Sega, the creator of Sonic the Hedgehog, is reaping the dividends of its decision to ditch its loss-making Dreamcast games console.

Its new strategy, in which it concentrates instead on writing games for Sony, Nintendo and Microsoft's hardware instead, has slashed its losses by almost two thirds.

In the year to March 2002, Sega lost 17.8bn yen ($141m; �97m), down from a 51.7bn yen loss in the year before.

It now says it will be back in the black this year, aiming for a net profit of 18bn yen.

Hardware battle

Sega was one of the early pioneers of advanced consoles, as its Megadrive took on Nintendo's Super NES console.

Both then were superseded by Sony's PlayStation.

But while Nintendo's 64 offered Sony solid competition, Sega's Dreamcast was hobbled by late delivery of the games themselves.

As its competitors - now including Microsoft for the first time - spent hundreds of millions on developing newer, more powerful machines, Sega realised that it should concentrate on its strength: game design.

Sonic boom

Now its iconic Sonic the Hedgehog character is back on the Nintendo GameCube, one of eight titles which sold a total of 1.2 million copies in 2001.

Its 13 PlayStation 2 titles racked up 3.5 million sales in all, while 13 GameBoy Advance games sold nearly 1.7 million copies.

Seven titles for the newly released Microsoft Xbox were responsible for another 660,000 games.