Square Enix 2010 Annual Report Download - page 6

To Our Shareholders
Recurring income Net sales
Billions of yen
Net sales Recurring income
60
50
40
30
20
10
0
240
160
80
0
2004 2005 2006 2007 2008 2009 2010
18.2
25.9
15.5
26.2
18.9
11.3
63.2 73.9
124.5
163.5 147.5 135.7
192.3
27.8
Years ended March 31
Net Sales and Recurring Income
Figure 2
Billions of yen
30
25
20
15
10
5
0
Games Amusement Publication Mobile
Phone
Content
Merchandising
FY2009
FY2010
6.7
23.8
2.9 4.1 4.6
1.8
3.3 3.5 4.2
0.8
254.0%
11.8% 16.4% 8.1%
124.2%
Operating Income by Business Segment
Figure 3
30
25
20
15
10
5
0
North America
Japan
OtherEurope
13.62
11.05 12.23
16.93
14.41
11.61
26.66
2004 2005 2006 2007 2008 2009 2010
(44)
(28)
(27)
(1)
Years ended March 31
Millions units
*Composition percentage in parentheses
Game Software Sales by Region
Figure 4
The Year’s Record Profit: Broad-Based Success
In the year under review, sales and profit reached record levels,
while nearly all business segments showed increased profit.
Furthermore, sales across all geographic segments of Japan,
North America and Europe achieved record levels (Figures 2 - 4).
Key Factors to Enter the Next Growth Stage
As I’ve mentioned, we have been able to manage our current
businesses very effectively under a challenging operating
environment.
So, are we prepared to enter the next growth stage?
I would like to give the following overview from this perspective.
We have identified three key success factors.
1. Globalization
2. Becoming “Network Centric”
3. Strengthening Own-IPs
Since our creation by merger between ENIX and SQUARE,
these fundamental themes have not changed.
Globalization
Entertainment in so many forms is destined to spread around
the world.
While digital entertainment has been the most recent to enter
the market, computer games and network communications
have already pervaded virtually every part of the world. Based
on this, the whole world has become game companies’ target
market. The only choice available to individual companies in the
industry is where to set up content development and marketing
operations to best serve global markets.
For us, we have chosen the path of complete globalization.
Our substantial first step in this process was the acquisition
of U.K.-based Eidos. A year on since the acquisition, progress
has been extremely smooth as we not only completed the
organizational integration but also have begun to collaborate on
certain development projects.
As a result, we’ve been able to strengthen our development
and marketing structures in North America and Europe. And
while we are still developing in this area, our composition of
human resources is now more balanced across regions, forming
a solid foundation for global business development (Figures 5 - 6).
When I say that we’ve built a foundation, I don’t mean that
we will then simply expand these operations by functional
extensions based on the status quo.
In fact, each location has differences in personnel skills and
performance as well as costs and trading conditions. This world-
wide location framework will provide the basis for the most
efficient resource allocation in the globalization of our businesses.
Figure 7 shows the geographical breakdown of sales of game
titles achieving over 3 million units during the fiscal year under review.
04