To Our Shareholders

The Way Forward

Our business environment is undergoing major changes. Sales of PlayStation 4 and Xbox One are growing significantly, primarily in Europe and North America. At the same time, smart devices are becoming more advanced and more commonplace. As such, we are seeing an evolution in where and how we enjoy digital content. Moreover, as the term IoT (Internet of Things) suggests, everything around us is beginning to connect to the internet. This is another trend that promises to create new experiences for us. We recognize that such changes are a constant feature of the landscape in which we do business, and based on that recognition, we maintain a constant goal: to deliver content of consistently high quality to customers around the world under the best conditions possible. We will continue to strive to attain that goal by engaging in research into the latest content and technologies, developing new business models, and cultivating new sales channels and regions. In addition, we will focus on the following initiatives in order to further strengthen and enrich our Group’s content and IP portfolios.

1. Revitalizing Existing IPs

We will revitalize some of our strong IPs in ways that meet the needs of the modern gaming market. For example, we will take an IP developed for earlier generations of game consoles and recreate it for the latest consoles, while also proactively developing versions for play on smart devices. In addition, we will also explore possibilities involving VR (virtual reality) and other new platforms. We want our longtime fans to relish reliving past experiences with a freshness that only the latest in technology can provide, while at the same time have new customers enjoy the IP as though it were brand new. By not only optimizing single pieces of IP for single platforms but also rolling out IP in a multi-dimensional manner to meet the needs of the modern market, we believe we can deliver exciting new experiences.

2. Creating New IPs

How to constantly generate new IPs and how to cultivate them are key business issues for any content provider. Once new content begins to take shape, it is vital to have an environment and mechanisms in place that help it grow into a major franchise. We intend to strengthen our efforts to sow the seeds of new content, and cultivate them constantly, and we will pursue a variety of avenues in order to do so. Our Group possesses many content platforms, including console games, smart device games, arcades, PC games, and comics. All of those platforms are capable of giving rise to new IPs. We see this as a strength of our Group that is unmatched by any competitor. We will work in the fiscal year ending March 2016 to ensure that these IP cultivation platforms give rise to new IPs for us to foster for the future.

3. Collaboration with Partner Companies

As I mentioned above, we find ourselves in an age of change. Devices, business models, and the competition are constantly changing. This means that today’s assumptions may not apply tomorrow. In such an ever-changing environment, insisting on complete self-reliance does not strike us as the best approach to staying unique and highly adaptable. Instead, I believe it is more beneficial to remain flexible about forming partnerships with others. A willingness to seek in others what we lack is a better approach to growing our business in this age of uncertainty. As such, we will not rule out any possibility as we explore and execute collaborative initiatives ranging from joint collaborations focusing on a single product to business alliances of a wider scope. In so doing, we hope to capture earnings opportunities in a timely fashion and leverage them for our further growth.

4. Geographic Expansion

The regions marked in red on the map below are those that the Square Enix Group has yet to enter. While the Internet has made the world more interconnected and less impeded by national boundaries, I believe that regional and individual tastes remain a major determinant of preferences for different types of content. Furthermore, as these untapped regions experience economic growth, their demand for content will mount, and their consumers will begin to want content rooted in the local culture rather than being satisfied solely with imports. As such, these regions have the potential to become major content-consuming markets in the future, which means it is important to establish a foothold there now. In the fiscal year ending March 2016, we will remain open to not only exporting existing content but also investing in local development efforts in these regions. We note also that economic growth in Asia remains strong and that the region continues to be a key market for us. In terms of size and technological development, Asia is now an advanced market rather than a growing one. In particular, China’s shift to mobile has been remarkable, and the country possesses some of the most advanced mobile game development technologies in the world. This makes collaborations and partnerships with Chinese companies very appealing, and we intend to approach such opportunities as an important part of taking on the competition not only in China itself but also in Japan and globally.

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