Investor Relations

Outline of Briefing Session for Revisions to Consolidated Results Forecasts held on March 26, 2013

Outline of Briefing Session for Revisions to Consolidated Results Forecasts held on March 26, 2013

Let me move on to our another major factor in the revisions announced today: incurring an extraordinary loss.

We have seen certain degrees of success in globalizing high-quality game development focused mainly in Europe and North America, however on top of our revenue model being outdated, our selling capacity has been far weaker than we ever imagined. In the end, we simply failed to sell the required number of units. For this reason, we are incurring an extraordinary loss in an effort to sort out items not achieving expected revenue levels, through scrapping those items and terminating production. Here is an overview: ¥2 billion plus, out of the Loss on Disposal of Content of ¥4 billion, originates from studios in Japan, in which we have already halted productions and scrapped WIP. Our subsidiary in the US launched a new division to develop casual games for smartphones, however seeing that this did not go well, we have shut down all functions in relation to this area. A ¥1 billion plus loss is expected for its closure. We also have some Loss on Disposal of Content in our European studios that amounts to a few hundred million yen, which brings to a total of ¥4 billion loss.

Although the current accounting period has not yet ended, in line with making downward revisions in prospective yields for every game title and overhauling business models, we are expecting to post a Loss on Evaluation of Content. The amount we expect to write down would be roughly ¥2 billion for Japan and approximately ¥1.5 billion for Europe and North America.

We also anticipate a company-wide ¥2 billion loss in relation to restructuring the organization.

We have done everything we can do to adapt and respond to the drastically changing environment; however we have not been able to accomplish satisfactory results since FY2011. I intended to do what had to be done but these results came despite my best efforts. We are performing negatively in the Amusement sector, negative in EUR/NA console games, and although Social Media Games are doing well, MMO is not performing to the level we anticipated.