Outline of Results Briefing held on March 26, 2013

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I am pleased to report that Social Gaming and Others shows solid performance, where we see continuous growth in net sales, and expect net sales to reach ¥20 billion plus for FY 2013. Profit margins also continue to improve steadily. While we are making prior investments, we are seeing a confident rise in profit size. The social gaming industry is generally known for its roller-coaster situation, where a title could be a mega hit at one moment and then suddenly plunge to the ground. However, we are proud that not only do we own competent IPs, but our teams are now sharing KPIs and exchanging expertise on a daily level, which is certainly paying off since we relocated to our new office, strengthening our organization and development resources. Instead of uniting the organization into one team, we had multiple units running side by side while having them share and exchange the skills and proficiencies they each possess. This management style has proved successful in balancing diversity and structure, and played an important role in stimulating confident growth in this segment. Although we have yet to come up with a powerful title that can turn around the entire gaming industry, we are pleased to see extremely strong and steady growth in this area.


Let me cite two best practices in this segment:

Adapting browser games to smartphones generally requires rehashing mobile phone games to smartphones. One successful example in FY2013 following this method was Sengoku IXA, adapting PC browser games to smartphones. Then we have Million Arthur, a megahit title in Japan, which began service in Korea at the end of last year. This game has never dropped from its top-ranking status since release, and is still one of the best selling games in Korea. In the next FY, we will focus on providing social media games to Korea, China and gradually expanding our services to the entire Asian region. I believe we are already off to an excellent start.

This roughly summarizes the factors that led to the variance against forecast within the Digital Entertainment segment.

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