Okazaki san

Okazaki from Nomura Securities asked about the remaining balance of Bungie's intangible and tangible assets on the balance sheet after the recent impairment loss, and the risk of further impairment if Marathon or Destiny 2 underperform. Okazaki also inquired about PlayStation 5 sales, noting Q1 and Q2 sales exceeded the previous year, and whether the year-end expansion plans indicate an upward revision to the 150 million units goal.

Answer

Lin Tao, CFO, Corporate Executive Officer, clarified that the impairment loss targeted Bungie's intangible and tangible assets, not goodwill, which is supported by the entire game segment. Lin Tao confirmed some intangible assets remain, and a risk of further impairment exists if Marathon or Destiny 2 do not meet expectations, though it's not expected to impact the whole game segment. For PS5 sales, Lin Tao affirmed that the forecasted number of units for the year, including the 150 million units goal, is believed to be reachable.

Okazaki san from Nomura Securities asked about the progress of diversifying production bases for game consoles in response to U.S. tariffs, specifically inquiring where consoles sold in the U.S. are now produced and how this might affect the hardware's pricing strategy.

Answer

Lin Tao, Corporate Executive Officer and CFO, stated that the production transformation for consoles is complete, and hardware sold in the U.S. is now sourced from outside China. She noted that the transfer for peripherals will be completed by the end of the first half. Regarding pricing, she declined to share specifics but affirmed that it would be decided flexibly, considering factors like lifetime value, sales volume, and consumer price sensitivity.

Okazaki san from Nomura Securities asked about the progress of diversifying the production base for game consoles in response to U.S. tariffs, specifically inquiring where consoles sold in the U.S. are now produced and how this shift impacts the hardware pricing strategy.

Answer

CFO Lin Tao stated that production for game consoles sold in the U.S. has already been moved outside of China, with the transfer for peripherals to be completed by the end of the first half. Regarding pricing, she explained that it's a flexible decision based on multiple factors, including lifetime value, content sales expectations, and consumer price sensitivity.