Sega changes game plan, embraces blockchain ventures after sales dip

Sega, a titan in the gaming industry, recently signaled a strategic pivot towards integrating blockchain technology into its operations.

The move comes as the Tokyo-based company faces a downturn in its financial outlook due to underwhelming game sales during the 2023 holiday season.

Sega, known for its iconic franchises like Sonic the Hedgehog, faced a challenging period. Titles like “Sonic Superstars,” “Endless Dungeon,” and “Total War: Pharaoh” did not perform as expected.

As a result, Sega revised its sales and profit forecasts downwards, attributing the adjustment primarily to the lackluster performance of its new releases in the third quarter (Q3) of the financial year.

The backdrop to Sega’s financial woes includes a broader video game industry trend of plateauing market expansion in key regions such as Europe and the U.S., exacerbated by an inflation-driven worsening economic environment.

Coupled with rising game development costs, Sega finds itself at a crossroads, needing to adapt to these evolving business landscapes. However, the company remains optimistic about the long-term growth of the gaming market, driven by the diversification of service provision and the ability to deliver content globally, irrespective of device or platform.

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Sega and Web3

In a move that could be seen as a response to these challenges, Sega has ventured into the realm of blockchain gaming.

The company, which first launched in 1960, announced a partnership with Japanese blockchain firm Double Jump Tokyo to develop its first blockchain-based video game. The initiative will leverage Sega’s intellectual property in a SEGA-licensed digital collectible card game, set to be released on the Oasys HOME verse L2 network.

The game, drawing from the mythology of the Romance of the Three Kingdoms and utilizing the Sangokushi Taisen series IP, represents Sega’s foray into the burgeoning field of blockchain and NFTs within the gaming industry.

The strategic pivot is not without its context. The gaming industry at large has been exploring the potential of blockchain and non-fungible tokens (NFTs), despite facing criticism over concerns such as environmental impact and ethical considerations.

Giants like Konami and Atari have already begun selling digital items as NFTs, signaling a shift towards digital ownership and the monetization of in-game assets.

And in February, the PC strategy game Blocklords airdropped 300,000 LRDS tokens among its players and NFT holders. The Blocklords GameDrop plans to run a total of five airdrop events, with the second one already live.

Sega’s exploration of blockchain technology, marked by its partnership with Double Jump Tokyo, is part of a broader industry trend toward embracing new technologies . The effort could redefine gaming’s future landscape.

Sega’s venture into blockchain gaming could potentially offset some of the financial pressures it faces by opening up new revenue streams and engaging a different segment of gamers interested in the digital collectible space. While the company has faced setbacks with its traditional gaming portfolio, the integration of blockchain technology and NFTs into its strategy could pave the way for a new era of gaming, driven by digital ownership and the global accessibility of games.

As Sega navigates through its current financial challenges, its move towards blockchain gaming underscores a strategic adaptation to changing market dynamics and consumer preferences. The company’s ability to innovate and embrace new technologies will be crucial in its efforts to remain competitive in the evolving gaming industry.

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