Square Enix 2009 Annual Report Download - page 7

each contact point. A customer’s choice of a certain contact
point depends on his/her lifestyle. In other words, even if a
customer’s content-related tastes do not change, if the cus-
tomer’s lifestyle changes, there is the possibility that we may no
longer be able to convert those customer tastes into revenue.
For this reason, we are committed to offering content
across a broad array of contact points. No matter which contact
point a customer chooses, we have the opportunity to convert
tastes into revenue. Furthermore, we can maximize revenue
opportunities by providing multiple contact points for the same
content. At the same time, the exposure our content receives
becomes multilayered and brand value is enhanced.
Until now, the entertainment industry has been divided,
according to the point of contact chosen by the customer, into
such sectors as movies, music, manga (comics), and games.
However, many sectors, including the movie sector, have
pursued a multi-window strategy while the digitization of content
formats has also contributed to the blurring of boundaries
between sectors. This evolution means that the business
environment has been transformed into one in which brand
development has a far stronger impact on profitability than ever.
Whilst we fully recognize this environmental change, our
business segments are purposefully divided according to
customer contact point. Our most fundamental value is the
centripetal force—or drawing power—of our content. Although
this value is not dependent on a particular point of contact,
unless each segment succeeds at its own business, we cannot
generate synergies between segments. This fundamental rule
effectively disciplines the day-to-day business operations.
The Mobile Phone Content segment has performed very
robustly, achieving new records for both operating income and
operating income margin. However, the most pressing issue we
must address is that, so far, this success has been limited to the
Japanese market alone. We are committed to accelerating the
development of this business in North America and Europe to
further bolster the segment’s profitability.
The Publication segment has also performed strongly. Each
year, some of our new titles achieve hit-product status, leading
to extremely favorable results. However, this segment must also
address the issue of being a domestic market-only business. In
the future, driven by online development, we aim to expand the
Publication segment’s geographic territories.
The Amusement segment is facing an uphill struggle. Since
our acquisition of TAITO CORPORATION four years ago, we
have successfully restructured the business and built up operating
profitability to around ¥4–5 billion per year. Unfortunately, in the
year under review, we faced the impact of slumping economic
conditions. It seems likely that an adverse economic climate will
persist for another one or two years, and we believe this industry
is in a shakeout phase where the surviving participants will
eventually reap rewards. For this reason, we are exerting our
utmost efforts now to ensure that we are one of the future
winners.
Synergy is emerging between SQUARE ENIX and TAITO.
Such successes as “DRAGON QUEST Monster Battle Road”
and “LORD OF VERMILLION” are drawing much attention within
the amusement industry.
❹
Reinforcing capabilities in community management
Brand value rests not only on the relationship between the
customer and us. The brand should become a kind of hub,
facilitating communication among customers themselves, and
thereby further bolstering value. By running a wide range of
communities, from “FINAL FANTASY XI” to “Nicotto Town,” we
aim to reinforce our group’s community management capabilities.
The four strategies I have outlined above form the core of our
growth strategy.
Nicotto Town
SQUARE ENIX HOLDINGS wholly owned subsidiary SMILE-LAB Co., Ltd., officially launched
the Nicotto Town online virtual community in September 2008. In the nine months since its
official launch, Nicotto Town has recorded over 240,000 user registration. With site page
views now exceeding 200 million per month, Nicotto Town continues to enjoy steady growth.
05