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Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 11, 2018

Outline of Results Briefing by SQUARE ENIX HOLDINGS held on May 11, 2018
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I will next break our results down by segment. The Digital Entertainment segment saw net sales fall ¥7.6 billion YoY to ¥191.4 billion, while operating income rose ¥10.1 billion to ¥43.4 billion. Despite the releases of “DRAGON QUEST XI: Echoes of an Elusive Age” and “FINAL FANTASY XII: THE ZODIAC AGE,” sales declined at the HD Games sub-segment due to the release of fewer major new titles in FY2018/3 as compared to FY2017/3. Operating income nonetheless grew as we continued to see brisk repeat sales of high-margin products, driven by digital downloads of catalog titles such as “NieR:Automata.

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The MMO sub-segment saw both net sales and operating income rise as the release of expansion packs for “FINAL FANTASY XIV” and “DRAGON QUEST X” spurred growth in both disk sales and paying subscriber numbers. Net sales and operating income also both increased in the Games for Smart Devices/PC Browsers sub-segment, thanks not only to brisk sales in Japan and overseas of existing titles such as “FINAL FANTASY BRAVE EXVIUS” and “HOSHI NO DRAGON QUEST,” but also to greater royalty income. In terms of new titles, “SINoALICE” was an earnings contributor. Arcade operations at the Amusement segment were solid, but net sales and operating income fell due to a decline in sales of new amusement machines. The Publication segment saw both net sales and operating income rise, in part because of brisk sales of comic books, but especially due to stronger sales in digital formats. At the Merchandising segment, net sales rose thanks to brisk sales of the figurines included with “FINAL FANTASY XIV” expansion packs, and of the “FINAL FANTASY TRADING CARD GAME.” Operating income fell, however, due to a rise in advertising costs. This concludes my results overview.