Square Enix 2006 Annual Report Download - page 10

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Review of Operations
SQUARE ENIX CO., LTD.
Games (Offline)
The Company plans, develops and distributes games for game consoles (including handheld
game machines). The Company also handles localization of games developed and distributed in
Japan to distribute in North America through a wholly owned subsidiary, SQUARE ENIX, INC.,
while distribution in Europe and Asia is handled by leading publishers through license arrangements.
During this fiscal year under review, conditions in the Japanese market were generally harsh;
however, such major title releases as “FINAL FANTASY XII” for PlayStation 2 (2,380 thousand
units in Japan as of March 31, 2006) and “KINGDOM HEARTS II” (1,150 thousand units in Japan
and 1,260 thousand units in North America, ditto) achieved robust sales. Consequently, sales in
the Games (Offline) segment totaled ¥45 billion (up 9.5% from the previous fiscal year results),
and operating income amounted to ¥9 billion (down 51.2%, ditto).
SQUARE ENIX CO., LTD., and its consolidated subsidiaries (collectively, “the Company”) have been making
determined efforts to strengthen the foundation and profitability of its business segments of Games (Offline),
Games (Online), Mobile Phone Content, Publication, AM (Amusement) and Others. The Company has been pur-
suing fundamental R&D activities to obtain advanced information technologies, which are crucial to promote
network-related businesses, and to apply such technologies to our products and services.
During the fiscal year under review, the Company made TAITO CORPORATION a consolidated subsidiary. TAITO
and its consolidated subsidiaries (the “Taito Group”) were included in the Company’s scope of consolidation
from the end of September 2005. For the fiscal year ended March 31, 2006, Taito Group is included in the
consolidated balance sheets, and the business results of the Taito Group for the six months ended March 31,
2006 are included in the consolidated statements of income of the Group. Through the addition of the Taito
Group, the Group has secured a diverse range of content services, including the amusement center and
machine businesses.
The Year
in Review
Overview by
Business
Segment
Business Segment Information (Fiscal year ended March 31, 2006)
(Millions of yen)
Games (Offline) Games (Online) Mobile Phone Publication Amusement Others Elimination or Consolidated
Content corporate total
Net sales 45,916 15,720 5,067 9,742 41,069 6,957 – 124,473
Operating income 9,590 5,907 726 2,866 (1,170) 2,007 (4,457) 15,470
Operating income margin 20.9% 37.6% 14.3% 29.4% (2.8%) 28.8% – 12.4%
©Disney Enterprises, Inc.
Developed by SQUARE ENIX
©2006 SQUARE ENIX CO., LTD. All Rights Reserved.
CHARACTER DESIGN: AKIHIKO YOSHIDA