Japanese video game maker Sega trims losses after discontinuing Dreamcast console

00-00-0000
Dateline: TOKYOSega Corp. trimmed its losses for the latest fiscal year as the Japanese video game maker reshaped its business after dropping the money-losing Dreamcast console.

Sega, the creator of the Sonic the Hedgehog character, lost 17.8 billion yen (dlrs 140 million) for the fiscal year ended in March, less than half of the 51.7 billion yen it lost the previous year, it announced Friday.

Sales fell 15 percent to 206 billion yen (dlrs 1.6 billion) from 243 billion yen as the Tokyo-based company downsized under a turnaround plan that included selling off unprofitable affiliates.

Since abandoning production of the Dreamcast last year, Sega has been focusing on creating software for other companies' game machines such as Sony Corp.'s PlayStation 2, Microsoft Corp.'s Xbox and Nintendo Co.'s GameBoy and GameCube.

Sega expects to return to profitability in the current fiscal year, which ends March 2003. It is forecasting a net profit of 18 billion yen (dlrs 141 million) on 210 billion yen (dlrs 1.6 million) sales.

In the year just ended, Sega booked a special charge of nearly 33 billion yen (dlrs 259 million), about half to reflect the plunging value of shareholdings donated to the company by former chairman and president Isao Okawa, who died last year.

The Dreamcast was launched in Japan in 1998 but struggled from the start to make inroads against competing machines by Sony and Nintendo, in part because of delays in releases of software titles.

Worldwide sales of the Sega console reached about 10 million this year as the company slashed prices to dispose of remaining inventory. More than 30 million of PlayStation 2 machines have been sold worldwide.

Sega, which sees Internet gaming as a key part of its business, is beefing up its online game offerings for the PlayStation 2, Xbox and GameCube.

Sega sold 3.5 million copies of 14 game titles for the PlayStation 2 in fiscal 2001, 1.2 million copies of eight titles for the GameCube, and nearly 1.7 million copies of 13 titles for the handheld GameBoy Advance. It sold 660,000 copies of seven games for the more recently released Xbox.

Sega announced Friday it inked a deal to make games starring the comic book characters by Osamu Tezuka, who has been praised as Japan's Walt Disney and is best known as the creator of Astro Boy.

Sega is also strengthening its sports lineup in North America, where it foresees continued growth in the world's largest market for video games.

Although the arcade sector declined overall abroad, sales in Japan, such as crane-type games and fighting games, held steady, Sega said.