Summary of Main Questions and Answers at the FY2019 Second Quarter GREE Results Briefing Held on February 4, 2019

The financial performance and strategic direction for the second quarter of fiscal year 2019 center on the successful international expansion of first-party intellectual property and a rigorous optimization of the existing game portfolio. A primary driver of recent growth is the overseas launch of Another Eden, which has seen rapid adoption, with international user counts already surpassing domestic Japanese figures. Because international expansion costs are largely limited to translation and localized marketing, these global revenues are expected to contribute significantly to profit margins. This expansion serves as a foundational case study for the company, providing essential data on self-distribution and cross-border marketing hypotheses that will inform future global releases.

Operational efficiency is being addressed through the planned withdrawal from several unprofitable titles. While this strategic contraction is expected to reduce third-quarter sales by several hundred million yen, the impact on operating income is projected to be negligible, effectively streamlining the business for better long-term profitability. Overall sales for the upcoming quarter are expected to remain steady, as the growth from new international markets offsets the natural lifecycle decline of older domestic titles.

Future growth is being supported by a robust development pipeline, with multiple titles currently in the late stages of production. This transition into high-volume content creation necessitates an increase in outsourcing costs and development investment. Marketing expenditures for the third quarter are projected to remain stable within the Japanese market, though several hundred million yen has been allocated specifically for overseas advertising to sustain the momentum of recent launches. Additionally, a one-time correction of variable cost transactions related to the misclassification of domestic and overseas expenses was completed in the second quarter, with no further impact expected on future financial reporting.