risen 75 percent since January on the back of expectations that Sega's software business may ring up profits helped by the planned introduction of two new game consoles, Microsoft's Xbox and Nintendo's GameCube later this year.

SOURCE: Reuters.