I would like to explain the background of not only the downward revisions for the FY2013/3 forecast, but also our unstable results for the past two years. While our digital entertainment strategy is built on a three-tier scheme (HD, MMO, and Social), the unsuccessful launch of FFXIV caused a negative chain of events in other areas across the businesses.
One notable example is the significant delay in the development of new HD Games titles in Japan. As a result, our major releases of HD Games titles use IPs previously developed by Eidos Interactive, and are sold mainly in Europe and North America.
Being dependant on Western titles indicates that our profit plans will greatly fluctuate according to the sales potential and capacities of our European and North American subsidiaries. This is a contributing factor to our downward forecast revision announced last week.
To explain this in relation to our three-tier framework, MMO was intended to be our solid foundation, HD Games as the stabilizer, and Social Gaming & Others as an area to aim for the upside. However, MMO earnings still remain \0. That each business line has to build its earning base from scratch is a significant variation factor against overall performance. For this structural reason, results for the last, current and next fiscal years would remain volatile for the time being.
If I were to mention the risks we are currently facing, we were able to obtain an accurate estimate of HD Games sales until recently, however, major releases of HD Games for the current fiscal year are mainly in the European and North American markets. It is therefore possible that uncertainty in the sales forecast could involve a downside risk for the full-year results.
I sincerely hope this session helped to clarify the factors behind the forecast revisions announced last week, and provide insight into our current business and outlook for FY2013/3.