SEGA-Sammy Holdings 2019

Abstract

SEGA has an history of over 50 years in the entertainment industry. The company became highly reputable at the end of the 1970’s for building arcade machines and creating video games. Strong of this experience, they entered the home entertainment market and became renewed as a video game consoles manufacturer through the 80’s to the 90’s. In 1999 SEGA went nearly bankrupt due to the increasing competition from the new actor Sony and was saved by Sammy, a Japanese pachinko company. Their objective in this acquisition was to diversify their own field of activities, having in common some real estate and dedicated facilities for entertainment in Japan and around the world. They would also access SEGA’s most popular Intellectual Properties as assets for their own slots. As SEGA renounced to their activities as a hardware manufacturer, they focused on a new strategy as a publisher. They released their games on their former competitors’ game systems and on PC, which was a huge change as these were originally designed as system-sellers exclusives. However, while this strategy helped making some profits for a while, this strategy solely would not have been sufficient in the long run. After some reshuffling, SEGA invested in acquiring various video game studios around the globe with the intent to diversify both their catalogue and worldwide presence. As of 2019, the strategy could be considered successful. Among the many franchises acquired and related projects funded, a significant number of them proved highly profitable. This business case is about how a video game company rose from its ashes through M&A strategy and changing its core activities and marketing strategies.

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