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

May 29, 2008

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Implementation of a Holding Company System and Our Vision for the Future
Implementation of a group company management system is essential to assure the benefits of a changing business environment

You have decided that from October 1, 2008, you will implement a holding company system by means of the company split method.

WADA

We will establish a new, wholly-owned subsidiary which will take over Square Enix’s business, with the current company becoming Square Enix Holdings Co. Ltd.. The company’s listing on the Tokyo Stock Exchange will continue as a holding company. In the current difficult business climate, we believe it is essential for the group to implement a group company management system to assure the benefits of a changing business environment.(Reference: Notice Regarding Implementation of Pure Holding Company System and Amendment of the Articles of Incorporation, published 23 May, 2008.)
Furthermore, we are aiming at a system that can sustain and promote our brands from a broader perspective. The image we have in mind is LVMH Moët Hennessy - Louis Vuitton, a holding company that possesses a number of luxury brands. Under the umbrella of a holding company, we think we can develop strategically, whether creating new brands or absorbing other brands, while avoiding cannibalization between brands. Within our own business of entertainment, we have studied the Walt Disney Company brand strategy. When Disney bought an adult-oriented live action movie production company, there were arguments both for and against the move, with some saying it was not appropriate for Disney, with its child-oriented brand image. But now, these concerns seem misplaced, as the brand has become an established part of the Disney group portfolio. We expect our holding company system to play an important role in maintaining the brand while expanding our business.

You have explained how you have already set the course for the future from 2010.

WADA

I believe 2010 will be a major turning point. The media and content markets will converge, and the game industry in general will find itself in continuous motion. That is why we must make a major course setting now.

You have presented a bold vision for the future. What are your personal feelings?

WADA

Development of the Video Game Industry

If you look at the game industry, the first phase is a mono-polarized, vertically-integrated stage. The second phase is multi-polarized and networked. From 2010 we will enter the third phase, in which the media and content markets will converge. Distinctions between the game industry and others will disappear, market size will increase, and competition will be even fiercer. I can see rivals coming from beyond the game industry, and the industry itself will simply become part of an enormous media content industry.

What are your tasks in detail for the third stage and beyond?

WADA

To survive, the enhancement of content creation capabilities will be essential. To ensure this, we have set our sights on promoting the Square Enix Group’s core game business. At the same time, development of an even greater global presence is important. In both the European and North American markets, we have completed the preparation of our own sales forces, but the crucial stage is yet to come. For this reason also, I believe an important task is to introduce the holding company system while sustaining profitability and mid- to long-term growth.

(Interviewer: Motoshi Isobe, Journalist)
May 23, 2008

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