CEO Interview
Interview with Yoichi Wada on Square Enix’s Consolidated Results for FY2007

May 29, 2008

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The Aims of the TAITO Acquisition and the Company’s Business Progress
The Concept Behind the Restructuring of TAITO -“Concentration on Core Competence.”

At the FY 2007 Results Briefing Session you explained the aims of the TAITO acquisition and its current business situation.

WADA

I just wanted to explain again that our aim was different from that at the time of the merger between ENIX and SQUARE. Through the integration of TAITO, we expect not only revenue streams from the relatively-stable amusement business, but also the development of synergies with the console game business. It will also contribute to stability from a financial perspective.
The concept behind the restructuring of TAITO, since its integration in September 2006, has continued to be concentration on core competence. In addition to the effects achieved by the series of reforms introduced in FY2006 to improve profits, FY2007 results show the core game arcade operation business is now back on track. Looking at the results of our competitors in the industry, we can see that only TAITO is showing healthy progress in its business. We believe this is the result of measures such as training for staff engaged in game arcade operation. We have also been pushing ahead in negotiations on contract terms for the lease of each outlet, and making positive efforts to promote favorable conditions for introducing the latest machines. These restructurings have led to big improvements in profits. With these tasks already mostly completed, from now on, for future growth, we can fully introduce our arcade machine rental business and move towards development of a franchise system for outlets. This will encourage other industries to become involved, and thereby broaden our market. We also have various plans for celebrating the 30th anniversary of the Space Invaders brand.

Until now game arcades were mainly associated with young people. What are your plans for game arcades in the future?

WADA

We think that young people playing now will continue to play there, even when they are adults, but we will have to create games that are attractive even to people in their late 40s and 50s. In fact, the appearance of games such as Brain AgeTM and Wii Sports has increased the number of people who play games, both horizontally and vertically. This is an opportunity we have to exploit. Since the game player base has been widened, we are now exploring a realm of games that never existed before.
This is why the Square Enix Group’s vision of the future not only includes itself, but explores the ideal form to energize our business in association with other businesses.

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