SAMMY Management Meeting

2018/11/30 INC. Pachislot and Pachinko Machine Business Market Environment (Pachislot and Pachinko)

パチスロ・パチンコ設置台数Pachislot / Pachinko installations (Thousands(千台) of units) 1.5 3500 パチスロ・パチンコ年間回転率（回転）Pachislot / Pachinko machine annual turnover rate (Times) Installations keep stable

1.5 1.11 1.07 1.19 Turnover rate is declining 3000 7,000 1.15 0.93 1.13 0.92 1.11 1.07 0.88 0.89 0.87 1.0 0.860.95 0.94 0.96 0.82 0.94 0.91 0.85 0.86 0.85 0.84 0.83 1.0 0.70 0.75 0.75 6,000 0.63 0.71 2500 0.62 0.57 0.58 0.54 0.52 0.45 0.38 0.5 0.36 0.5 2000 5,000 4,754 0.30 4,330 0.0

4,000 1500 0.0

(0.5)

3,000 1000

(0.5)(1.0)

2,000 500

1,000 (1.5) 0 (1.0) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

0 （予想） (2.0) 2000 2002 2004 2006パチスロ設置台数（千台）2008 2010パチスロ年間回転率（回転）2012 2014 2016 2018 (Forecast)（予想） 2 Market Environment: Around previous regulatory revision (Pachislot)

パチスロ設置台数（千台）Pachislot installations (Thousands of units) パチスロ年間回転率（回転）Pachislot machine annual turnover rate (Times) 1.11 Both turnover rate and installations increased 3500 1.07

0.93 0.92 1.0 0.88 0.89 0.87 0.86 0.82 0.85 0.86 3000 0.75 0.70 0.63 0.58 0.57 0.52 2500 0.5 0.36 Sep, ‘09 0.30

2000 Launch of “Pachislot Psalms of Planets 1,660 Eureka Seven” 0.0 1500 1,323

1000 (0.5)

500

0 (1.0) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 (Forecast) （予想） 3 Market Environment: Around previous regulatory revision (Pachinko) Turnover rate increased パチンコ設置台数（千台）Pachinko installations (Thousands of units) 1.5 パチンコ年間回転率（回転）Pachinko machine annual turnover rate 1.37 (Times) 1.30 1.31 5000 1.14 1.07 1.09 1.06 0.98 0.97 0.98 0.92 1.0 0.84 0.82 4000 ‘04 0.69 0.68 0.65 3,431 Regulatory 0.54 0.51 revision 0.43 0.5 3000 2,670

0.0 2000

(0.5) 1000

0 (1.0) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 (Forecast) （予想） 4 Market Environment: Revision of voluntary regulations

Remove upper limit of No. of

obtained medals Shorten play time Pachislot per game

Remove 65% Can develop machines

upper limit in with high probability playability Pachinko continuous rate change continuous rate of probability

change Expand scope of 5 Strength of Sammy (IP) Owns multiple popular series ＜No of titles/Total sales units (Total of Pachislot and Pachinko machines)＞

Hokuto No Ken 31 titles Approx. 2,870K units ALADDIN 14 titles Approx. 560K units Beast King 14 titles Approx. 500K units SOUTEN-NO-KEN 11 titles Approx. 450K units Hokuto Muso 4 titles Approx. 160K units Eureka Seven 3 titles Approx. 130K units Bakemonogatari/Nisemonogatari 9 titles Approx. 120K units CODE GEASS 3 titles Approx. 60K units

※No. of titles includes spec changed ver.

6 Strength of Sammy (Development resources)

No. of development staffs (comparison with other manufacturers) 437 More than 400 development staffs Top-class scale among the industry

Source: “Trend and Market share of Pachinko manufacturers 2018” A B C D E F Sammy from Yano Research Institute Ltd. 7

ZEEG (Business model)

Integrated support covers both ZEEG hardware and software  Supply hardware  Supply software development kit (ZSDK*) Supply environment for Deliver hardware on a software development unit and machine cabinet bases Reducing procurement costs Suppliers Development and production by each manufacturer by reuse  Reuse that taking advantage of Universal Buy-in hardware Sammy Other economies of scale on a unit and Entertainment manufacturers machine cabinet  Increase the reused component ratio bases and the ratio of cabinets use Trade-in by each Sales from each  Reduce procurement costs for buy-in on manufacturers manufacturers component bases

Pachinko Hall ※ZSDK：ZEEG amusement machine Software Development Kit 9 ZEEG (Variation of models)

Selling 5 types of proto type

10 B to C Activities To build future fans

More than 16,000 fans attended “Universal Carnival” x “Sammy Festival 2018” 11 Entertainment Contents Business Amusement Machines Sales and Amusement Center Operations Transition of market scale of Amusement center operation

Transition of sales by operators Sales of operators tend (Billions of Yen) 485.9 to recover after 2014

422.2 - Favorable performance in prize field - Contribution of the sales from “KanColle Arcade” and etc. - Parts of Entertainment Establishments Control Law revised and interpretation base has changed. (2016/6)

Source: Amusement Industry Survey 2017, JAIA 2014 2017 14 Expansion of operators business

YoY sales ratio of existing domestic amusement centers Strengthening profitability trough the 104.5 % enhancement of operation in prize field

100% Train full-time leaders for operation 94.1 % Supply official operational manual Improved accuracy in buying-in of prizes

2014/3 2018/3

15 Promote the collaboration with other operators

Co-development and sales of Unify the specs of IC card for terminal for multiple arcade game electronic money for amusement centers

Common symbol Enables players to use the same card for corresponding arcade machines of each company

16 Utilization of external IP

・KanColle Arcade

・Fate/Grand Order Arcade

17 Packaged Games Improve and maintain product quality

Transition of average score in external review site Rated more than 70.0 for average of all titles 75.5 consecutively from 2014

Titles received high score in 2018 (FY19) Titles Release Date Score 67.9 2019 2018/11/8 86 Valkyria Chronicles 4 2018/9/25 85 Two Point Hospital 2018/8/29 84 Sonic Mania Plus 2018/6/17 87 6: The Song of Life 2018/4/17 83

2011 2012 2013 2014 2015 2016 2017 19 Expansion of title lineup

Transition of No. of Sega titles on (units) 249 Numbers of titles on Steam is increasing

121

2011 2012 2013 2014 2015 2016 2017 20 Distribution of old titles (Example)

Realize long tail sales with Chronicle of Total War series sales continuous distribution via Steam 2005 2018 SHOGUN: Total War Medieval: Total War Rome: Total War Medieval II: Total War (2006) Empire: Total War (2009) Acquisition of Creative Napoleon: Total War (2010) Assembly Total War: Shogun II (2011) Total War: ROME II (2013) Total War: Attila (2015) Total War: WARHAMMER (2016) Total War: WARHAMMER II (2017) 21 Strategy for raising profit from long term sales (example) Transition of sales number of Total War: WARHAMMER in Steam

Regular launches of additional contents (DLC)

Regular promotional sales after release

Release

Summer Promo Summer

DLC

DLC

Week Promo Week

Skull Promo Skull

WH Promo WH

GW Promo GW

DLC

Winter Promo Winter

Autumn Promo Autumn

Winter Promo Winter

Franchise Promo Franchise

DLC

DLC

CA Promo CA

Week Promo Week

Summer Promo Summer

DLC

MWNL Promo MWNL MWNL Promo MWNL

16/4 17/4 18/4 22 Sales of 3rd party titles and licensing in titles

(Thousands of units) 2,000 Japan Asia (except Japan) Support earnings

1,600 with the sales of 3rd party titles 1,200

800 Commenced self-distribution in Asia from March 2017 400

0 15/3 16/3 17/3 18/3 19/3 (Forecast) ※3rd party titles are not included in sales number of Sega titles

※Licensing in title: Includes SEGA publishing titles

23 Trend of download sales ratio in Japan

Download sales ratio of Sega titles in Japan Download sales ratio is also increasing in Japan

30%

16/3 17/3 18/3 19/3 (2Q) 24 Present issues in Digital Games Area Transition of top 3 titles in quarterly sales (Digital Games) Top titles remained to be occupied by the titles operated over long-term 17/3 18/3 19/3 Titles Service launch Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ONLINE 2 Jul, 2012 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st

Puyo puyo!! Quest Apr, 2013 2nd 3rd 3rd 3rd 2 2 3rd 3rd 3rd

CHAIN CHRONICLE 3 Jul, 2013 2 3rd

Hortensia Saga Apr, 2015 3rd 2nd 2nd 2nd 3rd 3rd

SHIN Jan, 2018 ー ー ー ー ー ー ー 2nd Liberation Dx2

SEGA Pocket Club Manager Apr, 2018 ー ー ー ー ー ー ー ー 2nd

BORDER BREAK Aug, 2018 ー ー ー ー ー ー ー ー ー 2nd

※Red font = new titles

Numbers of titles newly launched in each quarter 2 1 1 2 1 0 1 1 3 1

26 Delay in launch of new titles

Actual Title A Planned release 7 months release Launch of new titles Tends to delay Actual Title B Planned release 6 months release chronically

Actual Title C Planned release release 3 months

Title D Planned Actual release 13 months release

27 Transition of overseas sales ratio (Digital Games)

Sales (Billions Yen)

Composition ratio of overseas sales

140 50.0%

12.0 45.0% 120 Overseas sales 10.3 40.0% transitions at

100 35.0% low level

30.0%

80

25.0%

60

19.5% 20.0% 13.7% 15.0%

40

10.0%

20

5.0%

0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 17/3 18/3 19/3 28 Reorganization of SEGA Games (Summary) Fundamental reorganization

Consumer video games/PC games related business sectors Entertainment Content HQ

Integrated business sectors for mobile games and consumer video games/PC games Mobile game related → Consolidate IP roll-out capabilities business sectors → Narrow down the number of mobile game titles to develop/operate Development Facilitation HQ Turned project progress and budget management functions into an independent division

→ Strengthen the schedule management → Establishment of management environment aiming for improving accuracy 29 Progress IP-centric strategy

Roll-out on Create / grow IP × multiple platform × Global roll-out IP Platform Japan Asia Americas EMEA Console PC New IP

Package Mobile Existing IP Console ・Current ・Idle PC ・External

Operation Mobile

30 Example: Titles from

Create/grow IP Roll-out on Global roll-out multiple platform

Original series Ryu ga Gotoku 1-6 Yakuza 1-6

Kurohyo: Ryu ga Gotoku Shinsyo, Spin-off Yakuza: Dead Souls Ryu ga Gotoku OF THE END, etc.

Collaboration with : Lost Package Hokuto ga Gotoku external IP Paradise

JUDGE EYES: Shinigami no Project JUDGE New IP Yuigon (working title)

F2P on

Ryu ga Gotoku ONLINE ation Oper smartphone and PC

※ It also rolled out into pachinko/pachislot, movie/drama, play, merchandising and etc. 31 Multiple roll-out of contents

EMEA Americas Smartphone × Japan Asia Amusement machine PC/Console /Amusement center

Roll out the strong IP regardless of platforms and territories

32 Resort Business Responsibility and firm determination as a Japanese company

34 To prepare for casino business operation

Nurturing human capital for casinos 2014 2015 2016 2017 2018

1st team 2nd team 3rd team 4th team 5th team 6th team

Aim to establish an organization with

100 personnel in the near future 35 Value chains for casino

Identify necessary elements for casino operations Whether operation by SEGASAMMY is feasible How to complement for elements not operatable ourselves

36 To acquire Casino operation

Value Chain Analysis for 118 items

37 Complies world’s highest casino regulations for clean casino business operations

Acquisition of Gaming Machine Manufacture and Distribution License in Nevada. U.S.

38 Industry-Academia Joint Research with Kokoro Research Center of Kyoto University

Countermeasures for addiction from Japan

39 Initiatives of SEGA SAMMY Renewal of Combine the various cultures of operating Logo companies to foster a SEGA SAMMY Group culture

41 Reorganization Strengthen Group business management and increase efficiency Administration For use of human functions resources and boosting efficiency Licensing

Integration functions To strengthen IP strategy Resort Business To support the business

Newly Newly Division established management of each facilities

Internal control functions To strengthen governance

dation

- Consoli

42 Promotion of Work-Style Reforms

Newly established “Working Method Consultation Room” (as of Apr. 1, 2017)

• Promotion of Female Established the site for Participation • Reduction of Long information exchange Overtime Hours between employees • Smooth operation of regarding work-style, flex time systems etc. named “Waku Lab” Consolidate and share Each group company initiatives of each company 43 Side Job System 【JOB+(Job plus)】

Introduced to improve the ability of individual employees through new skills and experiences acquired while working side jobs

Examples of applied side jobs Creative activities including writing Consultant/licentiate Lecturer/instructor Family business Retail (including sales of used items) Status of approval Holding seminars and events (as of Aug 2018) Appearance in a theatrical play/extra YouTuber, video distributor Applied side jobs range Interpretation/translation widely Others Many based on experience gained through work

44 Work-life balance

Flex Time Improve business efficiency and QOL of employees Systems by introducing flex time systems at group’s major companies

Telework Consider introduction of teleworking and satellite offices in an Systems aim to improve productivity and secure workforce

“SEGA SAMMY Osaki Nursery School (tentative name),” Nursery a nursery center within the company is scheduled to be opened on April 1, 2019

45 SEGASAMMY Collage Supply various learnings such as business skills and skills to improve personal strength

Skill level for Tiers each tier Learning opportunity group supplies SS-College

Crammer for managements Opening lecture (Training at outside of company） “Keynote speech by Top managements Leadership Program Manager Hara” Satomi Crammer Leadership Program Held the lecture meeting with Haruki Crammer Inviting Mr. Hara, the manager of Managements Leadership Program Track and Field club at Aoyama Gakuin

Conceptual skillsConceptual Managers University

Dojo (Training hall)

Human Human skills Leadership Program General employees Leading Players

Dojo (Training hall) Technical skills Technical Training for new employees New employees How to work at SEGA SAMMY

46 Consolida Improve business efficiency and tion of office strengthen coordination between group companies

Conform to the latest ICT

Reduce travel times

Meeting spaces

47 Consolida Vitalize interaction and coordination tion of office among human capital

48 Consolida Vitalize interaction and coordination tion of office among human capital

Create a “SEGA SAMMY Group culture”

49 Open Investment activities targeting Innovation promising companies

■ LP investment in venture capital funds ■ Investment/acquisition and establishment of JVs

Related to existing EMEA Americas businesses Japan Startups, etc. Asia

50 Open Innovation Co-working space

Accelerate open innovation through interaction between employees of group companies and venture capital

Start up companies × Big enterprise × Human × Human New technologies × Old technologies

51 Open Innovation Utilization of co-working space

Opening ceremony of co-working space Private showing for press

52 Professional League for Mah-jongg Soccer “M League” Baseball

Golf Sport Facilities e-sports 53 Combine the capabilities of the group and build the base for further growth

54 Awards for IR activities

■ Received 2018 Award for Excellence in Corporate Disclosure from Securities Analysts Association of Japan

The highest rank in the advertising services, media and entertainment category The Securities Analysts Association of Japan

■ Received award in Internet IR Award 2018

Received second rank award Daiwa Investor Relations Co. Ltd.

55 https://www.segasammy.co.jp/

[Disclaimer] The contents of this material and comments made during the questions and answers etc. of this briefing session are the judgements and projections of the Company’s management based on currently available information. These contents involve the risk and uncertainty and the actual results may differ materially from them.

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