Investor Relations

2019 To Our Shareholders

Expanding our recurring earnings base

With the next-generation consoles and the launch of cloud gaming services in the offing, the map of the digital content industry is poised to undergo significant change in the next few years. The quality and volume of content that customers demand is also likely to grow even further. In order to keep pace with such trends and consistently provide customers with the ultimate in excitement, we will need to engage in sustained and aggressive investment in content development. The scale of development spending will grow, and investment in the underlying technologies that enable such efforts will gain further importance. Moreover, the earnings and financial foundations that fund such investment will become even more crucial than before. It is our Group’s recurring earnings generated from our rich content portfolio that will create such foundations.

Digitization is extending the lifespan of games, making sales initiatives critical not only at launch but also thereafter. Thanks to digitization, we are also seeing the creation of an environment that enables us to meet the needs of fans of manga content at any time, and that has become a pillar underpinning the growth of our Publication Business Segment. Furthermore, as the ways customers enjoy content diversify, they have come to expect a greater variety of engagement opportunities including film and stage productions that enable them to enjoy their favorite content as an entire universe. We will be launching a dedicated organization within SQUARE ENIX CO., LTD. as of the fiscal year ending March 2020 so that we can best respond to these diverse customer needs. This unwavering commitment to strengthening our customers’ engagement and connections with our customers will enable us to generate recurring earnings.

Developing new content requires massive investments and therefore involves risk. Our Group is in the business of providing content and thus must always take on this risk, create entertaining new content, and deliver it to our customers around the world. In order to be able to take on such risk, we need a solid foundation of recurring earnings. New content creates new recurring earnings, which in turn enables new investment. Creating such a cycle will give rise to sustained growth for our Group, thereby making our corporate philosophy a reality. Further digitization, the arrival of next-generation consoles, and the launch of cloud gaming services will serve as good opportunities for us to strengthen our customers’ engagement. We also need to examine the pros and cons of the much-discussed topic of subscription models from the perspective of how they might help us to bolster our customers’ engagement and our connections with our customers. By strengthening engagement, we will generate recurring earnings and create business foundations that constantly enable us to take on new challenges and thereby keep pace with a changing world.

On Shareholder Return

Our annual dividend per share for the fiscal year ended March 2019 was ¥47. Heretofore, we have used a 30% consolidated dividend payout ratio as a yardstick and intend to maintain that policy in the fiscal year ending March 2020. As discussed above, the digital content industry remains in a period of major change, so in addition to the content development efforts we are currently undertaking, we also need to engage in development initiatives to support the next-generation of consoles and for cloud-centric and cloud-native games. As such, we will keep to our strategy of bolstering recurring earnings by prioritizing the funding of the content development that will underlie our growth while also maintaining a level of cash and deposits that will serve as a financial buffer against investment risk. We intend to continue to reward our shareholders primarily via dividends as we endeavor to strike a balance with our growth investments.

I would like to take this opportunity to ask for your continued support.

Yousuke Matsuda

Yousuke Matsuda
President and Representative Director