1) Enhancing our offering of premium apps for smart devices
Currently, the global market for smart device games is dominated by F2P (free to play) games, and the
market for premium games that players pay to purchase is practically nonexistent. However, our Group
has for some time been offering premium games for smart devices, including brand new titles. When
viewed across the Group, these offerings represent a considerable volume of earnings.
F2P games have achieved remarkable growth thanks to their massive download numbers and
significant active user bases that generate fee revenues. Many companies entered the market
because of the perception that F2P games cost less to develop than traditional console games while
also offering the potential for significant earnings. As a result, the market as a whole saw major growth,
but competition reached excessive levels. Meanwhile, marked advancements were made in smart
device performance, and consumers of F2P games grew more demanding. As such, the market
ceased to provide major returns for low-budget development.
However, the picture for premium games is different. Initial development costs for both F2P and
premium games are roughly the same as or even higher than those for new games for dedicated
handheld game machines. In other words, the level of investment required cannot be considered low
risk. The risk involved in F2P games is even higher than for premium games because of the need to
spend on ongoing operational and additional development efforts.
F2P games generate massive download numbers because basic play is free. They thereby
establish significant active user bases and present major earnings potential. Premium games, meanwhile,
offer the advantage of generating purchases over a long period of time after their initial development
costs have been fully depreciated.
Premium games naturally need to be modified to keep pace with frequent OS updates and require
ongoing marketing spending to generate user awareness. However, smart devices still provide a
better platform for playing greatly loved games for many years than dedicated game consoles do
because of the latter's issues with backward compatibility.
Continuing the comparison with dedicated handheld game machines, we note that significant
advances have been made in both the specs and operability of smart devices and that this evolution
is likely to continue unabated. Moreover, smart devices have a much greater installed base globally
than dedicated handheld game machines. The smartphone-native generation already sees smart
devices as all-in-one game consoles.
For these reasons, it makes sense for game manufacturers such as ourselves to supply
games that we have traditionally developed for dedicated handheld game machines not only for
such consoles but also for multipurpose smart devices.
We believe that the operability of smart devices makes them a good match for turn- and
simulation-based RPGs, among other games. We see turn-based RPGs as a style or format of
game and do not believe them to be outdated at all. The development of such RPGs is something
that our Group has exceled at for some time.
By releasing new RPGs not only for dedicated handheld game machines but also for smart
devices, we hope to develop the premium game market into a pillar of our business on a par with
the F2P market. In so doing, we believe that we can enrich the portable game market in the
broader sense in order to respond to a variety of customer needs.
