Investor Relations

Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 14, 2012

Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 14, 2012
(Continued from previous page.)*

Taking into consideration the improvement factors from FFXI, we have decided to include negotiations with Shanda for FFXIV and further into Asia. Although no definite plan is set for DQ, we would like to expand the operation of the title overseas as well.
However, assessing from the operating profit basis in the current fiscal year, the impact would not be robust. In the instance with FFXIV, it is difficult to collect profit while in operation, and we have only started billing just recently. DQX, too, will have the same accounting treatment as the other package software games by expensing its costs upon release. As such, operating profit will have an upward effect from the next fiscal year onwards.

Next onto HD games. “High-definition game” is a coined word. The business model in this area is drastically changing. Instead of burning discs and selling off to the customers, the business model is changing to maintain continuous transactions with the customers. Although this is an opportunity to increase revenues, maintaining customer relations is difficult. Further, as there is limitation to the available time a customer allocated to the game-playing and the number of games one can play, there would be severe competition on consumer attention and loyalty. As a result, we are concentrating on 2 key factors – how to change the business model and how to narrow down to hit IPs that enable us to maintain continuous relationship with customers.
In relation to the change in the business model, we have already progressed in terms of distribution. For example, full-download of games. It is important, above all, to determine the appropriate revenue model, which is diversified in the current market whether it would be additional payable download content, micro-transactions, and/or a fixed monthly subscription fee. As game creators have to keep this in mind in the planning phase of game development, we need additional efforts to change their mindset.