Summary of Main Supplementary Explanations Questions and Answers at the FY2020 Fourth Quarter GREE Results Briefing Held on August 20, 2020

GREE’s financial performance for the fourth quarter of fiscal year 2020 reflects a period of strategic transition and operational adjustment in response to global economic shifts. While the Game and Live Entertainment segments maintained solid sales performance, overall revenue and operating income experienced a quarter-on-quarter decline. This downturn was primarily driven by weakness in the Advertising and Media business due to the COVID-19 pandemic, alongside a rise in fixed costs. These expenses were largely one-time in nature, stemming from the withdrawal from unprofitable business lines, office streamlining and relocation, and the implementation of remote work support systems.

The impact of the pandemic on the core Game business remained relatively limited, though some disruptions occurred regarding the timing of anime broadcasts for third-party intellectual property titles. Looking forward to fiscal year 2021, quarterly operating income is projected to stabilize between ¥0.5 billion and just under ¥1.0 billion. However, the first quarter of fiscal year 2021 is expected to exceed this range, surpassing ¥1 billion in operating income. This anticipated growth is largely attributed to the strong performance of the global version of SINoALICE.

Strategic restructuring remains a priority for the Advertising and Media segment. Following a revision of business plans and the implementation of cost-saving measures, the segment is expected to see improved profitability with the goal of becoming profitable within the 2021 fiscal year. These findings, derived from the August 2020 results briefing, indicate a focus on streamlining operations and leveraging successful global game titles to offset broader macroeconomic challenges and internal restructuring costs.