Investor Relations

1. Higher game development costs

Advances in performance and functionality are enabling more diverse and sophisticated content experiences on the consumer game consoles, PCs, smartphones, and other platforms for which we provide games. This trend gains momentum with each passing year, and since we need to provide content that keeps pace, we expect our game development costs to continue to rise. By engaging in more stringent management of our development efforts and earnings at the level of individual titles, we are endeavoring to keep our development costs at an appropriate level. However, our earnings could be impacted if we were to sell fewer units than initially anticipated and were therefore unable to sufficiently recoup our development costs.

2. Our ability to respond to changing customer tastes, increasingly diverse business models

Major structural changes are underway in the digital entertainment industry, resulting in more diverse means and business models by which to provide content. Our earnings could be impacted if we were to be unable to respond to such changes in an appropriate and timely manner.

3. Securing human resources to execute our growth strategy focused on creating new content and services, expanding overseas

Our business environment is undergoing major changes. In order to respond to such environmental changes in an appropriate and timely manner, securing talented human resources is crucial. Our earnings could be impacted if our efforts at securing the necessary human resources were unable to keep pace.

4. International business operations

We operate our businesses internationally. As such, our earnings could be impacted by market trends, political and economic developments, legal and regulatory developments, social conditions, and other factors at play in the countries in which we operate our overseas businesses.

1. Changes in the economic environment

Our earnings could be impacted by markedly sluggish economic conditions that diminish consumer demand given the potential for them to reduce consumption of the products and services we offer in the field of entertainment.

2. Foreign exchange risk

We have consolidated overseas subsidiaries in North America, Europe, and Asia. We reduce our foreign exchange risk by using local currency obtained by such subsidiaries primarily to cover payments in the relevant geography or to fund investments there.
However, because we convert the sales, costs, asset values, and other foreign currency-denominated amounts associated with consolidated overseas subsidiaries into Japanese yen when producing our consolidated financial statements, our earnings could be impacted if foreign exchange rates at the time of conversion were to deviate significantly from our expectations.

1. Information and network systems

We appropriately develop, operate, and manage the information and network systems required to execute our businesses and operations. However, system failures, operational errors, and other problems could disrupt the execution of our operations, resulting in opportunity losses and the incurrence of additional costs.
In addition, we develop, operate, and manage robust preventative and defensive measures against security incidents such as cyberattacks, unauthorized access, and computer virus infections affecting our information and network systems. However, in the unlikely event of a security incident arising that was unpreventable even through the employment of such measures, the execution of our businesses or operations could be disrupted, resulting in opportunity losses and the incurrence of additional costs. There is also potential for confidential information such as the personal data of our customers and employees to leak externally, thus resulting in the incurrence of additional costs and damage to our social credibility.

2. Management of personal information

In response to the enactment of Japan's Act on the Protection of Personal Information and the EU's General Data Protection Regulation, we have developed and enforce strict internal controls on personal information and provide training regarding personal information protection to our officers and employees on an ongoing basis. However, as noted in "1.Information and network systems" above, our earnings could be impacted if a security incident were to result in the external leakage of personal information.

3. Japan's Act on Control and Improvement of Amusement Businesses

Businesses operating game facilities are regulated under Japan's Act on Control and Improvement of Amusement Businesses. The law covers the granting of permits for the establishment and operation of such facilities, limits on their operating hours, age limits for entrants, restrictions on facility locations, and regulations regarding such facilities' structures, interiors, lighting, and noise emissions. We operate our facilities legitimately and appropriately in compliance with the aforementioned law, but our earnings could be impacted if stronger regulations were to be enacted under the law.

4. Litigation, etc.

We have established a code of conduct of which our officers and employees are made thoroughly aware that includes legal and regulatory compliance as well as respect for the rights of third parties. However, given our business operations in Japan and abroad, we are inevitably exposed to risk of becoming party to disputes. Should litigation or other legal procedures be brought against the Group, our earnings could be impacted despite our efforts to resolve any such matter quickly with terms that are advantageous to us.

1. Accidents and disasters

In order to minimize the impact of earthquakes and other major natural disasters, fires, power outages, system or network failures, terrorism, outbreaks of infectious diseases, and other accidents and disasters, we take countermeasures including performing regular disaster-readiness and facility inspections, developing our evacuation guidance capabilities, and performing appropriate regular disaster-readiness and evacuation drills.
However, our earnings could be impacted if major accidents or disasters were to occur.

2. Impact from the spread of infectious diseases

In the event of another widespread and severe infectious disease outbreak, there is a risk, based on our Group's business domains, that such an event could impact the demand for content and development timelines for new game titles, as well as lead to lower sales at amusement facilities. Our earnings could be impacted as a result.