Ladies and gentlemen, it is now time to start Sony Group Corporation's FY '21 Third Quarter Earnings Announcement. I'm [ Okada ], Corporate Communications. I'll be serving as master of ceremonies today. The session is being held for journalists, analysts and institutional investors to whom we have sent out invitations in advance. This session will be live webcast through our Investor Relations website. First, we have with us Mr. Totoki, Executive Deputy President and CFO, to explain third quarter FY '21 consolidated results and the forecast for consolidated fiscal 2021 results. The duration is about 70 minutes. Mr. Totoki, the floor is yours.

Thank you. I will cover the topics written here today. FY '21 Q3 consolidated sales increased 13% compared to the same quarter of the previous fiscal year to JPY 3,031.3 billion, and consolidated operating income increased a significant JPY 113.3 billion year-on-year to JPY 465.2 billion. Both were record highs for the third quarter. Income before income taxes increased JPY 77.8 billion year-on-year to JPY 461.6 billion, and net income attributable to Sony Group Corporation shareholders increased JPY 35.4 billion to JPY 346.2 billion. . Please see Pages 3 to 6 of the presentation materials for a depiction of each profit metric adjusted to exclude onetime items. This slide shows the results by segment for FY '21 Q3. Next, I will show the consolidated results forecast for FY '21. Consolidated sales are expected to remain unchanged from our previous forecast of JPY 9.9 trillion, while operating income is expected to increase JPY 160 billion to JPY 1.2 trillion. We have also upwardly revised our forecast for income before income tax to JPY 1,155 billion and the forecast for net income attributable to Sony Group Corporation shareholders to JPY 860 billion. Our forecast for consolidated operating cash flow, excluding the Financial Services segment, has increased JPY 50 billion to JPY 940 billion. This slide shows our forecast by segment for FY '21. And I will now explain the situation in each of our business segment. First is Game & Network Services segment, FY '21 Q3 sales decreased to JPY 813.3 billion, 8% lower than the same quarter of the previous fiscal year in which we launched the PlayStation 5 and sold major titles in conjunction with the launch. Operating income increased JPY 12.1 billion year-on-year to JPY 92.9 billion, primarily due to a decrease in selling, general and administrative expenses and an improvement in PS5 hardware profitability, partially offset by a decrease in software sales. FY '21 sales are expected to decrease JPY 170 billion compared to our previous forecast to JPY 2,730 billion, and operating income is expected to increase JPY 20 billion compared to the previous forecast to JPY 345 billion. Total game play time or play station users in December '21 was 20% lower than the same month of the previous year, which was immediately after the release of PS5. But game play time increased approximately 7% from December 2019. For a quarter in which there were only a few major titles released, we think this was solid performance. In the fourth quarter ending March 31, 2022, we expect user engagement to increase further because the major first-party titles, Horizon Forbidden West and Gran Turismo 7 will be released. The PC version of God of War released in January 2022 has received high acclaim among the PC gaming community obtaining a meta critics metascore of 93. Unfortunately, due to limitations on the supply of components, especially semiconductors an increase in delivery times resulting from the disruption of the global distribution supply chain, we have revised our FY '21 unit sales forecast for PS5 hardware to 11.5 million units. Limitations on the supply of components are expected to continue going forward, but we are continuing to exert every effort to meet the strong demand for PS5. On January 31 in the U.S., Sony Interactive Entertainment entered into a definitive agreement to acquire Bungie, Inc., one of the world's leading independent game developers. With more than 900 creative people on staff, Bungie has a track record of creating blockbuster titles such as Halo and Destiny. As a long-time partner of Bungie, we have discussed various forms of collaboration with them in the past. Ultimately, we decided to pursue an acquisition because we gained confidence that we could grow even more by combining the corporate cultures of both companies as well as our strengths in the creative space. Once part of SIE, Bungie will operate as an independent studio and will continue to publish its content on platforms other than PlayStation. The total consideration for the acquisition is USD 3.6 billion, and the completion of the acquisition is subject to certain closing conditions, including regulatory approvals. From calendar year 2014 to calendar year 2021, the size of the global game content market doubled, driven by add-on content revenue from live game services, which grew at an average annual rate of 15% during this period. We expect this trend to continue going forward. Bungie has capitalized on this opportunity from an early stage by incorporating live game services into its premier franchise, Destiny, and it has accumulated a wealth of experience and superb technology in the space. The strategic significance of this acquisition lies not only in obtaining the highly successful Destiny franchise as well as major new IP that Bungie is currently developing but also incorporating into the Sony Group, the expertise and technologies that Bungie has developed in the live game services space. We intend to utilize these strengths when developing game IP at the PlayStation Studios as we expand into the live game services area. Through close collaboration between Bungie and the PlayStation studios, we aim to launch more than 10 live service games by the fiscal year ending March 31, 2026. In addition, we view the deployment of our game IP on multiple platform as a major growth opportunity for Sony, as has been the evidence by the success of the PC version of the God of War and other first-party games. Through this acquisition, we intend to acquire new users and increase engagement on platforms other than PlayStation, which will enable us to significantly advance on our long-term growth strategy for further expanding ecosystem of our game business. Catalyzed by the acquisition of Bungie, we intend to accelerate the growth of our first-party game software revenue, aiming to more than double the current amount by FY '25. Now I will use this conceptual diagram to explain at a higher level how this acquisition will be treated from an accounting perspective. Bungie is a private company, the majority of whose shares are owned by its employees. So the payment of the consideration is structured to incentivize the shareholders and other creative talent to continue working at Bungie after the acquisition closes. Approximately 1/3 of the USD 3.6 billion consideration for the acquisition consists primarily of deferred payments to employee shareholders conditional upon their continued employment and other retention incentives. These amounts will be paid over the course of several years after the acquisition closes and will be recorded as expenses for accounting purposes. We expect about 2/3 of these deferred payments and other retention incentives to be expensed in the first 2 years after the acquisition closes. Next is Music segment. Although sales of Visual Media and Platform decreased, FY '21 Q3 sales increased 12% year-on-year to JPY 295.9 billion, primarily due to an increase in streaming revenue. Despite the impact of the increase in sales of recorded music, operating income decreased JPY 4.0 billion year-on-year to JPY 55.5 billion, primarily due to the impact of the decrease in sales of Visual Media and Platform. The contribution to the operating income of the quarter from Visual Media and Platform accounted for the mid-teens percentage of the operating income of the segment. FY '21 sales are expected to increase JPY 20 billion compared to our previous forecast to JPY 1,090 billion, and operating income is expected to increase JPY 5 billion compared to our previous forecast of JPY 205 billion. Streaming revenue in Q3 continued to grow at high rate, 29% year-on-year in recorded music and 27% year-on-year in Music Publishing. The recorded music business continued to generate major hits with an average of 36 songs ranking in Spotify's global top 100 songs during the quarter. Global superstars, Singer, Songwriter Adele's album 30 became a historic hit remaining #1 on the Billboard chart for a consecutive 8 weeks after its release in November. Next is the Pictures segment. FY '21, Q3 sales increased significant, 141% year-on-year to JPY 461.2 billion, primarily due to the blockbuster hit, Spider-Man No Way Home in motion pictures and the licensing of the popular U.S. television series Seinfeld in television productions. Operating income increased a significant JPY 121.1 billion year-on-year to JPY 149.4 billion, primarily due to the impact of the increase in sales and the recording of JPY 70.2 billion gain from the transfer of GSN games, which closed on December 6, 2021. FY '21 sales are expected to increase JPY 40 billion compared to our previous forecast to JPY 1,222 billion, and operating income is expected to increase JPY 97 billion compared to our previous forecast to JPY 205 billion. Even when onetime items are excluded, operating income this fiscal year is expected to be the highest ever for the Pictures segment. Spider-Man No Way Home was released across the U.S. on December 17, 2021 and went on to record the second highest ever opening box-office revenue nationwide. According to the most recent data, its cumulative worldwide box-office revenue is the sixth highest ever at approximately USD 1.7 billion, and it holds the record for highest grossing film in the history of Sony Pictures Entertainment. Other franchises such as Venom-Let There Be Carnage contributed significantly to our financial results, and we are looking forward to the release this month of Unchartered, which is a movie version of a popular PlayStation game title. Despite our success, we will continue to pursue our flexible release strategy going forward as we have done by postponing the U.S. release of Mobius, a new film from the Sony Pictures universe of Marvel characters from January to April of this calendar year. On December 22, 2021, Sony Pictures Networks India, a subsidiary of SPE, signed a definitive agreement on merge -- to merge SP&I with Zee Entertainment Enterprises. The merger represents an opportunity to further accelerate expansion and digitalization of our business by using the strength of both companies to strengthen our digital distribution service in rapidly growing Indian entertainment market. We expect that the transaction will close in the latter half of this fiscal year ending March 31, 2023, after obtaining approval of the Zee's shareholders and regulatory authorities. After the transaction closes, SPE will own a majority of the shares of the merged entity. Then the next is the Electronics Products & Solutions segment despite the favorable impact on sales from foreign exchange rates, Q3 sales decreased 2% year-on-year to JPY 286.9 billion, primarily due to a decrease in unit sales of our products resulting from a decline in stay-at-home demand and the shortage in the supply of components. Despite the favorable impact of foreign exchange rates and an improvement in product mix, operating income decreased JPY 23.3 billion year-on-year to JPY 80 billion, primarily due to the impact of a decrease in sales. FY '21 sales are expected to increase JPY 80 billion compared to our previous forecast to JPY 2,360 billion, and operating income is expected to increase JPY 20 billion compared to our previous forecast to JPY 210 billion. Operating income margin for this fiscal year is expected to exceed 8%. The efforts we have been making to improve our profitability are steadily bearing fruit. During quarter 3, the impact of the rapid decline in TV panel prices on consumer market prices for TV was more limited than we originally anticipated. And the shift to large-sized TVs increased primarily in the U.S., Europe and China. As a result, we are able to maintain the average selling price of our TVs at essentially the same level at the second quarter ended September 30, 2021. Nevertheless, we continue to be unable to fully meet market demand in multiple categories due to severe limitations on the supply of components. We expect the situation to continue to impact us in the fourth quarter ending March 31, 2022. We will continue to exert every effort to procure components as that will be one of the highest priorities for this segment next fiscal year. Next is the Imaging & Sensing Solutions segment. FY '21 Q3 sales increased a significant 22% year-on-year to JPY 324.8 billion, primarily due to an increase in sales of high-end image sensors for mobile products. Operating income increased JPY 13.3 billion year-to-year to JPY 64.7 billion, primarily due to the impact of the increase in sales. Our FY '21 sale is expected to decrease JPY 30 billion compared to our previous forecast of JPY 1,070 billion. The FY '21 operating income forecast remains unchanged from the previous forecast. Despite severe conditions in the smartphone market, such as weakness in the Chinese market and shortage of components, especially semiconductors, the effort we have made here to expand and diversify our mobile sensors' customer base as well as to recover our market share on a volume basis are having some success. However, it is taking longer than expected to introduce the high-performance, high-resolution custom sensors that we have been working on with Chinese smartphone makers. So the speed of profitability improvement resulting from an increase in added value products going into next fiscal year will be slightly lower than the originally planned. Recently, the trend toward the Chinese smartphone market purchasing larger-size segments for the high-end product is improving after having segment due to the contraction of our business with the certain Chinese customers. We expect the Chinese smartphone market to normalize in the second half of next fiscal year. Since we feel better about the possibility of sales growth and for the market share expansion next fiscal year, we will focus even more on increasing the added value of our products and strive to improve profitability. On January 25, 2022, Sony Semiconductor Solutions Corporation completed its initial investment in Japan Advanced Semiconductor Manufacturing Company Limited as a minority shareholder. Sony will support JASM by assisting with the start-up of this biologic wafer factory, which aims to begin mass production during calendar year 2024. And lastly, the Financial Services segment. Fiscal year '21 Q3. Financial Services revenue increased 11% year-on-year to JPY 471.3 billion, primarily due to an increase in the net gains on investments in the separate account at Sony Life Insurance Company Limited. Operating income decreased JPY 4.7 billion year-on-year to JPY 35.2 billion, primarily due to deterioration in valuation on securities and at our venture capital business and at Sony Bank. New policy amount enforced at Sony Life during Q3 grew at a higher rate than our competitions, driven primarily by our priority focus area of selling insurance to corporations. FY '21 Financial Services revenue is expected to increase JPY 120 billion compared to our previous forecast to JPY 1,610 billion. Our FY '21 operating income forecast remains unchanged from the previous forecast. Now I'd like to update you on our strategic investments. The amount of capital allocated to strategic investments, including the acquisition of the Bungie which I explained earlier and repurchases of Sony stock from the beginning of the fiscal year until today and increasing acquisition and asset purchases that have closed as well as those that have been decided but not closed totals approximately JPY 850 billion. This slide shows the breakdown of the segments and areas in which we have allocated investment. The music segment portion of the chart does not include approximately JPY 100 billion we have invested in music categorial catalogs because the amount is included in operating cash flow under IFRS. We are making steady progress in accordance with our current midrange plan of making JPY 2 trillion on -- or more of strategic investment as we believe that we believe that the evolution of our business portfolio aimed at realizing long-term growth is progressing well. As I mentioned at the previous earnings announcement, we aim to accelerate the cycle whereby returns generated from previous investment are used to invest in growth, thereby realizing long-term growth. At CES 2022 last month, President Yoshida announced that we established Sony Mobility, Inc. in the spring of this year, and we will explore the possibility of introducing our VISION-S in the market. The VISION-S initiative aims to create new value and contribute to the evolution of the mobility by leveraging Sony's various technology and content and by adding new entertainment elements to a safe and secure moving space. Going forward, we will proceed our -- with our exploration under the assumption that we will collaborate and lie ourselves with multiple partners. That is the conclusion of my remarks.

Thank you very much. It was Mr. Totoki, Executive Deputy President and the Chief Financial Officer. From 3:55, we have Q&A session for media. And from 4:20, Q&A by investors and analysts. We've set aside 20 minutes each for Q&As. Those journalists, investors, analysts who have already registered for questions in advance, please be connected to the designated telephone number in advance. And those of you who have not made a registration in advance, you can continue to listen to the Q&A session through Internet webcast. Please wait until the session is resumed. [Break]

[Operator Instructions] Thank you very much for waiting. Now we are going to entertain questions from the media. Respondents are Mr. Hiroki Totoki, Executive Deputy President and Chief Financial Officer; and Naomi Matsuoka, Senior Vice President in charge of Corporate Planning, Control, Finance and IR. [Operator Instructions] The first question is Masuda-san from Nikkei, Shimbun Newspaper, Masuda-san, please. Masuda-san, can you hear me? Can you hear us?

Yes, I can hear you. I have 2 questions. First question is you're thinking about strategic investment. The other day, you have made an acquisition. And I think that you have made announcements going forward, AV and semiconductors, you will be coming up with new strategies. And for each, the size of investment will become larger going forward. So as the management, you'll be -- you think that it is necessary to make large investment and investment deals you have the sitting [indiscernible] of JPY 2 trillion. But is that going to be exceeding JPY 2 trillion or the acquisition in the orders of hundreds of billions of yen?

Thank you for your question. Our thinking behind the strategic investment was the question that you have raised. Currently, as you know, 3-year mid-range plan, strategic investment, we will be allocating JPY 2 trillion for strategic investment. And as I mentioned in my speech earlier, JPY 850 billion, and we made the decisions up until JPY 850 billion. And this framework, we don't think that we need to change in a major way this framework. And within this, we will be making forward-looking positive investment. So areas of investment, priority area is IP, DTC and technology, and this priority areas remain unchanged. That's all from me.

So we'd like to entertain the next question from Asahi Suzuki-san, please?

I'm Suzuki Asahi. I hope you can hear me.

Yes. Go ahead, please.

I have 2 parts of the question. First is image sensor that the -- as to this picking chip that the Taiwan TSMC is the company that you expected to entrust you the supply according to some reports as this picking and the chip that like for iPhone and other applications and for the high level of the sophisticated cameras, do you intend to further ask them to manufacture on behalf of Sony because this copper-copper connection is different. But as to some of the fundamental technologies maintained by your company, Sony. But I think the chips are may be likely to be entrusted to the TSMC and so on to produce on behalf of you in conjunction. Do TSMC will have a new plant in Kumamoto, biologic wafer factory that has been the missing piece so that the Japanese government is likely to give subsidy to that new plant in Kumamoto. It's expected that this new -- the chip for the pigment and so forth is likely to be producing commits well. Now turning to electric vehicle that the President Yoshida announced about the mobility new area, and you have a new Sony mobility company is likely to be established in the spring. But you might have a higher the details do you have like the scale of this new company as well the exact timing to establish a new company because Mr. Totoki, as to the new mobility company, together with [indiscernible], I understand that you have some chat with him about the Fitch trigger. You were the founder of Sony Bank and other new businesses in the past. So for the new company to be established, are you going to nurture this Sony Move Inc. to be a big company? As one of the pillars, I'd like to hear your view on the mid- to long term in terms of how to nurture Sony Mobility Inc. and so on.

Turn to the first question about this, the image sensor, but you are likely to entrust the production to thus TSMC. But the -- actually, it's not announced by us, but it's -- I don't have a direct answer to that. But anyway, as to the external production by possibly like TSMC, the logic is mostly to be produced outside. But it's core of the master the process. As to the master process to be stressed out, it's quite limited because as of now, that we do not intend to increase that image sensor chip that is master process. We do not intend to ask the outside company to produce much of that. As to your second part of the question, Sony Mobility. When will that be built? It's the spring of 2022. That has been mentioned by our President and CEO, Yoshida. As to the exact timing when the company will be established, we have to scrutinize and consider the details of this new company. So after that is decided, that optimal timing, we'd like to publish that information. Let me add to that. Sony Mobility, Inc. will be established, we will consider to be engaged in the mobility sector. Though as a thesis we announced, so we didn't exactly decide on the exact entry into that sector. As to the automobile industry, there are a lot of things we have to study about the automobile industry. So as to this establishment of Sony Mobility, Inc., which is the first step, and that will enable us to further deepen our study in consideration. That's what we mean by building a new company. Of course, for the long-term future, we might like to nurture this company as a hope to nurture as an important big company. But specifically, what would that be a specific business, the scale of the business and other things? Well, it's too premature to mention the details of this new company. Thank you.

Next question, we have Nishida-san, a freelance reporter.

This is Nishida speaking. Can you hear me?

Yes, we can. Please go ahead.

I have 2 questions. Your first question is that the semiconductor devices shortage is the topic, PlayStation 5 and EP&S products have impact from the shortage. And are there any change in the product mix as a result? Or any change in the product line for -- to ensure the performance? And also that may have an impact on platform. So if you could expand more on the impact of the supply shortage on your performances. And next, on the game business, your rival, Microsoft has announced a large-scale purchase. Is there any plan to have a purchase of a large publisher type supplier? And also, is there any impact on your game business who, because of that kind of published type acquisition by your competitor?

First, about the semicon shortage. And two, that we do have a variety of impacts on our businesses. And largely, we have shortage of components. So we need to put a higher priority on the high value-add products. That is not something new to us, though, that the -- when the semicon shortage started, we made a lot of adjustments to change the product mix and allocate to different product lines. And regarding the PS5, in terms of a short-term profit promotion cost was saved or high logistics cost has been saved because of the decline in the units that leads to the decline in expenses, but we plan to -- we hope to ship as many units as we can. So we will exert our efforts. Now in terms of the impact on the long-term platform that the, right now, under the limited shipping capability, I think that's a short-term impact. We think we can catch up. And from PS4, the -- when we move from one console generation to the next, there was a large change drop in engagement and also sales and profit changes drastically -- so there was a very sharp cyclical phenomena that has softened recently. And obviously, we hope to see a quicker recovery, but we also see the situation is rather limited in terms of the impact. Now in terms of the acquisition by our competitor, we are not in a position to make any comments. So it is difficult for us to say anything. But they have announced the intention to purchase, but that has not been completed yet. And what kind of business model change will take place is something we don't have a clear picture yet. So for the competitors' large-scale M&A, we do not want to speculate. And rather, we want to pursue and execute our strategy at the right timing, and we want to focus on that. That's it.

We'd like to move on to the next question. Nikkei BP, [ Nieda-san ], please.

Hello, can you hear me? .

Yes, we can, please.

I have 2 questions. First is about VR. At CES the other day, new device, VR 2, was announced. On the other hand, environmentally, the competitors are increasing their units and investing a large amount of money, and the momentum is there. Currently, VR business, how -- what is your view about promoting VR business going forward? Second, mobile games. Currently, Sony Music is the main player. But SIE itself will be considering mobile games business. So what is the direction that you have in mind?

Your first question regarding VR, PS VR 2 access, we have already explained. Users have the sense of imaging. So set up itself will be simplified and headset will be evolving and we'll be evolving the headsets. And already, this is announced. Evolution of headset 4K HR display with a wider viewing angle, and the movement of the eye of the player is detected. Looking at certain direction, then it's possible to manipulate the -- so for the rendering the high resolution for center of the view and external then lower resolution. By that, high-quality image experience can be given to the users. Such technology is introduced. Also, the motor vibration ahead headset and haptic hedged feedback. This will be introduced as a technology as we already made a decision. In relation to VR, already, further technological evolution, there's room for evolution, hardware and software. And with the evolution of technology, it is expected that the market is also going to expand. So Horizon Call of the Mountain, the first-party title is already announced simultaneously. So in this way, we have our technology and content that we have an ecosystem we leveraged, and we are going to enhance presence in this market. And then the second question, mobile games. Mobile game market itself is a growth area, and PlayStation IP can be used by more users, and this is a great opportunity for us. As for the timing, it's very hard to say exactly when. But PlayStation IP will be deployed for the IPs. So I believe that we can grow this steady. So these attempts and the specifics when the appropriate timing comes, then we are going to explain to you more clearly. Thank you.

Time is running short, so we'd like to entertain the last question for this session. Shimai-san from NHK, please?

I'm Shimai of NHK. I have 2 parts of questions. The first is about your performance and achievement because the results are very good. Frankly, I'd like to ask your frank interpretation of that despite the COVID-19, you had achieved well. So taking into account this difficult environment, what kind of good measures you have implemented to achieve such good results? That's one question. The second question is about EV. So in your future investment and in terms of JPY 2 trillion for the strategic investment, you didn't refer to EV. But this spring, new company will be established and then maybe the different consideration will be made. So in that strategic investment framework of JPY 2 trillion, that -- will that include EV? You intend to spend the money for EV or you rather than tapping into that the budget, that maybe the more the game will be the focus of spending money for strategic investments. What do you think of this now?

Thank you for your question. As to this question, of course, as to the third quarter, the results, what is my impression, my comments. As you mentioned, despite the COVID-19 difficulty, the logistics adversely impacted and semiconductor and other device components supply was limited for a long time. In many areas, this problem lasted for a long time. To cope with that situation for each business segment, they would like to forecast what will happen next based upon that good forecast, they take proactive measures to prepare for the difficulty. So that is why I think that we achieved record high results that the sales and the profit in this third quarter. But not everything is rosy good because PS5 was a big demand. We couldn't supply enough to the increasing demand as the image sensor the profitability, the recovery did not progress as soon as we had expected. Those are the challenges we identified and we'd like to consider that for the future. The second question, that is our investment idea toward EV. Well, about that EV, as has been mentioned earlier, we assume that we'd like to start with the asset-light condition with the possible partners to align with. As to our concept, for example, standalone, we might not have that big production facility or the developer own battery. That kind of capital-intensive activity is not likely to be considered in our business model. Without such a capital investment as an assumption, we would like to achieve the vision we have advocated. So that's how we are considering the EV business. So what's our vision towards EV? Let me repeat that the mobility environment space should be evolved into a more entertainment space. So the new kind of customer experience and values should be provided through that. Thank you.

Now it is time to close the Q&A session for media people. We will be changing our responders so the Q&A session for analysts will start at 4:20. [Break]

Thank you for waiting. Now we'd like to start the Q&A session for investors and analysts. My name is Hayakawa in charge of Financial Services and IR. I will be serving as the moderator. As responders, we have Mr. Hiroki Totoki, Executive Deputy President and CFO; and Ms. Naomi Matsuoka, SVP for Corporate Planning and Control and Finance and IR and also SVP, Accounting, Mr. Hirotoshi Korenaga. [Operator Instructions] We have from Morgan Stanley, Mr. Ono.

And regarding the games, I have 2 questions. The first question is that the PlayStation 5, what is your forecast for the future from the second quarter, Totoki-san's speaking tone from the 14 million -- 14.8 million original target to -- that has been set back and especially at this time, reduced substantially. And what is your forecast for the next quarter? In May last year, Mr. Jim Ryan was saying that he hopes to shoot for the record high, and 22 million to 23 million, I believe, was the target. What is the -- your feel for the demand? And also, what is your prospect for your supply capability? And the second question is that regarding your strategic investment, -- this time, you have invested in one of the -- for the investor in Bungie as the Games segment investment. Now the remaining budget, you have about JPY 110 billion or so to invest. And what is your criteria for investment decisions for them? For example, for game, when you invested in Epic Games, that was a small game house. And there was an investment for content IP that was your priority back then. But this time, you have a total ownership, and we will intend to retain the subscription or you want to improve your first-party development capability? Or what is your criteria for investment decision?

Thank you for your questions. The first question was that the PS5 expectation for the next fiscal year. And in the past, the record was the 22.6 million the first presentation, I believe it was a single year unit. And that is what we were saying that we will try to copy again. But in terms of the next year, the market demand is very high that could allow us to make a record high sales. Now our partner companies supplying components -- we are working closely with them, collaborating, negotiating and working with them closely, and we hope we can make that happen. But in terms of -- there was -- we believe that the next year, I think it's safe to say that we will continue to have supply disruption in terms of the components globally because of the distribution problem and so on. So we can't say for sure what is exactly the demand for next year. But having a high target we have. And if we bring it down, we may ease ourselves to go for the lower target. And so I think it is good to maintain the high target. So in the consolidated performance report, we will have a more exact forecast for the fiscal year '22. And so that's the first answer to the first question. The second question was about our concept of strategic investment and in the past, we were investing in IP, and that's what we've been saying. And we will -- and obviously, IPs have market prices as fair values. So we tend to look for the future upside potential with our involvement, and that is our criteria. For investment decision. I think that will improve our investment efficiency and also will generate a premium and how we can rationalize that premium. And in terms of the scale of the investment, we don't have a clear criteria in terms of the size of the investment but looking at our balance sheet and also financial capabilities. So capabilities and risk will be studied very closely to decide any investment. And also, you use an example, partial purchase or total purchase you mentioned. And we need to work with our partner. We cannot decide single handle ourselves if it is a good company, we would wish to purchase 100%. But if we are amine about 100% touches, we may have difficulty having a good alliance. So we will give considerations for long-term partnership and alliance, that's all.

We'd like to move. Katsura-san from SMBC Nikko.

I have 2 questions. First, about the impact of the shortage of components. Next is Vision S. The first one, impact of the shortage of components. In the supplemental materials, number -- Page 7, the inventory asset included, if you can respond, shortage of components and the cost increase and the impact of that, what kind of impact was there? P&S and GNS as well. Can you please enlighten me and quantitatively explain 2Q EPS JPY 60 billion to JPY 70 billion of buffer of risk was incorporated? And this time, upped by the revision of JPY 20 billion for profit. So compared to second quarter, it turned out that it was better, slightly better. But on the other hand, situation is such that it is prolonged. So what is your thinking behind this? This is the first question. Second question. Earlier, the question by the media people talked about Sony Mobility. And asset-light is your posture. In the equity market, former TV business, there is a concern. As in the case of TV business, you will be suffering from long-term losses. So Sony Mobility Inc., what kind of risk return are you thinking about? And also, investment of the managerial resources situation in the past and going forward to the extent that you can share with us, please enlighten me.

Thank you very much. First, the shortage of components and the impact of the cost increase, including inventory level, and you asked me to explain. First of all, this fiscal year, at the end of third quarter, inventory level, I think it's good to talk about the inventory level. By category, if I may explain Game network service, with the holiday season, there's a decrease in inventory level. And PS shortage of components, which resulted in decrease in inventory. So there's not sufficient level of inventory. EP&S with the holiday season, the decrease of the completed products with the increase in TV panel, and this is the key. And ready in preparing for the shortage of materials, strategic stockpiling is being done. Next fiscal year also to a certain extent, we are anticipating shortage, especially in the first half, we can expect that for some of the products. So gradually, we are building up of inventory. Therefore, although there was a decrease in the inventory of the completed product because of the holiday season, but with the stockpiling of strategic stockpiling and the confusion of the supply chain, there is a delay of the delivery period. So these 2 factors are offsetting one another. The level of panel inventory is profit level. As you all know, in China, smartphone market recovery is lower, and there's an increase in the level of inventory in the market, which resulted in increase in the level of inventory. But the demand for gas for next fiscal year and production capacity considering that and building up the strategic inventory towards the end of the fiscal year, and this policy remains unchanged. Therefore, it's very difficult to say in a summary fashion. But next fiscal year, looking at the business for next fiscal year, as for the inventory, that is deemed to be necessary. As we move toward the end of this fiscal year, we are going to build up the level of inventory. That is a basic thinking. And then Visions risk return and investment of managerial resources, we are not at a stage where we can give you a clear-cut answer yet. And as has been repeatedly mentioned, asset light is what we have in mind. So we are not thinking of making big investments into this area. More specifically, development of battery or development and having the manufacturing facility for the vehicles itself or sales infrastructure or maintenance infrastructure to be held by us, we are not thinking of doing this Basically, we top up on partnerships or similar relationship. And we are going to be as asset light as possible. And with the evolution of vehicles with our technological element, we are going to contribute. And as a long-term vision, the space of vehicles are to be turned into new entertainment space. That is our long-term vision. Therefore, for example, in the mid-range plan period, JPY 2 trillion strategic investment. Is that included in that? We are not thinking about investment at that scale, and this is not realistic. Please understand it that way.

We would like to entertain the next question, Nakane-san, please, of Mizuho Securities.

I have 1 question. Totoki-san, as the CFO mentioned, but I'd like to share your personal view. But in terms of North America, what is the final ultimate demand in North America in case of your company, the game, hardware, software and the music and pictures as well as the electronics and you cover everything hardware, software and content. Very comprehensive. So when you summarize all activities of that fiscal year. And then this is taking into account inflation as well as the change of the interest rates and so on. What is your view of the summary as well toward the first half of the next year, what is the overall perspective according to each segment, is not -- please tell us some of the highlights of that situation.

About -- the question is about North American demand and the business outlook. Well, I'm quite concerned about its outlook in North America. As you say that the interest rate policy is the turning point to be changed and geopolitical risks are now increasing and the midterm election is scheduled to be held -- so all these are stable elements are likely to be inflation. And depending upon institution, maybe demand might be affected. And I'm getting the latest information and updating that understanding from different business segments. But for the time being, there's no clear trend of this deceleration in the North American market. That's my frank perspective right now. However, especially in terms of -- and I look at TV, during the latter half, of course, the Europe and Japan, compared to the previous year, this is sort of a sign of deceleration or slowdown a little bit, but has been expected. But in terms of North America, better than we had expected. I mean the strength seems to be maintained and the momentum is kept in the North America. What about entertainment? Generally speaking, entertainment is doing well in general. However, the COVID-19 impact that this theatrical release would be subject to impact. If the number of the infected patients increases that they have to revise this serial release, that's a flexible implementation of policy. So that is likely to have up and down. But the general demand or entertainment per se is not likely to go through major change according to my interpretation. So in terms of North America, things are going steady. It seems steady. Is it really true that you will never go through variation? Of course, I'm personally always concerned about that. Any potential, I'm always keeping an eye. So this is something -- some negative signs observed and detected, we'd like to take quick countermeasures and take action accordingly. Thank you.

We are running out of time. So we'll make the next question -- next person to be the last, and we have Mr. Ayada-san of JP Securities -- JPMorgan.

I have 2 questions regarding Bungie. First question is that in the earlier slide, you explained how it will be treated in terms of accounting of the JPY 3.2 billion, 1/3 is about for retention purpose expenditure, about JPY 1.2 billion. And of the JPY 1.2 billion, 2/3 will be used up in the first 2 years. So that's about $0.4 billion or $400 million annually. And also intangible assets about 20%, about $700 million to $800 million. How do you plan to depreciate that in terms of the term period over which period as long as the best estimate you have will be fine? And I know it's still pending on the regulatory authorities' approval. And so if you have any prospect that would be appreciated. And also second question is about Mr. Totoki mentioned about in the future that the -- you can get the upside that will be the decision criteria. And what is the case for Bungie? And also for Bungie, what is the upside for them to work with -- to become a part of Sony and also upside for Sony to acquire. Is that simply increasing the users? Or what kind of KPIs you're expecting to get gains from this investment?

The first question, we explained that the 1/3 will be for -- it will be preferred payment for retention purpose. For specific numbers, we still need to scrutinize -- and this time, we're just giving you the rough image. So that is the extent, we hope you will understand. We will examine more closely. And if we have update, we will be sharing with you. And for the -- it will be included in the forecast for the next year. So we will be updating that number. Now in terms of the intangible asset, we are actually study examining that right now. So generally speaking, we look at about 10 years or so for depreciation. And -- but that depends on the contents of such intangible assets. So Korea, do you have any comment on that? Let me add some comments. What will be treated as expenses, will be treated in 2 years, and that will be of the investment. And there are a lot of conditions for that, though. And how it will be allocated for the first year and the second year, that may not be 50-50 and necessarily. And also, in terms of the depreciation of the intangible assets, will be allocating the purchase price to a variety of assets, and we will identify the price tags for each one of them and then decide the depreciation period down the road. Okay. And the second question was that the case of Bungie, what as I commented in my speech, they are platforms capabilities, rather ability to distribute to a variety of platforms and also live service, they have a capability to develop. And that's -- those are something we have lots to learn from them. And therefore, our studios will learn from Bungie and that is a very strong issue we have. And the Bungie side also is willing to work closely with us. And in the first year, we believe we'll put together a good plan and drive that. And I believe it will generate upside from that kind of work. Now from the other side, -- the Bungie, the personnel retention and recruiting, I think we can help them and support them, and we hope to be able to do so. And also, not just for gaming area, but the multi using of IP and merchandising of IPs like good title may be game title may be put into the pictures, movies. And Bungie want to nurture the IP they have in the multidimensional manners, and that's their hope. And for that, we believe we can help that. We have pictures and music and Bungie can use -- leverage our platform so that the IP can flourish and grow big, and that's all.

The time has come to close Sony Group Corporation's earnings announcement. I thank you very much for joining us today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]