To Our Shareholders

Key Business Development Initiatives

The environment surrounding the gaming industry is in constant motion. I would therefore like to describe the business development initiatives we are undertaking to drive sustained growth against such backdrop.

Digital Sales Enhancement

The way game content is purchased is undergoing a significant change. Gamers are significantly moving away from purchasing packaged games and shifting toward digital downloads. In North America, more than 20% of purchases of “FINAL FANTASY XV” have been via digital downloads. The global download rate for “NieR:Automata” has been even higher at over 30%. Higher download rates help in a significant way to improve profitability on HD game sales. Mega publishers in the West have greatly improved their profitability via strong promotions of digital downloads. However, our own efforts in this area have not been sufficient, and we still have significant scope to improve our margins by bolstering our digital sales rates. It is extremely important to make the purchasing process as smooth as possible, such as by presenting or recommending products to customers based upon their purchase attributes. As such, we intend to undertake a variety of initiatives, including the overhaul of our sales sites.

Multiplatform Utilization

It is in the interest of content providers such as ourselves to have more platforms on which to provide our content. In the console gaming space, the fiscal year ended March 2017 saw the release of the “Nintendo Switch”, and its installed base has been growing rapidly. Microsoft has also announced that it will be releasing the “Xbox One X” this fall, so the console gaming market looks likely to experience an upsurge as we head into the 2017 holiday season. With 5G or the fifth-generation mobile networks likely to come online at last as 2020 approaches, the telecommunications environment for mobile gaming also looks poised to evolve dramatically. Devices supporting VR (virtual reality) and AR (augmented reality) technologies are also likely to grow smaller and lighter, and the use of such technologies in mobile environments looks likely to increase. As such, we believe we will see new content and services developed in those spaces. In the mobile content space, native apps are enjoying a zenith, but in the 5G world that awaits us, we believe that HTML5 will result in a resurgence for web browsers and that robust cloud streaming will become a reality. By collaborating with and taking part in Yahoo Japan’s “Yahoo!Game Gameplus” initiative, we intend to proactively engage with browsers, the conventional platform that has many new things to offer. As the above illustrates, game platforms are constantly evolving, with content now regularly becoming available on platforms where it previously could not be offered. This should be welcomed by content providers such as ourselves who possess a wealth of content assets. We have entered an age where more customers can enjoy our content more easily. For this reason, our guiding principle will be to offer our content on all available platforms to make it possible for our customers to enjoy our content in the ways that best suit their diverse lifestyles.

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