Sega beats Q2 forecasts as pachinko income surges 331.6%

Sega's operating income jumped 42% year-on-year to ¥14.2 billion ($89.7 million) in the quarter ended September 30, 2026, with a 331.6% surge in operating income from its pachislot and pachinko machines business driving the beat against expectations.

Group net sales rose 5.6% to ¥212.5 billion ($1.3 billion). The games-focused Entertainment Contents segment, which also covers transmedia and licensing, exceeded expectations even though its revenue fell 2.4% to ¥145.1 billion ($916.8 million).

What changed for the games business?

Full game sales declined 23.5% to ¥20.5 billion ($129.5 million), down from ¥26.8 billion ($169.3 million) a year earlier. Unit volumes moved the other way: 10.6 million full games sold, up from 9.3 million.

The mix shifted hard toward catalog (back-catalog titles rather than new releases). New releases generated just ¥0.3 billion ($1.8 million), a steep drop from ¥8.7 billion ($54.9 million) last year, reflecting a thin launch slate. Catalog sales climbed 12.2% to ¥20.2 billion ($127.6 million) from ¥18 billion ($113.7 million).

Free-to-play sales "performed slightly below expectations," falling 3.3% to ¥26.0 billion ($164.3 million). DLC and subscription services "performed steadily." Rovio, the Angry Birds publisher Sega acquired for $776 million in 2023 before taking a $200 million impairment, "performed generally in line with expectations."

Angry Birds creative officer Ben Mattes, who spoke to GamesIndustry.biz earlier this year, framed the Sega relationship as mobile-first and transmedia-driven. "They know that we're a transmedia company. They know that we're a mobile-first company," said Mattes. "So of course from day zero, the ambition has been to make Angry Birds every bit as big as Sonic is from a transmedia point of view, and grow not just the Rovio mobile free-to-play business, but all of Sega's mobile and free-to-play expertise and live-ops expertise across its portfolio."

What's the forward signal?

Sega expects "expansion in new title and catalogue sales" through sales transformation initiatives, plus increased licensing revenue from its transmedia rollout — a pipeline that leans on film, TV and merchandise alongside games.

Wishlist data (pre-orders' closest proxy on Steam) points to a strong start to 2027. Stranger Than Heaven, launching January 2027, has passed one million wishlists, "outperforming benchmark titles at the same stage before release," with new users accounting for approximately half of registrations.

Persona 4 Revival, due February 2027, has exceeded two million wishlists and is also beating benchmarks. Sega noted that "a high proportion of registrants have purchased multiple titles in the series" — a retention signal that matters for the ATLUS label's live-ops and DLC potential.

What does this change for Sega's operating posture? The quarter buys patience: gambling machines, catalog depth and licensing are carrying the P&L while the release schedule rebuilds. The January 2027 launch of Stranger Than Heaven is the first concrete test of whether that rebuilt slate converts wishlist demand into revenue.