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- FUTERE Special Feature 2 Delivering Quality Games to Even More Customers
After we began distributing a version of Puyopuyo!! Quest for Apple's mobile operating system (iOS) in April 2013, player numbers increased at an amazing speed. In just 10 days, the video game reached one million downloads and claimed the No. 1 ranking among all free applications. Subsequently, the pace did not slacken. The combined total for iOS and Android™ versions broke the three-million-downloads barrier in July. And this is only one example. Since May, we have continually had at least 10 titles in the iOS market's top 50, making us one of the industry's best-performing companies. Moreover, our portfolio of high-ranking titles is expanding. In the Android™ market, which we entered in earnest in April, we had nine titles in the top 50 as of the end of August. We have heightened our presence so rapidly—it has been just a year since our establishment—because we have unswervingly adhered to a basic management strategy of delivering quality games to even more customers.
SEGA has more than 1,000 development personnel who have garnered experience by working in the amusement machine sales business or the home video game software business. Furthermore, during its long history the company has honed an extensive lineup of intellectual properties spanning a diverse range of genres. Adding to these assets, decision-making speed and practical abilities that venture companies cannot match will fully equip us to build competitive superiority. With this in mind, SEGA established SEGA Networks in July 2012. The new company features a greatly streamlined decisionmaking process whereby its Board of Directors reaches conclusions without consulting with the parent company. Moreover, SEGA has delegated a significant amount of authority to the CEO of SEGA Networks. Also, the new company has a distinctive organizational structure. Of its 355 employees, approximately half belong to the development division. The remainder are engaged in non-development operations and business divisions, which are responsible for title lineup composition and management, marketing, public relations, and operational infrastructure management. Moreover, the operations and business division are comprised entirely of specialists with extensive experience in a variety of industries, who efficiently market content that the development division has created. This organizational collaboration is driving SEGA Networks forward rapidly.
The digital game content market has grown more than tenfold in the past three years. Promising to sustain vigorous growth in the current fiscal year, this market continues to develop in two directions: Internet applications, which browsers process, and native applications, which terminals process. The outcome of these two trends is difficult to predict, even in the near term. Furthermore, player preferences are diversifying across a broad range of content that includes not only puzzle games and card battle games but also upmarket game content with high-resolution graphics comparable to those of dedicated game machines. In such market conditions, relying on limited contents increases risk.
Our operations division's specialists in title lineup composition, promotion, and research work in unison to hammer out the flexible development strategies that will bring SEGA's abundant development capabilities and intellectual properties to market most efficiently. Then, adhering to its basic management strategy, SEGA Networks provides quality content for a broad range of genres in a well-balanced manner. We believe this collaborative process gives us a competitive advantage in a volatile market.
For example, we mainly produce single-sale applications and F2P native applications, such as card games and puzzle games, in-house because this enables us to make effective use of development resources by optimizing SEGA's existing major intellectual properties for smart devices. Furthermore, we are advancing organic collaboration with SEGA. SEGA's home video game software development division played a central role in our development of Puyopuyo!! Quest, and we could not have developed CHAIN CHRONICLE without the collaboration of our parent company's amusement arcade machine development division.
Based on business collaborations with partners who have extensive know-how and with venture companies able to expedite development, we are realizing timely marketing of Internet applications that reflect the latest trends and include social game elements, such as ease of play and ready accessibility for large numbers of people. As well as jointly developing The Clan Battle of Fate with Pokelabo, Inc., we exploited one of SEGA's intellectual properties, through subsidiary f4samurai, Inc., to launch BORDER BREAK Mobile: Gun Front Hurricane. We are also advancing collaborations with a broad variety of other companies, such as Aiming Inc. and CrossGames Inc.
As the Kingdom Conquest series proves, we can leverage SEGA's development resources to achieve differentiation among titles that feature high-resolution graphics and complex, multilayered worlds. Because development requires significant investment and a certain amount of time, we are looking several steps ahead of the current market as we create quality video games in-house. Beginning distribution in February 2013, Demon Tribe capitalizes on the advantages of native applications to push the envelope of game content for smart devices. It epitomizes the ceaseless pioneering of innovative products that characterizes SEGA's corporate culture.
Since its establishment, SEGA Networks has been exploring the creation of a system that will give even more players access to its quality content.
The idea took concrete shape when we began offering the Noah Pass system to partner and nonpartner companies in August 2013. This completely new system for the mutual introduction of players is entirely in keeping with our basic management strategy. We expect it will win acceptance among game content development companies because corporate participation is free, there are no strategic restrictions, and it enables companies to advertise and promote products efficiently at a time when development expenses are rising. Already, the system has 25 corporate participants and more than 20 million registered users. By the end of the year, we expect to have around 30 corporate participants
and 40 million registered users.
Moreover, this system could provide the opportunity to increase user numbers at a stroke not only to game content development companies but also companies in peripheral business areas, such as media web sites, online communities, game-strategy web sites, video web sites, and Internet portals. By providing a value-added service that benefits all participating companies, we want to increase the economic scale of the system. And, plans call for monetizing the system in the near future.
Because it enables us to create synergies between the amusement machine sales business and home video game software business, Japan will remain our most important market.
Nevertheless, we intend to increase our presence in South Korea, North America, Europe, and other overseas markets proactively. In North America and Europe, our player base is already expanding steadily. For example, iOS versions of the Sonic series—including Sonic Dash, Sonic Jump, and Sonic & Sega All-Stars Racing—have surpassed 48 million downloads on a cumulative basis. Going forward, our team of specialists will continue adopting optimal strategies in light of thoroughgoing research on each market with regard to playing, communication, and fee environments. A strategic title for the iOS slated for release in the fall is our inaugural motion control title, GO DANCE, which will mainly target overseas markets. Furthermore, we plan to roll out the Noah Pass system overseas during the current fiscal year.
The digital game content market is on the cusp of a new evolutionary stage as terminals become ever more sophisticated and communications infrastructure become even faster. However, no matter how competitive conditions change, our commitment to delivering quality games to even more customers will remain unshakeable. By combining SEGA's development capabilities and our team of specialists, we will respond swiftly to changes in market conditions and win out against competition.
