CEO Interview on Consolidated Results for FY2006
Square Enix publicly announces its commitment to provide the world’s finest contents and services for its customers to have a spectacular experience. In order to achieve this goal, the company has been strengthening its overall capability by the merger of Enix and Square and by making TAITO a fully-owned subsidiary. We asked President Yoichi Wada about the current business situation and prospects for the future.
Review of the Consolidated Results for FY2006
Further progress in North American and European markets is important for future growth
It seems that you have made considerable progress in the restructuring of the Amusement segment.
The term Amusement refers to all the business operated by TAITO group, and we made a thorough review and drastic restructuring of the business during the previous fiscal year. The results of implementing these structural improvements, including the divestiture of the commercial karaoke machine business, closure of non-profitable amusement facilities, and streamlining human resources, mean that we are now in a better situation to approach the market more aggressively. The Amusement segment brings us physical interactions with our customers-the community in the real world. At the same time, new genres such as trading-card based arcade game and network enabled arcade game and network game machines have brought healthy growth in the area. Our next task is to find how to make the best use of the marketing information gained here. The amusement industry has a market size of almost ¥1 trillion, and until now market players had been fighting for a market share here. But we are now looking to develop a new business with a fresh and flexible vision.
Consolidated business results for the fiscal year ended March 31, 2007 showed a record recurring income.
Yes, indeed. Total game title sales, including repeat orders, reached 16.93 million units. This breaks down as 7.21 million units in Japan, 6.15 million units in North America, and 3.5 million units in Europe. For the first time, our overseas unit sales exceeded Japanese sales. With profits also increased in our Online Games, Mobile Phone Content and Publication, consolidated net sales were up 31.3% to ¥163.4bn and recurring income likewise up 68.8% to ¥26.2bn.
What do you believe accounts for this significant increase in overseas sales?
From the previous fiscal year, we have been working on establishing our own European distribution system managed through our local subsidiary and these efforts are now bearing fruit. The global market for packaged game software now exceeds ¥2 trillion, of which Japan accounts for 15-20%. In order to secure future growth, it is important to make further progress in North American and European markets. The key is to first determine the lifestyle and tastes of local customers, and then to find a way to produce attractive titles which reflect these lifestyles and preferences.