Something new to share: I've acquired in-depth Sega revenue information for 1991-1998, including export revenues. The most interesting thing? Sega was in a serious bind at the end of 1993. Revenues from exports to North America and Europe tanked at the end of 1993. This provides a lot of context for Sega's desire to get the Saturn out as soon as possible, and why waiting until 1996 would have been unrealistic. Read my write up here and get the data: https://mdshock.com/2021/04/14/segas-financial-troubles-an-analysis-of-export-revenue-1991-1998/
Earlier years (millions); 87.05 - 88.04: ¥11,777 88.05 - 89.04: ¥16,845 89.05 - 90.04: ¥26,874 90.05 - 91.03: ¥40,300 And some sources to financial results back to 1983 if you're interested in this sort of thing; https://retrocdn.net/index.php?title=File:GameMachine_JP_239.pdf&page=14 https://retrocdn.net/index.php?title=File:GameMachine_JP_286.pdf&page=1 https://retrocdn.net/index.php?title=File:GameMachine_JP_310.pdf&page=12 https://retrocdn.net/index.php?title=File:GameMachine_JP_311.pdf&page=12 https://retrocdn.net/index.php?title=File:GameMachine_JP_332.pdf&page=12 https://retrocdn.net/index.php?title=File:GameMachine_JP_361.pdf&page=12 https://retrocdn.net/index.php?title=File:GameMachine_JP_384.pdf&page=18 https://retrocdn.net/index.php?title=File:GameMachine_JP_405.pdf&page=14 https://retrocdn.net/index.php?title=File:GameMachine_JP_429.pdf&page=16 https://retrocdn.net/index.php?title=File:GameMachine_JP_452.pdf&page=14 https://retrocdn.net/index.php?title=File:GameMachine_JP_475.pdf&page=14 https://retrocdn.net/index.php?title=File:GameMachine_JP_497.pdf&page=12 https://retrocdn.net/index.php?title=File:GameMachine_JP_520.pdf&page=12
At the risk of being accused of promoting my own stuff... So when I made that video I stumbled across some financial tid bits from Sega between 1991-1992. I do mention this in the video and elaborate on why this show happened over say a typical ad campaign. And based on your data vs the information I uncovered during the research for my vid... Good Lord how much did they spend vs the income! It sounds like Sega may have had a problem saving money for the early part of the 90s at least. Based in the research I did into why Sega did that TV show. After Christmas 1991. Sega (America at least) had barely any money left. They'd literally pumped all the money they had into Christmas 1991 and Sonic/Genesis/Mega Drive promotions in the US and Europe. Which meant they were very strapped for cashing going into 1992 despite taking that huge market share and based on your data actually having a larger income going into 1992. This makes me wonder how much money was actually going out in the early 90s vs the income. Alongside all the promotion. The console research & development, they must have had enormous outgoings. Would love to see if that data exists anywhere Vs the income.
It would be nice to have financial information on the wiki - we do have all of Sega's annual reports from 1998 onwards.
The one English page of those later Game Machine issues is usually a good source for obscure details on the amusement industry side of things - I haven't attempted or seen many loose translations of the Japanese content in them yet either, so god knows what else is in them. Their significance is well-known but are always worth a look.
Nice video! In regards to saving money, that was definitely a secondary concern under Kalinske. His strategy was to focus on growth and worry about profits later, with the idea that there aren't really going to be any profits from distant second place in the volatile game industry. So yeah, it was all about trying to get that market share and then worry about stabilizing the business later. That's basically the opposite of how businesses are typically run in Japan, where stability is far more important than risky growth. Japanese companies, especially at that time, practiced lifetime employment, so employees were less willing to make risky decisions that might threaten their own job or the company itself. Nakayama, however, had a very Western approach to business, probably due to him having worked at and been heavily involved with Western companies since he was in his early 20s. That's why we get these stories about Kalinske wanting to spend huge sums on advertising in 1992 and the Japanese upper management being shocked at the cost, but Nakayama always siding with Kalinske and OKing it. In regards to profits and expenses, that information is available in Sega's financial reports and in the information Pirate Dragon posted above, although just per-year rather than per-six-months like the data I posted. Here is a basic breakdown of Sega's net income (profit) for the time: 1989: ¥2.8 billion (~$20 million at the time) 1990: ¥4.8 billion 1991: ¥8.2 billion 1992: ¥14.0 billion 1993: ¥28.0 billion 1994: ¥23.2 billion 1995: ¥14.1 billion Those are fiscal years where, for example, 1992 = April 1991 - March 1992. So we can see in FY1991, Sega made about ¥8.2 billion (~$65 million) in profit, which really illustrates why the upper management in Japan opposed Kalinske's advertising plan. In 1992, Kalinske spent $65 million on advertising, where the previous few years it had been something like $10 million per year. This idea of trying to balance growth with profit was a constant battle. Hideki Sato even mentions it in regards to the Saturn, where he says that the business side intentionally limited production of the Saturn to reduce losses (since they were selling each unit at a huge loss) and make their financial reports look better. That, of course, is a dangerous strategy, since if you don't build a strong user base initially you lose interest from third party publishers. But it's important to keep in mind that the company was always under huge pressure from investors (not to mention the internal opposition to even doing home console hardware).
Regarding this specifically. That's why we get these stories about Kalinske wanting to spend huge sums on advertising in 1992 and the Japanese upper management being shocked at the cost, but Nakayama always siding with Kalinske and OKing it. That I have heard before... But for a Sega Europe thing. And again at the risk of promoting my own toot. I'm sure we've all seen at least 1 image from this event at some point? Be it Cenna holding up that trophy or the car itself? Well apparently the guys who came up with the sponsorship and planned the whole thing didn't end up being that popular with Japan afterwards. Apparently it was one of the most expensive campaigns Sega ran given how long it went on for... Fortunately... Cenna performed 'The Lap Of The God's' at this race and it's regularly shown over and over again... so you can't help but see Sega's logo. In the end it paid off. However at the time SOJ and from the Sounds of it. Even SOA were not happy at the cost. And this was an Sega Europe thing and British business also tends to lean more on long term stability that an all or nothing approach.
At no risk of promoting our stuff ... because we do an excellent job without expecting revenue, fame, glory or stardom... much money was spent before and after that Grand Prix... Sponsorships , Sponsorships/Motorsports , Sponsorships/Football ... according to Raul Monton, Jr. Product Manager / Software Divison (Sega Spain, 1992-1994) on his blog... Sega TV advertising campaign made much more damage... this two minute ad alone, created to promote the Mega CD, costed £1.000.000 ... the Mega CD sold poorly in Europe... the revenues did not covered the expenses ... SOJ got pissed off and many heads rolled ... especially on SOA and Sega Europe ... Raul Monton was one the "victims" too ... he lost his job ...
Heads rolled in Japan too regarding the Mega CD - I read some quote by Nakayama (I think) upset that it took almost two years after the release of the add-on for Sega's internal developers to release anything substantial for it. Apparently Sega's developers just had no idea what to do with the CD format or how to develop for it...
Some context on how badly the currency fluctuations were a problem in 1993-1994 - Sega Europe lost £100 million in the year up to February 1994, and it was reported that three quarters of that loss was down to currency switches. The company had previously had a 28% profit margin, but cost of sales increased 35% as all of the manufacturing was done in Japan. The problem was so severe that Sega began manufacturing cartridges in Wales in order to cut manufacturing and distribution costs. From a European perspective, this all has to be seen in the context of the rarely-acknowledged gaming market slump of 1994. The home computer market that had been the industry's focus just a few years earlier was basically on death's door, as evidenced by the bankruptcy of Commodore. Meanwhile, the rapid growth of the console market prior to 1993 was halted. Part of that is easily explained by the business issues mentioned above (note that in the first story I linked, Nintendo is also known to be struggling), but I'd also argue that consumer interest declined pretty heavily too. If you look at magazine circulation figures from the time, you can see that pretty much the entire market experienced some fall in sales, with the multiformat and Sega-focused magazines dropping almost 50% of their circulation in a single year.
Great info - thanks! I haven't given much thought to the situation in Europe. I just looked up the historical chart for the pound to yen exchange rate, and yeah, it's rough: https://www.macrotrends.net/2556/pound-japanese-yen-exchange-rate-historical-chart From August 1992 to August 1993 it took an incredible nosedive (and kept going down after that). Much worse than the dollar-yen troubles. It's interesting to think about that 1993/1994 period and think about consumer interest. From my own experiences in the US, I remember that period particularly for the explosion of PC gaming (Doom was released at the end of 1993) and the resurgence of arcade gaming. There was definitely a feeling of anticipation for the next generation of home console gaming and I can remember being far more excited by the new genres and types of games coming out on PCs and in arcades than the mostly similar 16-bit console games.
Interesting. When I first started reading about the behind the scenes of SEGA in 2006 I bought into narrative that the Sega US staff were geniues screwed over by their Japanese counterpart. Starting to question that these days. Fun Fact: the actor who plays Zack Morris can be seen playing a Sega Saturn in the movie Dead Man on Campus.
