May 29, 1997
MOODY’S KEEPS SEGA’S LONG-TERM DEBT RATING THE SAME
NEW IMPORTS RELEASED
TWO NEW MEGAMI TENSEI GAMES COMING TO THE SATURN
May 28, 1997
THE LOST WORLD COMING TO ALL SEGA SYSTEMS
Sega Saturn: A 3-D action game in which players control a series of five characters (Compy, Raptor, Human Hunter, T-Rex and Human Scientist) struggling to survive amid natural and man-made perils. The game features advanced animation techniques that make the dinosaurs move with realistic features. Working closely with the game’s design team at Dreamworks Interactive, Sega is creating gameplay features specific to the Sega Saturn version. Ship date: September 1997.
Sega Arcade: Combines the fast-paced action of a shooter with the mind-bending challenges of a puzzle game. Realistic environments come to life with 3-D graphics and polygon-based characters. Ship date: August 1997.
Sega Genesis: An action adventure shooting game where gamers must capture dinosaurs for bounty. The game features 360 movement in which gamers navigate jeeps, Humvee Snagglers, boats and dinosaur transports. Ship date: August 1997.
Game Gear: A side-scrolling action adventure shooting game with six dinosaur species, plus a T-Rex bonus level. Ship date: August 1997.
SEGA TO SHIFT FOCUS TO SOFTWARE
“I think we had cut our inventories appropriately by the end of March, by abandoning old-generation game models and lowering their prices to market levels,” a senior Sega executive told a news conference. He also said the company will shift its focus to the profitable software sector in fiscal 1997/98 from the loss-making hardware sector.
Sega expects global shipments of its Sega Saturn 32-bit game machines to decline to 1.9 million units in 1997/98 from 4.16 million units in 1996/97, he said. He added that the decline in shipments will help to cut losses in Sega’s hardware operations in 1997/98. Sales in Sega’s consumer division, which include Sega Saturn and other game machines, are expected to drop 46 percent to 88 billion yen in 1997/98, he said.
He added, however, that the company had no intention to stop producing Sega Saturn machines.
SEGA MERGER FIASCO HURTS BANDAI’S IMAGE
“Negative impact on Bandai’s image is inevitable as reports (of the failed merger) have revealed that the company president did not demonstrate proper leadership,” said Mitsuko Morita, an analyst at Morgan Stanley Japan Ltd.
Bandai said on Wednesday that Yamashina intends to resign for failing to win internal support for the merger, which he and Sega President Hayao Nakayama had hammered out over a dinner one night last year. However, analysts said the resignation would be largely symbolic as he would take up the position of chairman and continue to wield influence. A Bandai official said the firm may make a formal decision on the management change at a board meeting on Thursday.
Sega, maker of the Saturn 32-bit video-game player, and Bandai, known for its Power Rangers series and virtual pet toy “Tamagotchi,” said in January that they would merge to create a global entertainment giant rivalling Walt Disney Co. But the marriage was called off only a day before the firms were to approve the pact — though they said the had agreed to a tie-up in product merchandising and development.
The Bandai management had been shaken by strong opposition to the merger from mid-level managers who feared a clash in corporate cultures as well as changes in working conditions. “It seems that the Bandai president was unable to persuade the firm’s managers into accepting the merger,” a broker at one of Japan’s “Big Four” brokerages. “Investors fear the absence of unity within the firm may hinder growth.”
On Wednesday, Bandai lost 90 yen on the Tokyo bourse to end at 2,670 yen. Sega, in contrast, rose 80 yen to 3,780. After the market closed, Bandai announced that it plunged into the red on a group basis in the year to last March 31. It posted a group net loss of 7.98 billion yen ($68.7 million). Its parent current profit also fell, by 15.4 percent to 8.6 billion yen ($74.1 million), while parent sales slid 6.4 percent to 98.7 billion yen ($850 million). Current profit is pre-tax and includes losses or gains on investments.
Bandai has been burdened by extremely weak sales of its Pippin Atmark machines, a video game player with Internet capabilities. It has stopped producing the multimedia terminal but says it will continue to sell the machines. However, despite the gloomy earnings and failed merger, analysts expect Bandai’s prospects in the current year to be brighter given the runaway success of “Tamagotchi,” an egg-shaped toy featuring an electronic bird. The toy became an instant hit after its debut in November, and about five million units have already been shipped. Bandai to sell 13 million by the end of fiscal 1997/98. Analysts said profit from Tamagotchi would begin to kick-in fully this business year.
Bandai forecast a group net profit of 2.5 billion yen ($21.5 million) this year. It said its parent current profit would fall to 7.6 billion yen ($65.5 million), although parent sales would rise to 120 billion yen ($1.03 billion).
Analysts said that in the long-term, Sega may have more to lose from the failed merger as it had become much harder to restructure its unprofitable game-machine operation without new blood and a boost in its earnings. They said Sega’s video-game machine is losing money and is unlikely to turn profitable in the future. Sega said on Wednesday that its parent current profit grew 5.2 percent to 33.3 billion yen ($287 million) in 1996/97. Its parent sales rose four percent to 359.9 billion yen.
For this business year, Sega forecast that its parent sales and parent current profit would decline to 310 billion and 30 billion yen ($258 million) respectively.
May 27, 1997
SEGA-BANDAI MERGER CANCELLED!
“Although we can’t merge, we’d like to maintain the spirit and purpose of our agreement,” Sega president Hayao Nakayama said. He added that the cancellation would not significantly change Sega’s long-term strategies.
The deal, announced in January, was seen as an opportunity for Sega to reinvigorate its video game business, which has been under pressure from rivals like Nintendo Co. and Sony Corp.
Sega’s newest Saturn game machine performed only modestly in the United States during Christmas, struggling against the more powerful Nintendo 64 machine and Sony’s PlayStation.
Nakayama said he originally had opted for a merger instead of a joint venture because he thought the latter would have been “weak.” He said he had believed as late as Monday that the merger would go ahead.
But Bandai executives said they decided to cancel the deal because of unspecified cultural differences and an inability to clearly identify benefits from the merger. They also said the merger could have involved problems with labor unions.
Bandai President Makoto Yamashina said at a news conference that he regretted the cancellation of the merger, but that he looked forward to cooperation with Sega.
Asked whether the cancellation would hurt relations between the two companies, Sega’s Nakayama said, “It will make it easier for us, since they will feel a little guilty.”
Nakayama said the new joint venture would include development of amusement facilities and retail shops, as well as cooperation in manufacturing and distribution. He didn’t give details.
Before the merger was announced in January, both companies had warned that earnings for the year would be lower than expected.
Sega slashed its profit forecast for the year ended March 31 to 5.3 billion yen, or $45.69 million, from 10 billion yen, citing a writedown of older 16-bit game machines at its U.S. subsidiary. Sega was scheduled to announce earnings for the year on Wednesday.
Bandai predicted a pretax loss of 2 billion yen for the year, citing slack demand for its Pippin Atmark multimedia set-top box, which it developed with Apple Computer Inc. Bandai subsequently halted production of the Pippin.
In recent months, however, Bandai has enjoyed a hit with its Tamagotchi toy, an egg-shaped simulation game involving the nurturing of a virtual chick on a tiny liquid-crystal display screen.
May 24, 1997
DEAD OR ALIVE SET FOR SEPTEMBER RELEASE
May 23, 1997
NEW BETA OF NETLINK BROWSER RELEASED
NEW IMPORT RELEASES
SATURN PRICE DROP AT E3?
CACPCOM CANS CYBERBOTS
FUTURE OF HEART OF DARKNESS UNCERTAIN
May 22, 1997
LAST BRONX RELEASE DATE ANNOUNCED
PHANTASY STAR 5 COMING TO SATURN
May 20, 1997
BANDAI AND SEGA TO SIGN MERGER AGREEMENT ON MAY 28
In January, toy maker Bandai and game-machine manufacturer Sega said they would merge on October 1 to build what they said would be a “formidable force” in the media entertainment business. However, Bandai president Makoto Yamashina has said that the merger could fall behind schedule as the two companies were carefully hammering out rules for the new merged company.