Square Enix 2005 Annual Report Download - page 5

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3
Annual Report 2005
Video Game Industry Awaits the Release
of Next-Generation Game Consoles
Looking at results by segment, Games (Offline)
revenue—our largest segment—rose 10.4% in fiscal
2004, Games (Online) grew 55.2%, Mobile Phone
Content jumped 63.2% and Publication increased
12.3%. We achieved revenue and income growth in
all business segments, resulting in a more diverse and
well-balanced business portfolio.
Total shareholders’ equity at the end of the period
totaled ¥108,933 million, and with no interest-bearing
debt we were able to achieve an equity ratio of 82.7%.
This indicates our sound financial position.
Nevertheless, we must not be complacent with our
current position. These figures only show that we
have built up our strength as planned for the coming
challenges. Having completed phase 1, we now need
to move on to phase 2. Within the next year or two,
Sony Computer Entertainment Inc., Nintendo Co., Ltd.,
and Microsoft Corporation will release next-generation
game consoles. This is a transitional period that occurs
roughly every five years, in which downward pressure
on prices, an increase in the number of choices for
customers to purchase, and intensifying competition
with alternate services and products combine to form
a difficult market environment.
We have been preparing for this transitional period
and are set to launch our strongest-ever lineup of titles.
We are also increasing our sales efforts by securing
SQUARE ENIX-dedicated shelf space in retail stores
to cope with the market leveling off. We also grew
revenue outside of packaged game software, further
improving our ability to create a stable profit base.
We have also laid down the foundations to become
a leader in this next generation of games consoles.
At Electronic Entertainment Expo (E3), the world’s
largest video game trade show, held in Los Angeles
in May 2005, Sony Computer Entertainment, Nintendo
and Microsoft introduced SQUARE ENIX as one of
the most important game software companies. Our
presence in the video game industry has without a
doubt become world class.
And yet, this is still not enough. The impact of current
changes in the industrial structure reaches beyond the
video game industry. These are fundamental changes,
of the kind that come along only once every few
decades, and impact all industries.
The emergence of next-generation game consoles is
merely a part of this.