Square Enix 2013 Annual Report Download - page 5

High-Speed Transforming GYROZETTER), a new machine launched in the
first half of the fiscal year under review, ended up with a disappointing result,
far below the original plan. The GYROZETTER business attained some progress
in creating new intellectual property (“IP”), but failed to become a big hit
as a whole, with the number of shipments substantially below the target.
On the other hand, the operation of amusement facilities produced
favorable results throughout the fiscal year under review, and in particular,
achieved, in the second half, comparable store sales of 103% on a
year-on-year basis. In the fiscal year under review, sluggish sales of
arcade game machines had a negative impact on segment performance,
but the entire Group’s arcade game machine development capabilities
grew considerably, which produced strong IPs such as “LORD OF
VERMILION” and “GUNSLINGER STRATOS.” In the context of live, non-
virtual entertainments, the development of games for amusement facilities
as well as the operation of amusement facilities are areas where we can
expect deep-rooted demand going forward, and will thus continue to
represent vital parts of our business portfolio.
In and after the next fiscal year ending March 31, 2015, amusement
facility operations will be adversely affected by the upcoming increase in
the consumption tax. However, we shall overcome the negative impact by
further efficiency in operations and our strong IP portfolio, and strive to
achieve a solid recovery in this business.
The fiscal year ended March 31, 2013 was a very difficult year for the
Group. On a consolidated basis, net sales totaled ¥147,981 million (an
increase of 15.7% from the prior fiscal year), operating loss amounted to
¥6,081 million (operating income of ¥10,713 million in the prior fiscal
year), recurring loss amounted to ¥4,378 million (recurring income of
¥10,297 million in the prior fiscal year), and net loss amounted to
¥13,714 million (net income of ¥6,060 million in the prior fiscal year). The
Group posted an operating loss for the first time since the merger between
ENIX CORPORATION and SQUARE CO., LTD. into SQUARE ENIX CO., LTD.
The business environment is undergoing major changes, notably, the
evolution of consumer game consoles into the next generation, considerable
growth in new game genres such as social gaming, and the rapid spread
of smart devices including smartphones and tablets. While we exerted
managerial efforts in the major business segments of Digital Entertainment,
Amusement, Publication, and Merchandising under the changing
environment, sluggish performance of the Digital Entertainment segment,
most noticeably in the HD (High-Definition) games category, and slow
sales of new arcade game machines in the Amusement segment led to
the consolidated operating loss.
The Amusement segment consists of the operation of amusement facilities
and the development and distribution of arcade game machines. In the
arcade game machine business, “Chosoku Henkei GYROZETTER” (Super
I would like to express my sincere appreciation for all the understanding and
support you kindly extend to the Square Enix group (“Group”). I was
appointed to the position of President and Representative Director at the
Annual Shareholders’ Meeting and the Board of Directors’ Meeting held on
June 25, 2013. I will draw on my previous experience and do my utmost to
guide the Group under the new management structure toward significant
business growth. I look forward to your continued support.
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