Q1: I would like to ask about your social media efforts in the entertainment business. I believe you will start to see benefits from your acquisition of Bungie and other moves going forward, but could you speak to what you have done to step up your mobile efforts over the past year, as well as to what benefits or learnings you have gained, if any? Also, what role do you see for mobile in Metaverse spaces?
A1: I believe that the fiscal year ended March 31, 2022 included two highlights for us in the mobile space. The first is that we acquired what is now Lasengle, formerly the mobile game development and operation division of Delightworks, which was responsible for the development and operation of the mobile game Fate/Grand Order. We hope that that will add to our development and operational capabilities. The other highlight was that we acquired preferred stocks of Scopely, Inc. as part of the consideration for the transfer of GSN Games. They provide a business whose nature is close to live game services, and run their business based on data, studying player trends in order to establish how to keep them enjoying games longer, and we feel we have a lot to learn from them. In addition, regarding SIE, we want to leverage our IP in mobile spaces over the long term, and we intend to steadily deliver on that.
Q2: You gave many examples of investments in the entertainment business, but looking at the balance between profitability and investment, it looks like ROIC has declined compared with the last few years. I understand that strategic investment and development costs are increasing, but what are your thoughts on the upside for ROIC going forward, including in terms of timeframes?
A2: ROIC is influenced by the harvest cycle. Taking the game business as an example, investment efficiency increased in the mature stage of the PlayStation4 lifecycle, but the transition from the final stage of that console to the PlayStation5 produced another temporary decline in profitability
Q1: There have been many developments in the entertainment industry in the U.S. since the start of the year, including the announcement of a huge investment of more than 8 trillion yen in the game industry and a major OTT platform losing subscribers. How do you view these developments? Also, when you think about strengthening your IP or expanding your platforms, what sort of risks do you see, and what kind of timelines do you think you have to base your efforts on?
A1: When thinking about M&A, the question of utmost importance is whether our investment will enable us to provide greater value for gamers or for game creators, rather than to expand our scale in the market, if what we are talking about is games. Platforms are important, but we are more interested in “Communities of Interest,” what motivates each of them, so we are not focused on the concept of a single platform. The media has changed significantly since things have moved online. We need to adapt ourselves accordingly, but we do not think the content that human creativity gives rise to will change that much. In the past, the media outlets chose what content they provided, but we are gradually beginning to see the content and its creators picking which media outlets they place themselves on. We therefore want to be sure we maintain our status as a company that is getting closer to creators. We nonetheless place greater investment priority on IPs than on DTC services. No matter how the world changes, we do not think a business can succeed without the power of content. As such, we intend to continue to ask ourselves what we can do to enhance our power of content creation.
