Management Policy
Business Strategies
Business Summary
Business Plan
In addition to Pachislot and Pachinko Machines Business which consist of pachislot and pachinko machines, the Group is engaged in a diverse array of entertainment businesses such as Entertainment Contents Business which consists of Consumer area which handles the video game software for smartphones, PCs and home video game console, Amusement Machines Sales area, as well as Animation and Toys area. Additionally, we are aiming to make a full-fledged entry into the integrated resort facility business and will make active efforts to make the Resort Business, which involves development and management of resort facilities, a new core business.
| FY2023/3 Results | FY2024/3 Revised Forecast (announced on Nov. 8) | |||
|---|---|---|---|---|
| Net sales | Overall | 389.6 | 474.0 | |
| Entertainment Contents | 282.8 | 327.0 | ||
| Pachislot and Pachinko Machines | 94,2 | 134.0 | ||
| Resort | 11.5 | 12.0 | ||
| Other / Elimination | 1.1 | 1.0 | ||
| Ordinary income | Overall | 49.4 | 63.0 | |
| Entertainment Contents | 41.1 | 36.5 | ||
| Pachislot and Pachinko Machines | 20.7 | 39.5 | ||
| Resort | -3.2 | 0.0 | ||
| Other / Elimination | -9.2 | -13.0 | ||
| Ordinary income to net sales | 12.7% | 13.3％ | ||
Sales Composition
Business Plan by Segment / External Environment
1. Entertainment Contents Business
Business Plan
| FY2023/3 Results | FY2024/3 Revised Forecast (announced on Nov. 8) | |
|---|---|---|
| Net Sales | 282.8 | 327.0 |
| Operating Income | 38.7 | 34.5 |
| Ordinary Income | 41.1 | 36.5 |
| Ordinary Income Mergine | 14.5% | 11.2% |
(Billion yen)
FY2023/3 Results
Both sales and profit increased YoY
- Some new titles in Full game and F2P* performed strongly (CS*)
- Sales in the Prize category went strong (AM*)
*CS=Consumer area, AM= Amusement Machine Sales area, F2P = Free to play
FY2024/3 Forecast
Especially new titles developed by European studio and repeat titles in Full Game went lower than expected. In addition to sell mainstay new titles, implement structural reform (CS*)
- Increase in unit sales of new titles
FY2023/3 results: 10,090 K units
FY2024/3 plan: 12,020 K units
- Increase in operating expenses of R&D expenses and advertising expenses due to increase in new titles
Strengthen sales in the prize category.
Continue to closely monitor impact of raw material price hikes (AM*)
External Environment
Consumer area
Strong ongoing growth expected in the global video games market
The global game content market continues to grow against the backdrop of rising download sales and the proliferation of game distribution platforms. Although the Amusement Machine Sales and Amusement Center Operations markets were hard hit by COVID-19, the prizes began to rally in 2021 and the market is recovering gradually.
Diversification of the way to interact with games and expansion of eco system
The acceleration of Digital Transformation (DX) and the emergence of new technologies such as 5G and cloud services have greatly influenced and shaped the entertainment industry. Traditionally, games and other kinds of entertainment-related content were distributed separately by device and by region in a form of package. Nowadays however, it is easier than ever for our products and services to reach users all over the world via digital distribution channels.
The way people interact with games is also becoming far more diverse than in the past. Game players are naturally at the center of the ecosystem. The broader ecosystem is also expanding, though, as games draw together many people on a global scale, to encompass not only game players but also, for example, streamers who broadcast their games and their viewers. These factors are also expected to fuel growth in the game population going forward.
Example of an ecosystem based on video game
Amusement Machine Area
| FY2014 | FY2021 | |
|---|---|---|
| Amusement machine sales | ¥161.1 billion | ¥152.0 billion |
| FY2014 | FY2021 | |
|---|---|---|
| Revenues from amusement center operations | ¥422.2 billion | ¥449.2 billion |
The Amusement Machine and Amusement Center Operations markets were in tough situation as they were hard hit by COVID-19, but they are in gradual recovery trend due to the strong performance of prizes since 2021. On the other hand, the impact of supply chain disruptions and raw material price hikes becomes apparent recently.
2. Pachislot and Pachinko Business
Business Plan
| FY2023/3 Results | FY2024/3 Revised Forecast (announced on Nov. 8) | |
|---|---|---|
| Net Sales | 94.2 | 134.0 |
| Operating Income | 20.0 | 39.0 |
| Ordinary Income | 20.7 | 39.5 |
| Ordinary Income Mergine | 22.0% | 29.5% |
(Billion yen)
FY2023/3 Results
Achieved significant increases in sales and profits YoY
- Especially pachislot machines (No. 6.5 models) performed strongly
- Recorded the sales and profits of partially pre-delivered units for the titles which will be released in FY2024/3
- Major titles sold：
”Pachislot Kabaneri of the Iron Fortress”
”P Shin Hokuto Muso Chapter 4″ etc.
FY2024/3 Forecast
Forecast higher sales and profits YoY
Continue to be driven by pachislot machines (No. 6.5 models and Smart Pachislot)
- Pachislot:
In addition to No. 6.5 models, aggressively launch smart pachislot, starting with “Smart Pachislot Hokuto No Ken”
- Pachinko:
Launch centered on mainstay series machines
External Environment
Along with the slow decline of the player population since 1995, there has been a long-term downtrend in the overall number of pachinko halls, as well as in the number of machines installed and in annual machine turnover. On the other hand, the opening of large pachinko halls and an increase in locations of major hall operators has caused a rise in the number of machines installed per pachinko hall.
Pachinko and Pachislot—Player Numbers and Market Size
Source: White Paper on Leisure Industry 2022, Japan Productivity Center
Pachinko and Pachislot Machines—Unit Sales and Market Size
Source: Yano Research Institute Ltd. “Pachinko Manufacturer Trends 2022” (Research of Japanese Market)
Annual Turnover* and Pachinko Hall Numbers
Source: Annual turnover is in-house calculation. Pachinko hall numbers are from the National Police Agency.
* Annual turnover = Annual unit sales ÷ Machine installations
Utilization Time*
Source: Daikoku Denki Co., Ltd., DK-SIS data
* Number of hours per business day that pachinko or pachislot machines are utilized
In the pachislot and pachinko industry, while the number of pachinko parlors is trending lower amid significant changes in regulatory and market environment, the size of pachinko parlors continues to become larger. As a result, the number of machines per parlor is growing. Removal of pachislot and pachinko machines comply with previous regulations was almost completed by the end of January 2022, as the market completed the migration to machines that comply with current regulation. In pachinko , a number of popular new pachinko machines that conply with new regulations were introduced and in pachislot, the relaxation of voluntary regulations continues intermittently. Concerns have emerged for rising raw materials prices due to the effects of factors such as the global chip shortage, logistics disruptions, and rising oil prices.
Given these circumstances, the Group must strive to maintain and grow its market share by developing and supplying products that offer innovative gameplay; meet market needs; and comply with regulations. Another management issues is the need to improve profitability in various ways, including promoting the standardization of pachislot and pachinko machine components, reducing costs through reuse of components and other measures, and more efficient development.
3. Pachislot and Pachinko Business
| FY2023/3 Results | FY2024/3 Revised Forecast (announced on Nov. 8) | |
|---|---|---|
| Net Sales | 11.5 | 12.0 |
| Operating Income | -1.1 | -1.0 |
| Ordinary Income | -3.2 | 0.0 |
| Ordinary Income Mergine | - | - |
(Billion yen)
FY2023/3 Results
Strong performance centered on individual customers, leading to a recovery in earnings
• PHOENIX RESORT:
- Strong growth in individual customers due to government and facility’s own measures to stimulate tourism demand, and achieved the highest sales and first profitability since it joined the group
• PARADISE SEGASAMMY:
- PARADISE SEGASAMMY: Casino sales recovered rapidly, centered on Japanese VIP customers, due to relaxation of travel restrictions
FY2024/3 Forecast
Expect to be profitable at ordinary income stage
• PHOENIX RESORT:
- Continue to take various measures for individual customers and strengthen CRM, and expect the
recovery of group customers from resumption of sporting camps and MICE, etc.
• PARADISE SEGASAMMY:
- Casino sales are expected to continue to be driven by strong Japanese VIP customer. In addition to that, a gradual recovery in Chinese VIP customers is also expected