As well as because of greater cost of development and advertising.
It’s not just Sega that is feeling the heat thanks to underperforming mobile games. Square Enix has reported its latest financial results, and while they are still making money (unlike Sega, who are reporting an “extraordinary loss”), they are making less money than they expected. The culprit? As you may have suspected based on the headline, underperforming mobile games.
While new launches such as Octopath Traveler and Shadow of the Tomb Raider allegedly did well for Square Enix, they could not compensate for the underperformance of their newly launched mobile and browser games. Those losses, coupled with “greater amortization of development costs for major new titles and increased advertising expenses,” have led to the weaker than expected financial results for the company.
Square has said that it intends to focus on select hits and IP across mobile and console games alike to counter this, which will probably work well for it in the future. Given that Kingdom Hearts 3 has been a very successful launch for them as well, we can also assume that their end of the year results will be in a better state than this last report is.