Sega encouraged by strong "Mario & Sonic" sales

Wed Mar 5, 2008 1:31pm GMT

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By Scott Hillis

SAN FRANCISCO, March 4 (Reuters) - Video game publisher Sega has sold 5 million copies of "Mario & Sonic at the Olympic Games", topping its expectations and giving it confidence that it can grab a bigger slice of the fast-growing market while staying independent.

"I don't think we believed in our wildest dreams that it would sell 5 million units in just three months," Simon Jeffrey, chief executive of the U.S. arm of Sega Sammy Holdings Inc (6460.T), told Reuters in an interview.

"We're moving very nicely up the charts but we are also very cognizant of what is happening at very top end of market, with regards to some of the M&A activity," Jeffrey said.

Last month, industry giant Electronic Arts Inc ERTS.O offered to buy Take-Two Interactive Software Inc (TTWO.O) for about $1.9 billion. Activision Inc (ATVI.O) is in the process of merging with the games unit of French telecoms and media firm Vivendi (VIV.PA).

"That's not an area we want to play in right now," Jeffrey said. "We have no interest in being acquired, we are very happy with our position right now."

Sega ranks as the sixth-biggest game publisher in the United States by revenue, according to market research firm NPD.

"There is plenty of room for smaller companies to be successful and profitable in this business. You don't have to be number one or number two. You can be number six very happily," Jeffrey said.

The Olympics game, which pits Sega's blue hedgehog mascot Sonic against Nintendo's iconic Italian plumber in athletic events, was first released for Nintendo Co Ltd's 7974.OS Wii console. A version for Nintendo's DS handheld went on sale in January.

The strong sales make it one of the few non-Nintendo games that has enjoyed big success on the Wii, which has been dominated by Nintendo-published games despite a rush by other publishers to create titles for the popular system.

And while many "hardcore" games, like "Halo 3" for Microsoft Corp's (MSFT.O) Xbox 360, see an initial burst of sales right at launch followed by a sharp decline, Jeffrey said casual games like "Mario & Sonic" often see steadier sales as word of mouth spreads.

"The Olympics is still four months off and the hype and excitement that builds to the Olympics should give this game a good boost up this summer," Jeffrey said.

Jeffrey said he was pleased with Sega's mix of franchises, which include games based on the upcoming "Iron Man" and "Hulk" movies, a Sonic role-playing game for the DS, and a title resurrecting its arcade classic "Golden Axe".

"We really think this year we've hit our stride getting that portfolio mix just right," Jeffrey said.

(Editing by Braden Reddall)

((scott.hillis@reuters.com; +1 415 677 2505; Reuters Messaging: scott.hillis.reuters.com@reuters.net)) Keywords: SEGA/

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