Square Enix 2014 Annual Report Download - page 7

Download and view the complete annual report

Please find page 7 of the 2014 Square Enix annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 74

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74

consoles, and 3) developing product portfolios tailored
to local requirements. I will explain each item.
1) Revisiting Long-term, Large-scale Development
HD (high definition) games are the Square Enix Group’s DNA
and a showcase for our creativity. HD game development will
continue to be an integral part of our businesses. However,
as I mentioned in last year’s annual report, there are serious
structural flaws in the disc sales model that defines the
current HD game business, and the question of how to deal
with the issue is a significant managerial challenge. One
major approach we are currently taking is to apply variable
pricing models, such as F2P (free to play) games, to the HD
games area. We are already introducing such models and
have achieved success in several cases.
Last year, platform providers began to promote content
delivery services based on the F2P model, in addition to
conventional paid content sales, for newly-released home
game consoles. Promotion of online HD games based on this
new business model is an important pillar of structural reform
for us as well, and we conducted a large-scale review of both
our HD games development and our European and American
studios, in preparation for this course of action. The list of
titles that have been announced is still limited at present, but
we will be introducing new HD game titles featuring variable
pricing models.
“DRAGON QUEST X”
©2012-2014 ARMOR PROJECT/BIRD STUDIO/
SQUARE ENIX All Rights Reserved.
In the previous year’s annual report, I mentioned that low
asset turnover is another major issue for HD game develop-
ment. The question is how to properly deal with increasingly
protracted development periods. In addition, we have a
number of challenges to tackle: to say nothing of research
into technological aspects such as game engines and devel-
opment tools. We are facing several business model issues
of how to provide customers with additional content both
before and after game launch, and how to introduce new
development initiatives such as derivative product and
episodic models. We are diligently undertaking these tasks,
and will report the results of our efforts at a future date.
Next, cloud gaming holds new potential on both techno-
logical and business model aspects. We have launched a
new development project for cloud game technology, and are
currently working on the business development to apply the
technology to commercial opportunities. It is still fresh in our
minds that the innovations in our technology received high
acclaim from the media at the E3 trade show held in June. In
addition, with the help of Taiwan’s Ubitus Inc., we have
started a game streaming service of “DRAGON QUEST X” for
smartphone and tablet, which will become available on the
Nintendo 3DS platform from this September. Cloud gaming
is already close to practical use, and we will be able to report
several achievements in this area during and after the fiscal
year ending March 2015.
05