Medium-to-Long-Term Growth Scenario
The Future Cannot Be an Extension of the Past
Previously, I have explained our vision for the earnings size of each business based on a medium-term goal of restoring operating income to the ¥100 billion level that it was directly after management integration. However, given changes in market conditions that have exceeded expectations, we need to assume tough conditions will continue, reevaluate the basic profitability of each business, and revise our scenario for earnings growth accordingly.
In the past, we projected medium-term earnings in the region of ¥50 billion for the Pachislot and Pachinko Machine Business segment. Assuming the player population continues to contract, we have to revise this estimate to between ¥25 billion and ¥30 billion. With this as a minimum level of earnings that we must maintain, we will do our utmost to add earnings. We will continue pursuing the strategic goal of simultaneously holding the leading shares of the pachislot machine market and the pachinko machine market. At the same time, we will to help invigorate the industry by developing and marketing appealing machines that broaden the player base.
With the Pachislot and Pachinko Machine Business segment as an earnings base, we plan to increase the earnings of the digital game area from the current level of around ¥10 billion to between ¥20 billion and ¥30 billion so that, over the medium term, the area reaches a scale comparable with that of the Pachislot and Pachinko Machine Business segment. In the future, digital game content is set to become increasingly high-end as digital device performance advances. We are confident that these conditions will allow SEGA Games Co., Ltd., to take full advantage of its strengths accumulated as a specialized manufacturer. Furthermore, in the digital game area we will step up rollouts in overseas markets from fiscal 2016. Thus, in the digital game area the outlook for the Group is promising.
Through other businesses, excluding the Pachislot and Pachinko Machine Business segment and the digital game area, we aim to generate earnings of about ¥10 billion in the medium term. Using these businesses as underlying supports, we will build a business portfolio that generates consolidated operating income of between ¥50 billion and ¥70 billion stably.
From a longer-term perspective, the goal is to restore operating income to the ¥100 billion level that it was directly after management integration. The key to achieving this goal will be the integrated resort business of the Resort Business segment.
Our businesses are based in Japan, where the population is certain to contract. To continue growing as a comprehensive entertainment corporate group, rather than simply developing existing businesses, we must tackle completely new business areas. For this reason, we are determined to participate in the integrated resort business. Anticipating the legalization of integrated resorts in Japan, we are accumulating expertise in relation to integrated resorts mainly through PARADISE SEGASAMMY Co., Ltd., a joint venture established with the Paradise Group of South Korea. PARADISE SEGASAMMY is leading a project to develop South Korea's first full-fledged integrated resort, PARADISE CITY, scheduled to open in 2017.
We are advancing initiatives aimed at the eventual establishment of casinos in Japan, even though they have yet to become legalized in the country. However, we have kept risk well within the scope of our resources. Even if we did not realize commercial operations in Japan, we would receive earnings commensurate with our stakes in assets. Although we are investing personnel in preparation for the establishment of integrated resorts, these personnel can be used in many ways, such as in our joint venture in Incheon, South Korea.
