Square Enix 2013 Annual Report Download - page 9

Yosuke Matsuda
President and Representative Director
from region to region, and other factors such as lifestyle, income status,
and infrastructure are vastly different throughout the world. Therefore,
developing a game on the assumption of world-wide distribution involves
tremendous challenges. Consequently, we will prioritize a product portfolio
for the future that attaches importance to consumer preferences in each
region we serve. We will utilize our global network to propel our global
business with a product lineup that emphasizes regional tastes. Of course,
we will always pursue an opportunity to expand a hit title’s service territory
beyond its original region. We, however, will start with global business
development by fine-tuning each product portfolio to customers in the
targeted region. We will also be watching markets that present
considerable growth potential, particularly the India and Asia region, the
Middle East, and Latin America. We aim to establish a solid business base
in these markets, and start generating a profit as soon as possible
thereafter. This is another major business objective for the fiscal year
ending March 31, 2014.
Our poor performance in the fiscal year under review undoubtedly caused
shareholders considerable concern. It is our mission, as the new executive
team, to reverse this situation, and to return the Group to a profitable
position at the earliest possible date.
The business environment for the game industry is in the midst of intense
and extensive changes not yet seen. However, we see this as an enormous
opportunity for growth. I would appreciate your continued great support.
cloud gaming services. The market for our HD games has considerably
expanded from the days when games could only be played on
conventional PCs and consumer game consoles. That is to say, consumers
can now enjoy playing HD games on various devices and in various
environments. This is an enormous paradigm shift. Under the conventional
disc distribution business model, development and sales were separated
as different functions, with total optimization achieved through partial
optimization in each function. Since games were provided on discs, we
set a price of a game upon a unit-basis, we concentrated our development
efforts on the completion of a gold master, and we were able to maximize
profits through maximization of the number of discs shipped and unit
prices. However, the spread of smart devices has now enabled multi-
device, multi-environment experiences of HD games. Once distributed
exclusively on discs, HD games are now available through other media.
We must shift away from the traditional divided structure in favor of a
unified system that aligns earnings models with game development.
This is a new challenge for us—a big one that requires a new skill set. If
we can resolve the challenge successfully, we will open the door to new
business opportunities. We are the company developing games and
delivering them to customers. No matter how devices evolve or how the
game environment changes, we still have to have the capabilities of
delivering games to our customers. The environment supporting high-end
games is definitely expanding, and this fact convinces me of the advent of
a new age when we can fully demonstrate all the game development
capabilities we have accumulated to date. The big difference from the
past practice is the earnings model. A priority in the fiscal year ending
March 31, 2014 is to build a firm business structure as quickly as
possible to address changes in the earnings model while providing
customers with excellent game experiences that make us stand out from
the others.
Let me wrap up with one more major theme—the issue of locality.
Marketing AAA titles on a global basis was one of our strategic initiatives.
I, however, have to admit that titles appealing to a global audience are
very limited, with a few exceptions. In addition, it is exceedingly difficult to
achieve worldwide prominence for a new IP. Customer preferences vary
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