Outline of Results Briefing held on May 13, 2013

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This slide shows the diffusion and further growth of smart devices (including game consoles), and as we publish games, we simply cannot ignore smart phones and tablets. Within our game portfolio, in particular the portfolio of SQUARE ENIX Japan, we have a structure split between, on the one hand, game console-oriented products (including handheld consoles), within which many games are focused on single-player, carefully played titles, and on the other hand, smart phone, tablet and PC-oriented titles whose focus is on multiplayer and event-driven style social games. On the basis of the progress of recent devices, moving forward we are thinking to push into publishing games on smart phones and tablets, which we had hitherto only published on game consoles, in particular our strong-point of single-player, story-driven games, etc. I have already given these instructions to our development teams, and we are moving ahead with this effort. Until now we have published games on these devices such as remakes of our old titles or turning our old franchises into social games, but going forward, in addition to these efforts, we will create new game titles of similar type. The most difficult part here is the earnings model. The prior packaged software sales model was a simple world calculated by quantity times price. The optimal business structure for this world involved separating development from sales and marketing, and having each specialize in their particular function. From now, we need to move toward a more flexible business structure. Therefore, it is not enough to simply develop a "good game," we have to think about what kind of game we want to present to our customers, how our customers will enjoy the game, and how we will receive compensation from our customers, which requires development, marketing and sales to unite in the creation of our games. Even in cases where the business model is a simple pay-per-download, we have to think of how to expand. It is critical to provide new titles where various revenue models such as pay-per-download, F2P, PDLC, and hybrids of them, are unified with the game design.

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