Japan is getting ready for its large-scale integrated resort (IR) projects. Sega Sammy Holdings Inc. has its eyes set on these multi-million-dollar projects. The country recently enacted legislation to create three large-scale casino resorts. The locations of these projects are yet to be determined, but 40 municipalities have expressed interest in hosting the resorts.
Numerous companies have already expressed interest in acquiring operating licenses for these projects. However, the government is not expected to issue a license before 2020, and the casinos are not expected to open before 2025. Sega is looking forward to bagging a “majority” of these projects as part of the company’s long-term growth strategy.
South Korean Resorts the Standard
In its integrated report for 2018, the Tokyo-based gaming and amusement company said that it will continue advanced investments to enter the integrated resort business in the country. The company acquired the Phoenix Seagaia Resort in 2012 which is now a case study for learning about resort operations. Sega is also developing expertise in the establishment and operation of IRs via a partnership with Paradise Co. which runs the South Korean resort, Paradise City.
Sega also said that it is refining its strategy by emphasizing on value chain analysis of over 118 key components of the casino business. Chairman and CEO of Sega Hajime Satomi said in a recent interview that a multitude of companies has approached the gaming operator to participate in their projects. However, he intends the group to maintain control over a “majority” of projects. The company’s goal will be to develop numerous lines of business with casino business as the focal point of operations.
Satomi further talked about the company’s strategy. Sega will invest cash from its gaming business in a prioritized manner. While the resort business will act as a “third pillar” and provide long-term investment outcomes, digital games will drive the medium-term growth of the company. He noted that successful implementation of this strategy will open a world of opportunities for the Group. It could also help Sega expand into the global market, riding on its domestic market success.
Increased Sega Profits
Sega’s profit has decreased significantly between 2017 and 2018. For the second quarter ending June 30, the company’s total profit was 300 million yen ($2.7 million). It earned 11.5 billion yen ($102.7) million during the second quarter of 2017. The company has projected a total profit for 12 billion yen ($107.2 million) for the year ending March 31, 2019.