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- Stepping Up the Pace of Business Development to Become the Market's Game Changer
We established the company to speed up decision-making and to provide exhilaration and “experience” through services that cater to diversifying customer needs. Also, we wanted to maximize the Group's earnings in the growing market for network game content.
In Japan and overseas, conditions in the home video game software market are changing dramatically. In particular, the game content markets for SNS and smartphones are evolving rapidly from day to day. To benefi t from the growth of these markets, we need insight to anticipate changes, quick decision-making, and an ability to take strategic measures rapidly.
We established SEGA Networks through divestiture of the main capabilities of SEGA's network business. The new company has a simplifi ed decision-making process based on delegated authority, giving its business management suffi cient speed to compete in these dynamic markets.
I want to fully exploit the brand power SEGA has built up over many years as well as the development capabilities it has honed. I intend to heighten our presence in markets. Moreover, my aim is to help improve SEGA's earnings power and put the company back on a growth track.
In the past several years, the network game industry has grown by leaps and bounds. For example, it grew exponentially in fiscal 2012, accounting for sales of about ¥240 billion in Japan and ¥2,050 billion worldwide*. And this market is set to expand further in fiscal 2013. The accelerating growth of this market stems from the large number of companies, players, and other developers participating in the market. This is attributable to open development environments and a low entry barrier. The swiftness with which these companies are carrying out strategies is also accelerating growth.
Focusing first of all on building a standing in its core market in Japan, SEGA Networks will outpace competitors as it rolls out a series of appealing titles and new-genre titles mainly for smartphones, tablets, other smart devices, and PCs. In each of these areas, we aim to establish superior positions.
Also, we want to enhance titles actively by taking full advantage of the complementary strengths that operational tie-ups can bring together. A good example is The Clan Battle of Fate, which we created with Pokelabo, Inc., and for which we have begun services. This game has met with very high acclaim from players. Another example is Sakatsuku S World Stars, created in collaboration with Cygames, Inc.
As for the global market, I also want to establish a position for SEGA in the network game business rapidly. The Group has an abundance of intellectual property assets and numerous talented development personnel. These include the digital content teams of our overseas subsidiaries Sega of America, Inc., and Sega Europe Ltd.; the U.S. online game developer Three Rings Design, Inc., which SEGA acquired in November 2011; Hardlight Studio, recently established in Europe to develop in-app purchase (IAP) and free-to-play (F2P) software for smart devices; and Sega Studios Australia. I am convinced that exploiting such management resources and creating organic collaborations between Group companies will underpin the creation of new digital businesses.
On the other hand, a negative facet of the rapid market growth since the beginning of this year is that content with strong gambling elements has emerged as a social problem. Focusing excessively on profit-seeking risks betraying the trust of players and, as a result, dampening market growth. Furthermore, it could damage the value of intellectual properties. With this in mind, I want us to contribute to the sustained development of the market based on maintaining a strong awareness of CSR and making sure that we manage businesses soundly.
* Source: PwC's annual Global Entertainment and Media Outlook: 2012–2016 (based on exchange rate of US$1=¥80)
We are increasing the pace of business development through the construction of original systems and processes that enable rapid and precise decision-making by small numbers of personnel. This involves consolidating capabilities for development, operations, and business management. Furthermore, with a view to removing overlaps and waste, we have rebuilt project management processes and revised rules on authority drastically. Also, we intend to focus efforts on strengthening development systems in a variety of ways so that we can flexibly adapt to customer needs that are changing daily and hourly.
In this new organization, we will cultivate lively debate focused on hammering out even better content. These discussions will bring together different viewpoints. They will include development division personnel, who pursue elements that make games truly engrossing, and operational producers, who seek added value that will give players lasting enjoyment. I am confi dent that through the full use of such systems we will be able to provide players with truly exciting entertainment.
In Japan, we aim become one of the top three network game publishers. For the entire digital business area, we are targeting operating income of ¥10 billion in two years' time. This area includes Sammy NetWorks Co., Ltd., for which I concurrently serve as President, Representative Director, and Chief Executive Offi cer, and SEGA's overseas subsidiaries. In the global market, we also want to rank among the leading three network game publishers. Two years is a very short period. However, if we do not expand operations with a sense of urgency we will not be able to win out in such a volatile market.
My vision is for each of the employees of SEGA Networks to heighten their sensitivity to emerging trends and take on challenges boldly to make the company a game changer. I want us to be a company that, through games, transforms the nature of games, the industry, and even society. In this way, I intend to strengthen the network business, centered on SEGA Networks, so that it rapidly becomes an earnings mainstay of the SEGA SAMMY Group.
