Publishing reinvented: How Sega Europe had its best year yet

We strongly suspected that Sega Europe had a fantastic 2017 but it’s good to hear it directly from John Clark, EVP of publishing for Sega Europe: “Last year was our most successful year, our most profitable year, for many, many years,” says the recent recipient of our MCV Person of the Year Award.

The games behind that bumper 12 months are highly varied. Total War: Warhammer II and Football Manager 2018 provided very different kinds of fantasy. Sonic Mania capitalised on retro enthusiasm with a sell-out special edition, while Bayonetta and Vanquish came to PC via Steam. Then there was Motorsport Manager, Yakuza 0 and Endless Space II among others.

With a mix of wholly-owned and partnered titles, western and Japanese IPs, spread across physical and digital releases on practically every platform, Sega Europe took full advantage of every opportunity available to it. With such an eclectic
line-up, plus its storied past, Sega Europe is hard to neatly sum up.

“If you’re trying to define what we stand for, it’ll keep you going for a while I’d think!” agrees Clark when we discuss this at GDC. “And until you work it out, we’ll be having these conversations for years,” he adds smiling.

Sega Europe does have a clear but broad mission statement, though, which he tells us is to “deliver entertaining experiences to the world, one community at a time.” With Clark keen for the developers working with Sega – never for Sega – to be building those communities with the publisher.

Actually, Clark is keen to impress the cooperative nature of Sega’s partnerships with its studios across a whole range of business activities, breaking down the traditional publisher-developer divide.

AN OPEN RELATIONSHIP

That even goes as far as discussing sales strategy in an open manner: “As a studio you’ve thrown your life into this, and you’re not prepared to be told you can’t have that discussion,” Clark says. “That conversation never used to happen between publishers and developers, now for Sega that’s part of how we work, it’s key to the relationship.”

Clark is emphatic that the publisher can’t just fund games and take its cut, instead always asking: “Where do we add value to the studio?”

“We all spend a lot more time working directly with the studios, it’s a far more integrated way of working, it’s just completely transformed the way we talk to each other and the way we talk to the studios.”

Whether it’s “sales people or marketing people… it’s not good enough to occupy the job. It never has been, don’t get me wrong, but sometimes I think publishing people relied on an exclusivity of relationships.” In short, the publisher could distribute your game and you couldn’t, so tough.

“For years no one would challenge you, no one from a developer would come to you and say: ‘why aren’t we No.1?’ Or: ‘I couldn’t find any games on shelves’.”

Or almost no one, at least, as Clark tells of a Saturday morning many years ago when a certain football-management developer phoned up to tell him there wasn’t enough stock in the right places at retail. Thankfully, Clark was already aware of the problem, having dragged his family down to the High Street that morning to check for himself.

And the new openness works across all the studios in the firm.

“We want the studios to talk to each other, and we want to be evaluated in how strong we are,” he continues. “By talking, you drive innovation, you get ideas away from game development – about social media, community, franchise development, about how to offer content, release strategies, pricing strategies. We want the studios to have an opinion.”

And that’s a group of studios that continues to grow, with Sega making a number of recent acquisitions and partnerships and very much on the lookout for more.

THE RULES OF ACQUISITION

“Whether that’s M&A [mergers and acquisition] or incubation or investment, that’s an area we’re operating in and we’re interested in,” Clark tells us. “We have an internal team called Searchlight, whose remit is to look for new western content and new western partners.”

Searchlight successfully targeted Relic at the THQ auction back in 2013, and worked on PC conversions of Japanese IPs, such as Bayonetta and Vanquish. It was the same team which spoke to Amplitude, leading to its acquisition by Sega in 2016.

“When we acquired Amplitude, we put down a plan of all the different areas of integration you need to understand the requirements of the studio. What are its priorities? What are its needs? We ask ourselves where we are adding value, and if we get this wrong where could we destroy value.

“If we acquire a new studio what are we bringing to the party? It’s not because we are now the owners of the studio, that’s not a good enough reason. The reason is because we’re good at this, and we’re the best people the studio can partner with to deliver this. It’s not because we’re fortunate enough to have relationships with channels, it’s because we’ve worked bloody hard to drive incredible relationships that deliver fantastic value for our studios.”

And that was particularly key with Amplitude. While Relic, Sports Interactive and Creative Assembly had never self-published their games, “Amplitude had built a company from developing and self-publishing,” Clark tells us.

“So how are we going to represent ourselves, with strength and credibility, in areas where these guys have spent six or seven years building up a business, working with Steam themselves, working with social and community channels, marketing channels and PR?”

It certainly wasn’t going to work simply saying: “Hi, I’m the sales guy – you did sales, now I do sales,” he says.

Instead they worked in partnership, says Clark: “You do sales, I do sales, please tell me how you’ve driven success for this startup developer and how you’ve been able to deliver these games to the level that’s made Sega really want to acquire you.”

ALIEN INCUBATION

And Sega is rapidly expanding its third-party publishing deals, or incubations as it describes them.

“Why we think about incubation rather than third-party publishing is that we enter these relationships to work with a passionate and driven developer with a vision, and that vision is connected to developing a franchise and a bigger future for the studio, focused on how they want to drive community. Community is really, really important to us,” Clark says.

“We don’t want anyone who’s going to develop a game, say ‘here’s the game’ and then move onto the next game. We want a studio that’s going to develop the game, the vision, the franchise, build the community and be front-and-centre of that community. We can do that job, but it’s you that’s making the game, so have that relationship with your consumers.”

At present Sega has such partnerships with three UK-based studios. Again affirming Sega Europe’s strong UK roots, Clark explains.

“[There’s] Playsport Games, a small studio with some very talented young people who have worked for Supermassive and Hello Games, among others. We’ve launched a game called Motorsport Manager with them, so you can see how that fits in the model.

“We’re also working with another talented group of guys based near Guildford, called Two Point Studios, founding members and original developers from Bullfrog. We’re really excited about that.

“Then we’ve recently announced we’re working with another studio, a startup called Interior Night – headed up by Caroline Marchal, who’s ex-Sony but also ex-Quantic Dream.” And which was also featured in MCV last month.

STEAMED DUMPLINGS

While the focus of its development remains in the west, Sega Europe’s Steam expertise is opening things up for it in developing markets – most notably in China – with Clark informing us that “China’s gone from being a Top 20 territory to being a Top 5 territory on Steam. The size of the market and the growth of the market means it’s a really strong focus for us.

“With Total War and Football Manager, we’ve seen strong resonance. They’ve got great awareness,” adds Clark enthusiastically. With the company seeing growth off the back of Steam’s own initiatives in the region.

“When Steam opened up Chinese localised pages, payment providers and currency, we saw an immediate increase in our sales in China. When we then started to support that with simplified Chinese localisation, again we saw growth – exponential growth. We’re still learning how to take that forward, but Steam is an offshore provider into China, which gives us some limitations about how we think about the Chinese audience.”

The most important of these being a lack of any marketing avenues for such offshore services, he adds: “No one’s advertising Steam in China, no one is advertising Football Manager in China.”

And Sega Europe’s regional experience is growing: “Over the last three years, from having no knowledge of the business in China we now have a good level of knowledge… and increased our ability to work a lot closer with our Japanese peers and partners, driving stronger relationships there as well.”

“When Steam opened up Chinese localised pages, payment providers and currency, we saw an immediate increase in our sales in China.”

The next step would have to involve a big Chinese partner, such as Tencent? “Yes, in a perfect world, or Netease,” Clark replies, before continuing: “These are huge organisations and they’ve built their footprint in China, so they run lots of these channels already. They have payment providers, their own social channels, they have a huge footprint. Working with these entities means accessing the routes to the consumer is something that is exciting.”

And of course it comes back to fulfilling the needs of communities: “Talking about community again, we see a Chinese community that’s very strong, very opinionated, loves our titles, just like any community. We need to get everything right for them.”

LEADERSHIP

It’s remarkable that all this activity and that bumper year occurred during what looked like a period of some disruption for the senior management. Long-serving Sega Europe chief Jurgen Post left his role in June of last year, and his replacement Chris Bergstresser only stayed for four months before moving on.

“At the moment we have a really strong leadership team, that’s the good thing, and our team is quite unique, in that we have four studio heads, we have corporate development, and my role in publishing,” Clark says.

“Miyazaki-san is the CEO of Sega West and he’s spending more time with us at the moment, which is great. We’re getting more exposure to the Japanese business which is really, really good. He’s getting more exposure to us. And we’re learning a lot about the way we all do business.”

Clark won’t be drawn on whether a new boss is incoming: “We’re looking for what is the right level of leadership to take the organisation forward. And that does involve talking to people about the leadership role within Sega Europe.”

With the company going full steam ahead at present, it’s not a decision that needs to be rushed into. We finish by simply asking if 2018 will be even more profitable for Sega Europe?

“Yes,” Clark simply replies.