Square Enix 2007 Annual Report Download - page 8

Video games came out in amusement centers more than 30
years ago, and the breakthrough of the Space Invaders game of
TAITO in Japan gave the infant industry a strong momentum.
Console games arrived a few years later, and in no time a wave
of popularity that started in Japan had propagated throughout
the world. Nowadays, no corner of the world is unaware of
video games. Moving into the 2000s, different multi-functional
platforms, such as mobile phones and personal digital assistants
(PDAs), developed the capability to accomodate games. In line
with the growing range of platforms for playing games, the
game-player segment itself grew more diverse.
At the same time, the cross-penetration with other entertain-
ment media, such as movies based on games and games based
on movies, added depth to the video game market. In a short
period of time the video game industry has grown to be the
well recognized industry in the world.
Incumbent game software companies are no longer the only
participants in the video game industry, but I wonder how many
people in the industry truly recognize this fact. Game software
companies used to operate within the closed ecosystems creat-
ed by game console providers. Now we need to excel not only
in the ability of developing creative content, but also in the abil-
ity of business development.
There are immense opportunities before us.
At the same time, we face competitive pressures like we
have never before experienced.
What is happening in the industry and what is
our plan?
06
strengthening the arcade machine business.
On the separate note, TAITO also has mobile phone content
and console game businesses, but with different characteristics
and business direction than those of SQUARE ENIX. For this
reason, we have made the conscious decision to run these
businesses independently from SQUARE ENIX. We believe that
this path represents a better approach toward synergy.
Note: When converting TAITO to a subsidiary, all its businesses, including the amortization of
goodwill, were consolidated into the amusement business.
We aim to become a leading global content provider and com-
munity management company. Put it in numbers, our current
goal is to achieve recurring income of ¥50 billion.
Four years have passed since the merger between ENIX and
SQUARE. Despite a number of twists and turns along the way, I
think you will agree after looking at Figure 4 that the combined
recurring income range has been clearly improved from the
time that the two companies were separate.
Now that we have developed the core structure that can gen-
erate consistent ¥25±5 billion in recurring income consistently,
our next step is to achieve ¥50 billion in a single fiscal year. Next,
we will put in place the corporate structures to deliver ¥50±10
billion on a regular basis; ¥35±5 billion from SQUARE ENIX
(excluding the amusement business) and ¥10±5 billion from
TAITO (the amusement business). We will judiciously apply the
funds we have at hand to propel ourselves along this path.
Aiming for ¥50 Billion in Recurring Income
Consolidated Recurring Income
Billions of Yen
Years ended March 31
(Totals through 2003 are simple totals of each of the contributing companies. Figures from 1991 through
1993 are for the former SQUARE. Figures for 1991 and 1996 through 2001 are based on individual
performance for the former ENIX.)
20072006200520042003200220012000199919981997199619951994199319921991
0
10
20
30
[Figure 4]
Consolidated Recurring Income Targets
Billions of Yen
Years ended March 31
Operating Income by Segment
■ Games (Offline)
■ Games (Online)
■ Mobile Phone Content
■ Publication
■ Others
■ Amusement
■ Consolidation and
Eliminations
50.0
26.2
15.5
25.9
18.2
20112007200620052004
[Figure 5]
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