"Green Hill Zone" was the name of the first level in the 1991 debut of Sonic, the blue hedgehog mascot from the video game manufacturer Sega.

With Affenzahn, Sonic ran up and down over brightly colored landscapes and also took the occasional loop with ease.

Looking at the six-year development of the share price of Sega's parent company, Sega Sammy Holdings, one inevitably feels reminded of the green hills from "Sonic the Hedgehog" (albeit without loops).

Gregor Brunner

Editor in business.

  • Follow I follow

In 2015, the top management began a restructuring process that lasted several years. Both divisions of the group, the video game and slot machine development under Sega and the manufacture of the pachinko and pachislot gaming machines under Sammy, which are popular in Japan, had come under pressure in the years before. On the one hand, video games for stationary systems increasingly lost market share compared to smartphone games. On the other hand, young Japanese were less drawn to the colorful and thunderous pachinko halls. In the 2015 fiscal year, business with the machines, which exploited a loophole in the Japanese gambling ban, which was very strict until 2016, shrank by 18 percent. Sega Sammy then posted a net loss of 11.2 billion yen (85 million euros).

The share price, which had been in a downtrend since the beginning of 2014 (with a brief boom in early 2015), hit a low of 1012 yen in January 2016.

Since then, the price trend has been a surprisingly regular curve, reaching high points at an average interval of 17.5 months before falling back into a temporary valley.

For both video gamers and gamblers, an expectable pattern is something that they can leverage for their success.

Is it equally worthwhile as a stockbroker to look for a system behind the movements of the Sega-Sammy share?

New laws

To answer this question, it is necessary to take a look at the two largest divisions over the course of the period under review and what moves them. In the 2016 fiscal year, according to the company's annual report, sales were 57 percent in the entertainment division under Sega and 38 percent in the gaming division under Sammy. These proportions have shifted steadily in favor of the entertainment division since the 2017 fiscal year. In the 2020 fiscal year (as of March 31), gambling had lost almost 10 percentage points and was only around 30 percent. As a stationary business, the gaming division lost another 10 percentage points in the pandemic fiscal year 2021 and made up around 19 percent.

The fears of a steadily decreasing number of players at the gaming machines had been confirmed over the years.

With 7.1 million players, around 10 million fewer were in the halls in 2020 than 20 years earlier.

In addition, the gaming machines repeatedly become the plaything of Japanese law.

The division not only benefited from the gradual liberalization in 2016 and 2018. With the option of operating casinos in Japan under strict conditions, the established pachinko and pachislot halls faced competition.

After the first easing was announced in late 2016, Sega Sammy's share price peaked at 1,838 yen in January 2017 and lost around 500 yen by November of the same year.