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.

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Now for the second component of the business model (Figure 4.)

When we say satisfaction, what kind of satisfaction do we mean? The point is, what kind of value do people seek to pay money for?

Let's consider the word processor. It used to be that you bought a machine to do word processing. Then DOS-V and MS-DOS came out, and the PC, and the OS, and on top of that you could buy word processing software. Hardware and software were separate. If you asked which had value, hardware or software, it was the word processing software that had more value than the PC.

Next let's consider spreadsheet software. The core of spreadsheet software is logic. If you add up this and this, you get this, and if you jump to this part of this column you get something- that kind of logic. But it's the calculations themselves which are important, not the calculation logic, so the software's value is split into two. They sell accounting software which uses spreadsheets. That's exactly what I'm talking about. If you divide the value it shifts up. This figure shows the order in which these shifts occur.

Talking about games, first we started with arcade machines.

Then, with the NES, hardware and software were divided; and when we reached the PlayStation, software's value was specialized into user generated data- which is to say, play logs and save data. And here the value shifted. And when the network became the foundation, play logs were transmitted, and communication between customers became critical. The value shifted like this.

The dotted line, and the difference between what is above and below it, is important. To put it succinctly, this separates what can be copied versus what cannot be copied.

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