Sega confirms it will use AI in game development ‘only in appropriate use cases’ as rising costs push studios toward efficiency
The parent company behind Sega, Sega Sammy Holdings, has confirmed that it will use AI in game development to increase efficiency amid rising development costs, but only in “appropriate use cases” to mitigate potential backlash.
Sega Sammy Holdings issued this message in an official English Q&A summary from the company’s Q2 2026 financial report, which was published on December 3. Investors inquired about the rising video game development costs in the industry asking “Game development scales are trending larger. Will you follow this trend toward larger projects, or pursue efficiency?”
The executives replied:
Rather than fully following the trend toward large-scale development, we will also pursue efficiency improvements, such as leveraging AI. However, as AI adoption can face strong resistance in creative areas such as character creation, we will proceed by carefully assessing appropriate use cases, such as streamlining development processes.
Sega is adopting AI amid the growing backlash against the technology due to financial pressures. Sega’s Entertainment Contents department, which consists of franchises like Sonic, Persona, and Yakuza, saw sales of 141.7 billion yen with an operating income of 18.7 billion yen in Q2 2026.
These sales figures are reportedly below Sega’s forecasts despite seeing strong launches such as Sonic Racing: Crossworlds and Football Manager 26. According to the report, repeat sales fell short. New titles, despite garnering a positive reception, underperformed commercially, in line with Sega’s predictions.
Executives stated that this lag was primarily due to gamers' preference for indie titles and AAA games, leaving Sega’s AA titles in a challenging position. Sega’s AI pivot comes just a few days after a Japanese studio shared concerns over AI.
Japanese news outlet Daily Shinko reported that an anonymous developer now requires applicants applying for video game artist positions to draw character designs or concept art during interviews.
This mid-sized developer took this stance after hiring “AI frauds” who underperformed in routine work.
Sega, on the other hand, is trying to position itself as a pragmatic player in the growing AI landscape by tying AI into non-creative workflows.
The company hopes not to alienate its fanbase while boosting profitability with upcoming titles like Yakuza Kiwami 3 & Dark Ties, Football Club Champions 2026, and an unnamed title under the company’s Super Game initiative, expected to release in March 2026.
