In recent years, Sega has undergone an ambitious transformation seeking to broaden the appeal of its iconic series beyond gaming, and that effort isn’t limited to Sonic the Hedgehog and Angry Birds with their respective Hollywood movies. Alongside their first physical stores in Japan, they’ve opened retail locations in China, hosted pop-up events globally, organized concert series for the music from their games, and more, all ways to monetize their properties beyond selling games directly to players.
As part of an expansive interview with Japan’s business newspaper Nikkei, Sega President and COO Shuji Utsumi discussed the importance of multimedia expansion of their IP, including appealing to fans of their series who don’t necessarily play the games themselves, in growing Sega as a company.
“In recent years, the number of fans of our games who don’t actually play them has increased,” notes Utsumi. “For example, merchandising for the Like a Dragon series is very strong, and about 60-70% of all merchandise purchased for the series is by women. There are a lot of people who have become fans of the world, story and characters of the series simply by watching YouTube channels and streams by different YouTubers. Amongst those people are a lot of people who haven’t played the games themselves.
“Even if these people haven’t played the games, we consider them to be fans and gamers in our eyes. The strength of transmedia is that it increases the number of pathways to becoming a fan of the series, and in some cases, it can create fans even more engaged than those who actually play it directly.”
Expanding IP to new mediums and heavily merchandising them for core fans to enjoy beyond the games themselves (or even independent of them) has been a common strategy not just in Japanese gaming but across Japanese entertainment for many decades. Notably, Utsumi also recognizes it as the main area for growth in the face of the difficulties facing the industry at present: while PC is growing as a platform and Sega has found growth by selling its games more on Microsoft platforms, supply-chain issues and rising costs mean it’s becoming difficult to maintain consistency and growth in the current business, forcing the company to adapt.
Utsumi even specifically cites the success of anime globally in recent years, and the way it has aided the Japanese music industry by increasing the visibility and global success of music artists and songs attached to hit shows. Sega is looking for a similar strategy to its merchandising—earning more money from fans, but also introducing its IP to new fans that could, perhaps, lead people back to the original.
“The transmedia project I’m trying to enact with Sega is informed a lot by my prior experience working at Disney Interactive Asia,” he adds. “Disney will implement a clear program of licensing their IP when releasing a movie in order to maximize profits. We had a system of creating a calendar around a film’s release and building relationships with licensees that went back for a long time, and we’d develop clothing, stationery, toys and other necessities using the IP from that. I feel I’m currently incorporating a similar transmedia strategy into my work at Sega at the moment.”
This was also the thinking behind the now-canceled “Super Game,” a game-as-a-service that Sega hoped could generate broader possibilities for its properties beyond gaming. Its cancellation came as it became increasingly difficult to bring the project to fruition as the company hoped. “Our transmedia expansion is centered on growing our business outside of games, but Sega is still a games developer, and we couldn’t ignore the games-as-a-service sector,” explains Utsumi.
“If we could create something from scratch that can appeal on a large scale globally using our IP, the reward from that would have been enormous. We tried to make it worth it by developing the technology we had, yet as we got further into development, the scale of investment and the scale of the operation of the game grew massively, and things became more and more difficult. Based on the current global circumstances we determined it would be too difficult to keep progressing work on it at this time, so we chose to cancel the Super Game.”
That said, Sega is still actively pursuing development on games that utilize the company’s old IP, such as Crazy Taxi, that GenX and Millennial players have nostalgia for and that offer opportunities for transmedia expansion. The company’s modern strategy is one that aims to take advantage of its marketable characters, not just to make new games but to create more ways to appeal to people who don’t play the games. A Persona fan who doesn’t play the game but will go to concerts and buy merchandise is just as important to the company, as is a Like a Dragon fan who attends stage shows, or a Sonic fan who simply thinks the blue blur is cute.
“When I first got involved in games, I felt both players and developers saw that games were, first and foremost, toys,” notes Utsumi. “Thanks to efforts to elevate games to be seen as a grander form of entertainment, the medium has become a dominant form of culture like movies and music. If you’re developing games across these current developments and trends, it’s important to consider how best to expand these IP and maximize profits, and transmedia expansion is part of that.”