Accumulating Expertise Related to the Integrated Resort Business Steadily

As we advance a range of initiatives in the Resort Business segment, we will keep in mind the realization of the SEGA SAMMY Group's medium-to-long-term mission of participating in Japan's integrated resort business.
A near-term task is enhancing the profitability of Phoenix Seagaia Resort, TOKYO JOYPOLIS, and other existing facilities. Moreover, such existing facilities are based in high-value-added markets. At Phoenix Seagaia Resort, we are achieving high-value-added operations by remodeling guest rooms and reception areas while improving service quality and holding appealing events. Thanks to these efforts, we have enhanced customer satisfaction and our ability to attract customers. In addition, the higher numbers of visitors to Japan is providing a tailwind to our efforts.

At the indoor theme park TOKYO JOYPOLIS, we are combining expertise in the staging of various types of events and incorporating intellectual properties to create mold-breaking entertainment spaces. In fiscal 2016, the success of collaborations incorporating major intellectual properties boosted visitor numbers significantly. Also, we are rolling out TOKYO JOYPOLIS overseas based on strategic curbing of risk through the establishment of a franchise network. Our first franchise, SHANGHAI JOYPOLIS, opened in February 2016. Such measures to increase the earning power of existing facilities help us accumulate operational know-how with a view to participation in Japan's integrated resort business. To accumulate such know-how in a more hands-on manner, we have been sending personnel to Paradise Casino Incheon,* which is managed by PARADISE SEGASAMMY Co., Ltd.,* since 2014. Currently, 21 employees are acquiring know-how related to casino management, marketing, IT, accounting duties, and operations.

Looking to the Future of Japan and the SEGA SAMMY Group

The scenario for short-to-medium-term earnings growth entails the Resort Business segment getting PARADISE CITY on track as South Korea's first full-fledged integrated resort after it opens in April 2017. The goal of PARADISE CITY is to claim a share of the market that Macau and Singapore have established. Given such advantages as geographical location, I think we have a very good chance of establishing a successful integrated resort business with a distinctive East Asian flavor.

Japan has extremely appealing tourism resources, and visitors to Japan are increasing. Unfortunately, the level of tourism is still low compared with other countries. One explanation for this is, I feel, dissatisfaction among tourists in relation to accommodation and entertainment in Japan. As well as helping address these issues, the integrated resort business in Japan promises to create an array of major benefits. Therefore, we will continue advancing ambitious initiatives while envisioning the future of Japan and the SEGA SAMMY Group.

* Paradise Casino Incheon is managed by PARADISE SEGASAMMY Co., Ltd., which is an equity-method affiliate of SEGA SAMMY HOLDINGS INC.