Sega eyes expansion in China, Southeast Asia

Sega Corp. is collaborating with international partners to enhance its presence in Asia and lessen its reliance on the Japanese market.

The company, known for the Sonic the Hedgehog franchise, is shifting its development focus beyond Japan and traditional console gaming.

In 2023, Sega Sammy Holdings, its parent company, acquired Rovio Entertainment, the creator of Angry Birds, to strengthen its mobile gaming portfolio.

Sega is pursuing partnerships suited for specific markets in Southeast Asia.

This includes a licensing agreement with Longtu Game in China.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Sega’s pivot to mobile follows Asia’s gaming market shift

Sega’s emphasis on mobile gaming reflects a significant market shift in Asia, where the company now sees over half of its gaming business coming from mobile platforms.

This aligns with broader regional trends, as mobile gaming accounts for 66% of total gaming expenditure in China, making it the dominant platform in Asia’s largest market 1.

The mobile gaming sector has rebounded to $188 billion globally in 2023, representing 49% of total gaming revenues and projected to reach 55% by 2026 2.

Sega’s acquisition of Rovio Entertainment for $776 million in 2023 2 represents a strategic response to this market reality, leveraging the Angry Birds franchise to accelerate their mobile presence in Asia.

The company’s statement that they were “paying too much attention to console” acknowledges a historical misalignment with Asian consumer preferences, where smartphone gaming has long outpaced console adoption, especially in Japan 3.

2️⃣ Sega’s decades-long quest for Asian market presence

Sega’s current partnership strategy in Southeast Asia follows multiple historical attempts to penetrate Asian markets beyond Japan, with mixed results.

In the 1990s, Sega entered India after trade laws were relaxed, initially partnering with Shaw Wallace Electronics to distribute the Mega Drive console and later attempting to build entertainment centers with projected revenues of 2 billion yen by 1999 4.