Summary of Main Supplementary Explanations Questions and Answers at the FY2021 First Quarter GREE Results Briefing Held on October 27, 2020

GREE’s financial performance for the first quarter of fiscal year 2021 reflects a strategic pivot toward business portfolio restructuring and cost optimization. Despite the divestment of the fashion commerce business within the 3Minute subsidiary, which reduced sales in the Advertising and Media segment by several hundred million yen, overall net sales and operating income grew quarter-over-quarter. This growth was primarily driven by the successful global launch of SINoALICE in July 2020 and a significant reduction in fixed costs. These cost savings resulted from the non-recurrence of one-time charges from the previous quarter, lower development expenses in the Game business, and structural reforms within the media divisions.

The Game business remains a central pillar of the company’s strategy, with annual development costs projected to stabilize between 7.5 billion and 8.5 billion yen. While the Chinese release of DanMachi met internal expectations and contributes to earnings, its financial impact is moderated by a net profit-sharing model with local partners. Looking toward the second quarter of fiscal year 2021, operating income is forecasted to remain steady between 0.5 billion and 1.0 billion yen. This projection accounts for a natural tapering of the initial revenue surge from SINoALICE and an anticipated seasonal increase in game development expenditures.

Broader organizational goals focus on achieving profitability across secondary segments. The Advertising and Media business is expected to turn profitable within the fiscal year as restructuring efforts take hold and media growth potential recovers. Simultaneously, the Live Entertainment business is showing signs of improvement, with losses steadily narrowing due to consistent sales growth. These developments indicate a transition toward a leaner operational structure focused on sustainable margins across both established gaming titles and emerging digital media platforms.