CEO Interview
Accelerating globalization and transforming corporate culture

Nov 24, 2010

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Even with the achievement of stable earnings under a challenging environment, areas for improvement remain

Can you start by giving us a general overview of the six-month period ended September 30, 2010?

Wada

For the six-month period, despite a challenging environment in the game industry, I think we were able to post relatively stable earnings. In this industry which has been facing substantial changes for the past several years, generating stable earnings has become more difficult. Having said that, our earnings have begun to benefit from several initiatives responding to these changes. However, when we look closely at the six-month period, there is no cause for celebration. The critical issue for us as a company is that we deliver products and services that people love deeply. And here, there is room for improvement.

One of the most anticipated titles of the period was FINAL FANTASY® XIV (FFXIV), what is the current status of this game?

Wada

While the financial impact is not tracking too far from our expectations, we cannot say that we've fully met customers' needs. There have been many aspects that we needed to reflect upon. We are working our utmost to regain customer trust. In addition to the already announced major version updates in November and December, we will conduct continuous improvement going forward.

How are you progressing against full year forecasts?

Wada

Our full year forecasts are unchanged. At the same time, however, we recognize how truly difficult industry conditions have become.
Further, the process by which we create within our company needs to change. I feel that over the past one or two years we have become somewhat complacent. We must return to a climate in which quality in every detail is our highest priority. To do so, we will need to transform our corporate culture and even the structure of our organization.

Step-by-step the Group's social games are gaining popularity

It seems that the Group is generating hit titles in new areas including browser-based and social games. Could you elaborate?

Wada

We have been working continuously in this field for several years now. Compared to large console games with big advertising and promotion, these titles don't get as much attention but they've actually been quietly gaining traction.
Some successful examples which I've mentioned before are Nicotto Town (virtual life community), SENGOKU IXA (browser game) and Bakumatsu Shishi No Renai Jijo (social game) – the first two mentioned here began development several years ago. Nicotto Town has been steadily growing sales and profit with current fiscal year sales forecast to be around ¥1 billion and we feel confident in keeping an operating operating margin over 30%. SENGOKU IXA, which only began open beta testing in August in tie-ups with Yahoo! JAPAN, has already exceeded monthly sales of 200 million yen in October.
After a few different attempts, our Bakumatsu Shishi No Renai Jijo social game has become a hit. With this, I feel that we have captured a new user base we could not reach with our past games.
I'm often asked, "Such games can only appeal to the Japanese market, right?" But in actually talking with various people, I've come to believe that there is room to expand our user base through such games in foreign markets. I also want to continue to work hard to grow in such areas going forward.


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