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- Interview with COO「Sammy Corporation SHIGERU AOKI」
Sammy is the main pillar supporting the SEGA SAMMY Group's growth. As a result, it must remain highly profi table. To fulfill this mission, the company needs to build leading shares in the markets for pachislot and pachinko machines.
The pachislot machine business accounted for 23.9% of the market in 2011 thanks to brisk sales of mainstay titles. Rather than maintaining this level, I want to increase our market share even further. In the pachinko machine business, we aim to capture a larger share of the market, with our sights set on building the leading market share over the medium-to-long term.
Of course, given current competitive conditions, realizing such management goals and then maintaining and enlarging market share is not an easy task. However, aiming to continue the efforts of my predecessor, Keishi Nakayama, who sought to create a company that reliably reaches business targets no matter what the market conditions, I will step up reform of all operational processes. At the same time, I intend to tackle the priority tasks I set out when I became president, and based on “high-quality cooperation” I will strengthen coordination within the company so that all personnel work in unison toward the common goals of capturing the No. 1 market share and growing earnings.
I believe Sammy has considerable scope for further reform. With “Power Up Sammy” as a rallying cry, we have prepared three priority measures.
The first priority measure calls on us to enhance each employee's competence. Since our establishment, we have regarded personnel as our greatest asset. Fostering personnel as a valuable asset remains the key to realizing dramatic progress going forward. Accordingly, we will develop structures that heighten the capabilities of each individual and thereby realize Sammy's strengths to the maximum.
Under the second priority measure, we will provide even better products matching the needs of each age group. To establish and maintain leading market shares, widening our field of vision beyond existing players to encompass new players is essential. To achieve this, we must market even more appealing products suited to the needs of each age group and heighten brand power. I think there is considerable scope to expand markets if we can achieve marketing that is finely tuned to the needs of such groups as, for example, baby boomers with ample time and money or the younger generation, who have a wide range of entertainment options. Based on this view, we have increased spending on research and development for fiscal 2013 and have already begun developing new products.
Our third priority measure aims to use management resources effectively. In September 2012, a new plant and a new distribution center will start up operations in Kawagoe, Saitama Prefecture, Japan. The plant will significantly increase the Group's overall production capacity: from the previous level of 5,400 to 7,900 pachislot machines per day and from the previous level of 4,800 to 9,800 pachinko machines per day. We will make full use of the new plant and the new distribution center to minimize sales opportunity loss and build an efficient production system. For example, this system will enable companies that underpin our multibrand strategy to purchase components jointly or share them and minimize disposal loss.
Compared with fiscal 2012, we aim to increase unit sales from approximately 300,000 to 473,000 pachislot machines and from approximately 330,000 to 450,000 pachinko machines in fiscal 2013.Although these are ambitious targets, I believe we should always set targets at levels that will inspire us to take up the challenge.
The Pachislot and Pachinko Machine Business segment has clearly shown its determination to stake out No. 1 market shares for pachislot and pachinko machines by increasing the number of titles it markets each year. Continuing this strategy, plans call for rolling out even more pachislot and pachinko machine titles in fiscal 2013. Of course we do not believe that increasing the number of titles alone will enable us to reach our targets.
The development system to which Sammy transferred in September 2007 has become entrenched and has successfully raised the basic quality level of all products. The benefits of this system are evident from the leading position the pachislot machine business has maintained-claiming 30.9% of the market in 2010 and 23.9% in 2011-and the growing market presence of our pachinko machine business. Capitalizing on this more powerful development system, we will supply numerous appealing machines able to earn market endorsement. In addition, positioning the new Kawagoe Plant as a hub, we will intensify coordination and collaboration among Group companies in the Pachislot and Pachinko Machine Business segment and grow unit sales.
For the year-on-year forecasts of the Pachislot and Pachinko Machine Business segment in fiscal 2013, despite projecting a 35.1% rise in revenues, we expect earnings to decline 1.4%. The primary reason for this is that we have set conservative profi t margins for the pachislot machine business in fiscal 2013 compared with those of fiscal 2012, when high-margin mainstay pachislot machine titles saw unexpectedly strong sales growth.
Moreover, the cost of sales ratio for the pachinko machine business is likely to worsen due to the current fiscal year's model changes for pachinko machine cabinets, which will increase cost while lowering sales of high-margin pachinko boards as a percentage of net sales. Also, a rise in R&D expenses will affect our profit margin. However, these are all strategic measures aimed at further bolstering our competitive strengths from the coming fiscal year onward. We expect that measures in fiscal 2013 will have advanced market penetration of Sammy's pachinko machine cabinets by fiscal 2014, when the resulting increase in pachinko board sales as a percentage of unit sales will improve our profit margin.
Pachislot and Pachinko Machine Unit Sales Targets
| 2012 | 2013 (Plan) | ||||
|---|---|---|---|---|---|
| Titles | Unit sales | Titles | Unit sales | Change | |
| Pachislot machines | 11 titles | 300,866 units | 13 titles | 473,000 units | + Approx. 172,000 units |
| Pachinko machines | 14 titles | 332,288 units | 15 titles | 450,000 units | + Approx. 117,000 units |
| Pachinko board sales as a percentage of unit sales |
52.4% | 31.2% | |||
