Outline of Tokyo Game Show 2011 Keynote Speech held on September 15, 2011

*This keynote was made by the president and CEO of Square Enix Holdings in his role as chairman of the Computer Entertainment Supplier’s Association.

(Continued from previous page.)*

I will never say that pirating is permissible. But I am trying to highlight that we need to seek out value that others cannot recreate. No matter what amazing data assets we create, or what kind of wonderful logic we code, when data assets are copied they lose their value. But if we made use of it to find out how customers experienced things, there's value. Making an experience out of user data has value. It’s unique. For example, playing with your friends: trying to recreate being at the same place and having a shared experience, that's impossible to copy. That's the direction that communication will go toward.

The source of value is shifting. The payment model is changing. We need to be self-conscious of this.

And as people in the industry it's very difficult. We make enormous investments, we make the things that are below the dotted line. But our customers are only seeing value in what's above it. There's a gap between what we're targeting for investment, and the model that's going to make the money back. This is incredibly difficult.

But, I think that's the way games always have been.

I define games as communication with rules. Something like sports is included in this as well. It's all games.

Let's take Shogi, or Japanese chess. Until Shogi as we know it was created, only the board and the pieces had some sort of value. Once the rules were created, well the board and the pieces are something anyone can make, so now it's the rule set. In other words, value transferred to the rules of Shogi. Once this is diffused, a completely different type of added value grows there. Playing itself becomes what's fun. And as time passes, today you have completely different added value services which have become mainstream. OUBAN KAISETSU, JOUSEKI, DAN-I SHUTOKU…** These are all completely different added value services. It's all the same, I think. There's a lot to learn. In the case of video games, it's how we interposition the computer which gives us a way to blend things. At first, video games simply created computer opponents in place of humans. Now they help introduce people to each other. How will this change? The undercurrent of competition is going to be in how we design games.

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