Sega parent Sega Sammy posted a profit and increased sales for the first quarter of fiscal 2011, but continued losses for its games division means the company will increase its focus on content geared towards social networking services and smartphones.

The Japanese firm, which operates arcade and pachislot businesses alongside its game and toy lines, swung from a first quarter operating loss last year to an operating income of 14.95 billion yen ($173m / £111m) for the three months ended June 30. Sales were up 51.1 per cent to 91.3 billion yen ($1.06b / £677m), while net income came in at seven billion yen ($81m / £52m).

The company’s consumer business, which houses its games and toy operations, saw first quarter sales up 15.4 per cent year-over-year to 20.9 billion yen ($242m / £155m), while its operating loss was slashed from 4.5 billion yen ($52m / £33m) to 636 million yen ($7.4m / £4.7m).

While domestic games sales were described as “mostly firm”, overseas sales of Sega’s “major titles for the US and European markets”, Iron Man 2 and Alpha Protocol, “remained slow as affected by the adverse market condition”. Sega sold 3.3 million software units in total, 1.68 million in the US, 1.33 million in Europe and 270,000 in the rest of the world.

“The group needs to adapt to changing business environment in which the market demand for new content geared to social networking service (SNS) and smartphone is expanding,” Sega Sammy said in a statement.