Earnings Presentation for the Q3 FY2017: Question & Answer Session (Summary)

FIELDS CORPORATION held a financial presentation for the Q3 of the FY2017 at the E-Space Tower (Shibuya-ku, Tokyo) on February 8, 2018 (Thursday) at 11:30 am.

This page provides an overview of the main question & answer session (summary) at the financial presentation.

Question & Answer Session (Summary)

[Cross-media business platform]

Q1. How will you proceed with game development from “DARLING in the FRANXX”?

A1. With regards to “DARLING in the FRANXX,” our business partner has not been decided, but we are considering joint development with a major game manufacturers, and in the process, we hope to accumulate new expertise regarding game engines and its structure, and so on.
In terms of the game business overall, previously we have operated by either licensing out, or by handling a degree of planning in-house and outsourcing development. In the future, in principle, we will undertake joint investments and joint projects with publishers and manufacturers.

Q2. In the game market, there is an apparent trend of a reversion from smartphone to non-portable type games. What is FIELDS’ policy? Also, how will FIELDS handle in-house development in the future?

A2. With the current state of smartphone games, if a game is hit, its profitability will be high, but there is an extremely low probability for a game to be a hit. We also believe that the business risks are high, due to the need for ongoing high costs for their operation.
Consequently, our policy is to continue to carefully consider titles and making releases going forward. Also, there are no plans to currently announce the titles for console games on our side.
With regards to in-house development, in principle, our policy is to appoint human resources to handle planning, production and publishing sales in-house, while outsourcing requirements for human resources to handle development, or proceeding in the form of a joint project.

Q3. Recently, there have been patent disputes between game manufacturers. What is the situation with FIELDS?

A3. In our game business, We always conduct checks before beginning development to ensure that there is not conflict with existing patents.
Consequently, at this stage, there have not been any incidents filed or complaints received.

Q4. Many game-related businesses are likely to post impairment losses in the Q4. What is the situation with FIELDS?

A4. We manage the revenue of each business on a monthly basis. Currently, we are not aware of the possibility of impairment loss occurring for the cross-media business platform.
In PS business platform, in regards to the gap between the PS machines developed and the market, we verified the possibility of impairment losses together with an audit company, and there are risks.

Q5. Please advise the absolute amount of annual IP investment and how much it will increase in the future.

A5. IP investment takes various forms, including acquisition of PS rights, acquisition of gaming rights and original work development. The investment amount varies greatly for each. For PS rights, both the investment amount and return are large, and the absolute amount therefore naturally increases. Therefore, although we do not have a set absolute annual investment amount, we will again explain the investment amount in recent years.
In the future, we will invest from the stage of visual development and secure that return, while aiming to operate efficiently, such as by acquiring a contact to exercise commercialization rights including for PS.

[PS business platform]

Q6. With the release of pachislot regulation 6.0 machines in the H2 of next year, it is possible that pachinko halls may refrain from purchasing regulation 5.9 machines in the H1. What is FIELDS’ view on this?

A6. It is possible that pachinko halls have high expectations for regulation 6.0 machines and refrain from purchasing regulation 5.9 machines. However, we expect that it will take a year until regulation 6.0 machine conforms to regulations and PS machines acceptable to the market are released. We will take sufficient time to explain these circumstances to pachinko halls in an effort to gain their understanding. Furthermore, we will promote proposals which leverage the advantages of having many regulation 5.9 machines and for island formations (the layout of PS machines in the pachinko hall) suited to the pachinko hall.
Based on the above-mentioned reluctance to purchase, we also plan to strengthen our lineup of pachinko machines that we expected will be in greater demand relatively, and we are also implementing measures such as strategically changing the release schedule for some pachinko machines from this year to the following year.

Q7. With regards to regulation 6.0 pachislot machines, a medal output upper and lower limit of 1,600 games will be set. Even if the internal regulation is changed, the jackpot performance will be lower than that of regulation 5.9 machines. What is FIELDS’ view on this?

A7. As you point out, pachislot regulation 6.0 machine has been set a medal output upper and lower limit of 1,600 games and we expect that the jackpot performance in the medium- to long-term will be lower than that of regulation 5.9 machines. However, due to changes of internal regulations, we expect expansion of the jackpot sensation and expansion of game aspects. We believe that it will take some time to find a way to develop this, and until developers adjust to the mechanism, so that we can offer gaming machines which are highly evaluated.

Q8. With changes of the pachislot's internal regulations, the advantageous interval will finish upon winning up to 2,400 medals. Is it possible to make a powerful jackpot wave by continuing this advantageous interval?

A8. Model certification test of regulation 6.0 machine has not started yet, therefore at present, we wish to refrain from commenting on whether it is possible to develop such type of machine.

*PS: pachinko and pachislot