Investor Relations

We have implemented our digital sales enhancement initiatives against a backdrop of customers increasingly purchasing full games—especially HD games—via digital download rather than in boxes. These initiatives have included enhancing and renovating our sales site to make for a smoother purchasing experience for our customers. As a result, the fiscal year ended March 2018 saw download sales of our catalog titles grow, which led to a sharp increase in the portion of our HD game sales that we generate digitally to more than 40%. The trend toward greater digital shopping is irreversible, so we will now need to go beyond simply renovating our sales site to creating the capability to provide our customers with tailored recommendations based on their preferences and game-play style. We must admit that our Group is behind in terms of such initiatives, but we will ramp up our system development and other relevant efforts to make up for lost time. We will in fact take things a step further by not only bolstering the digital sales of our games, but also establishing an e-commerce strategy as the fifth pillar of our growth initiatives to better leverage our Group’s IP portfolio. To date, we have recognized sales of IP-derived figures and other merchandise produced either by ourselves or via licensing arrangements under our Merchandising Business Segment and positioned such offerings as a way of supplementing the original IP. However, of late we have noted that consumers increasingly want not simply to enjoy games and manga in isolation but in a more wholistic way that includes merchandise based upon such contents. They have begun not only to want to play games but also to have a deeper appreciation for the universe of the game and the characters that inhabit it. Social networks have made it possible for players to share their playing experiences and reviews with many other players, thus creating global communities. In those communities, fans enjoy games, manga, and other content as though they are all part of a single universe, irrespective of whether they are engaging with the original IP or derivative products. For this reason, we believe that we should no longer limit our Merchandising Business Segment to a supplementary role vis-à-vis the original IP but to redefine it as “e-commerce,” applying a broad interpretation to the term and including in it the digital sales of our games, manga, and other products. We further believe that we should strive to grow such business, thereby giving additional depth to our earnings base and enabling investment in the development of more new content. We intend to pursue e-commerce as a new thematic initiative starting in the fiscal year ending March 2019.