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I will next break down our results by segment.The Digital Entertainment segment booked net sales of ¥204.5 billion (+¥13.1 billion YoY) and operating income of ¥29 billion (-¥14.4 billion).
The HD Game sub-segment saw YoY growth in net sales thanks to the release of the major titles “KINGDOM HEARTS III,” “SHADOW OF THE TOMB RAIDER,” and “JUST CAUSE 4.” However, a rise in costs associated with the release of the new titles resulted in a YoY decline in operating income.
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Both net sales and operating income fell YoY at the MMO sub-segment due to the high hurdle set in the previous year, which saw the release of expansion packs for “FINAL FANTASY XIV” and “DRAGON QUESTX.” However, recurring subscription revenue remained brisk.
In the Games for Smart Devices/PC Browsers sub-segment, many of the titles launched since the previous fiscal year have performed below our expectations and failed to add to the revenues generated by existing games. This, combined with a decrease in licensing revenue, led to a YoY decrease in net sales and operating income.
The Amusement segment posted net sales of ¥46.2 billion (+¥4.5 billion YoY) and operating income of ¥1.9 billion (-¥500 million). Net sales rose YoY thanks to solid arcade operations and the launch of new amusement machines, but operating income fell YoY due to an increase in depreciation charges related to the replacement of arcade machines.
The Publication segment booked net sales of ¥14 billion (+¥3 billion YoY) and operating income of ¥3.9 billion (+¥1.5 billion). Sales of printed comic books were on par with those of the previous fiscal year, but sales in digital formats grew sharply. A strong performance by the “MANGA UP!” manga application also contributed to the YoY rise in net sales and operating income.
The Merchandising segment posted net sales of ¥7.3 billion (-¥200 million YoY) and operating income of ¥900 million (-¥900 million). The YoY decline in net sales and operating income was the result of a high hurdle set in the previous year by the release of new merchandise based on popular characters and of strategic investments in developing new businesses.
This concludes my overview of our financial results.
