We'd now like to begin Sony Group earnings announcement. I will be serving as the moderator. I am from Corporate Communications. My name is [ Okada ]. First, Executive Deputy President and CFO, Totoki, will present the FY 2022 second quarter earnings and FY 2022 forecast, followed by Q&A. In total, we are scheduling for 70 minutes. With no further ado, Mr. Totoki, please.

Today, I would like to start by talking about the business environment surrounding Sony. We recognize that the risk global economy slowing down is increasing further due to the factors such as rising tensions between the U.S. and China, soaring energy prices and expanding inflationary pressure as well as rapid interest rate hikes on various countries -- in various countries. We are taking steps to prepare for further deterioration of the business environment in each of our businesses, especially in Entertainment, Technology and Services, ET&S, and Imaging & Sensing Solutions, I&SS, which are relatively more sensitive to an economic recession. Now I'd like to explain the following. The consolidated results for the second quarter ended September 30, FY '22, Q2 and the consolidated results. Consolidated sales for the quarter increased 16% compared to the same quarter of the previous fiscal year year-on-year to JPY 2,751.9 billion, and consolidated operating income increased JPY 25.6 billion to JPY 344.0 billion, both record highs for the second quarter and first half. Income before income taxes increased JPY 62.7 billion year-on-year to JPY 345.8 billion, and net income attributable to Sony Group Corporation shareholders increased JPY 50.9 billion at JPY 264.0 billion. This shows the results by segment for FY '22 Q2. Next, I'll explain the FY '22 consolidated earnings forecast. The forecast for consolidated sales is JPY 11.600 trillion, an increase of JPY 100 billion from the previous forecast. The forecast for operating income is upward revised to JPY 1.160 trillion, an increase of JPY 50 billion and the same amount that forecasted at the beginning of fiscal year. The forecast for consolidated operating cash flow excluding Financial Services segment is unchanged. The assumed foreign exchange rates are approximately JPY 140 to the U.S. dollar, approximately JPY 138 to the euro. The forecast for each segment is as follows. I'll now explain the situation in each of our business segments. First, the Game & Network Services, G&NS, segment. Q2 sales increased 12% year-on-year to JPY 720.7 billion, primarily due to the impact of foreign exchange rates despite a decrease in sales of third-party software. Operating income decreased a significant JPY 40.5 billion year-on-year to JPY 42.1 billion, primarily due to the recording of expenses associated with acquisitions, including Bungie, Inc.; an increase in software development costs; and the negative impact of foreign exchange rates, partially offset by a decrease in losses on hardware. The '22 sales are expected to be JPY 3.630 trillion, an increase of JPY 10 billion from the previous forecast due to the impact of foreign exchange rates, partially offset by reduction in the sales forecast for third-party software reflecting results of Q2. On the other hand, operating income is expected to be JPY 225 billion, a decrease of JPY 30 billion from the previous forecast. Regarding hardware profitability, we are expecting a slight improvement from the previous forecast due to price changes and cost reduction, partially offset by the negative impact of the foreign exchange rates. Regarding software profitability, we have downwardly revised our forecast because we think it will take more time for engagement to recover from its current low level. In addition, our forecast for expenses associated with acquisition is expected to increase from the previous forecast by JPY 4 billion due to the impact of foreign exchange rates and amount to approximately JPY 61 billion. Operating income, excluding the amount is estimated to be JPY 286 billion. Although a total gameplay time is spent by PlayStation users during Q2 increased slightly versus the previous quarter, it decreased 10% year-on-year, primarily due to the impact of an increase in opportunities to go outside, resulting from a reduction in COVID-19 infections. When we compare software sales for this quarter with the same period of the previous fiscal year, we see sales of past library titles decline sharply, while sales of major new titles remain strong. Users appear to be playing a smaller number of titles out of a desire to spend less money. The number of PlayStation Plus subscribers and accounts at the end of September decreased 4% from the end of June to 45.4 million accounts. We see that this decrease results from a greater decline in user engagement amongst the PS4 users than expected. On the other hand, the ratio of PS Plus subscribers among PS5 users remains at a level significantly higher than that of PS4. We are putting even more effort into accelerating the penetration of PS5 hardware to recover this user engagement going forward. Regarding production of PS5 hardware, restrictions on the supply of materials and logistics has significantly eased. And the number of units produced during the quarter exceeded 6.5 million, progressing faster than planned. We recognize that demand from customers for PS5 continues to be strong as the actual sales situation at retail stores in the U.S. is such that, in September, it took an average of 17.5 hours to sell out 100,000 units after their arrival. To meet this strong demand, we will do our utmost to bring forward supply into the year and holiday selling season and aim to exceed our FY '22 forecast of 18 million units. In terms of first-party software, we plan to release a new popular franchise title, God of War Ragnarök, on November 9. The previous God of War released in 2018 was one of the largest titles ever released exclusively for PlayStation, selling 23 million units cumulatively to date. We expect similar performance from the new title as well. Regarding Bungie, Destiny 2: The Witch Queen, Season of Plunder, which was released in August is off to a good start. In addition, we have announced Destiny 2: Lightfall, which is an expansion pack scheduled for release in February of next year, and we are receiving great expectations from fans as a result. In addition, Bungie's collaboration with PlayStation Studios is progressing well. Regarding PS software, we released Marvel's Spider-Man in August and the popular IP that was also a hit movie, UNCHARTED: Legacy of Thieves Collection, in October. The titles have been rated highly, with Metacritic metascores of 87 and 88, respectively. And in the 2 months since the release, sales of Marvel's Spider-Man approached the highest level ever for a PC software title released by Sony. In this way, we are actively pursuing various measures to ensure increased user engagement and reaccelerating the growth of our game business from both the hardware and software perspectives. We expect to see the results of these efforts contribute to sales and profit in earnest from the second half of this fiscal year and next fiscal year. Our next is the Music segment. Q2 sales increased a significant 32% year-on-year to JPY 359.3 billion, mainly due to the impact of foreign exchange rates and the increase in streaming sales. Operating income was JPY 78.7 billion, a significant increase of about JPY 28.1 billion year-on-year, mainly due to the positive impact of ForEx exchange rate and the increase in sales. The contribution of operating income from Visual Media and Platforms accounted for a mid-teens percentage of the operating income of the segment of the quarter. In the mobile game application, thanks to the collaboration with the Lasengle, which Aniplex acquired in February this year, our efforts to strengthen development and service are progressing smoothly. And our sales of Fate/Grand Order in the first of this fiscal year, which is the eighth year since launch of the title, exceeded the level of the first half of the previous fiscal year. Primarily due to the impact of the foreign exchange rate and the result of the fiscal year so far, we upwardly revised both sales and operating income forecast: sales to JPY 1.770 trillion (sic) [ JPY 1.370 trillion ], an increase of JPY 90 billion on the previous forecast; and operating income, JPY 265 billion, an increase of JPY 35 billion from the previous forecast. The streaming sales in this segment continues to grow steadily, with year-on-year increase of 34% recorded media, 78% on music publications. In Recorded Music, an average of 48 of our songs ranked at the top 100 songs in the Spotify's weekly global music ranking for the first half of the year, and which substantially [ excluded ] average of 36 of our songs over 12 months. And we're maintaining high share of hit charts by continuing generate hits from the contribution of the new artists and well-established artists, as Beyoncé, and with 6 new albums in the 6 years, Renaissance. Now I will take a moment to review our strategic investment in this segment. And we're actively making a strategic investment to capture further growth in the music market, which is driven by AWAL, Som Livre, Alamo Records; and merchandising Ceremony of Roses; and podcast production, Somethin' Else and for the acquisitions. In addition, we are carefully selecting which music catalogs of the industry-leading influential artists to acquire such as Bruce Springsteen. These acquisitions perform the important role of generating stable, long-term loyalty income, further expanding some revenue opportunities and increasing our presence in the music industries. This strategic investment is steadily producing results. And we expect our operating income of this first fiscal year Sony Music Group, which is responsible for our Music business outside of Japan to reach the record high for the sixth consecutive years. Next is the Pictures segment. Q2 sales increased 29% year-on-year to JPY 337.5 billion, primarily due to the impact of the foreign -- ForEx exchange rate. Operating income decreased JPY 4.2 billion year-on-year to JPY 27.6 billion, primarily due to the existence of the same period of the previous year of licensing revenue from digital streaming services. Fiscal year FY '22 sales are expected to be JPY 1.450 trillion, an increase of JPY 70 billion from the previous forecast, primarily due to the impact of the ForEx exchange. We have upward revised operating income forecast to JPY 115 billion, an increased JPY 15 billion compared to the previous forecast. And in the Motion Pictures, as you can see, Sony released original works in different genres during the quarter, and all of them performed well. And those are Where the Crawdads Sing, a movie adaptation of a bestseller novel, which achieved a box office revenue that greatly exceeded our expectations. The movie was made by our 3000 Pictures studio and which was the partnership of HarperCollins and the major global publishing companies. We are seeing the success of our efforts discovering the excellent original works and made. Now I'd like to give you an update on the Crunchyroll and the animation business distribution service. The integration of the Crunchyroll and Funimation services is progressing smoothly. And the number of paying members are increasing nearly 10 million so far. The company is also actively involved in overseas theatrical distribution of Japanese animation. Dragon Ball Super: Super Hero, was released in August in the U.S. and secured the number one box office sales in the first week of the release. Also on August 4, we completed the acquisition of the Right Stuf, the U.S. commerce company and sells anime DVD, character goods, comics. And the next, I'd like to explain our recent acquisitions of Pixomondo. And having 7 facilities in North America and Europe, Pixomondo offers end-to-end services, from visual production toward visual effects. It is a pioneer in the field having won numerous Academy and Emmy awards for the project it has worked on. It has superb technological capabilities and a rich history of success. And it is also known for using the Unreal Engine game engine provided by Epic Games, which we invest to make its visual effects. In the virtual production market, which is expected to grow significantly in the future, we will aim to combine Sony's hardware and software technologies and our video production know-how with Pixomondo's technology capabilities to establish a leading position. Lastly, I will explain the progress toward the merger of Sony Pictures Networks India and Zee Entertainment Enterprises. Following the approval of Competition Commission of India on October 4, Zee's shareholders approved the merger of the Extraordinary Shareholders Meeting held on October 14. The merger process is progressing steadily, and we currently expect the transaction to close by the end of first half of the next year. Next is the ET&S segment. Q2 sales increased a significant 16% year-on-year to JPY 677 billion, mainly due to the impact of foreign exchange rates. Operating income increased JPY 5.1 billion year-on-year to JPY 77.8 billion, primarily due to the positive impact of foreign exchange rates and the impact of an increase in sales of digital cameras. Although we have incorporated the additional risk of market slowdown in the second half of the fiscal year, our FY '22 sales forecast is JPY 2.510 trillion, an increase of JPY 60 billion. There is no change from the previous forecast for operating income. In the current quarter, we are able to quickly recover from the supply chain turmoil caused by the lockdown in Shanghai in order to restore a stable supply. This enabled us to recover sales and profit, primarily in the digital camera. For TVs, the deterioration of the business environment is becoming apparent such as the increasing downward pressure on price due to an oversupply of panels and sluggish demand, especially in Europe. We anticipate that the environment will become even more severe going into next fiscal year due to the global economic slowdown. We are going to minimize the risk. So at the end of September, daily turnover inventory in every product category has decreased versus the end of June, and we are planning to close attention to demand trend as we reduce the inventory even further. In addition, we are accelerating our efforts to strengthen our business structure from next fiscal year onwards and sales operations, strengthening the cooperation between ET&S, I&SS and G&NS in procurement and logistics and further optimization on the breakeven point according to the business environment. In addition, new business areas, which have been positioned as our growth access such as sports, life science, network services and virtual production are expected to increase their sales by approximately 20%. Next is the I&SS segment. Q2 sales increased a significant 43% year-on-year to JPY 398.4 billion, mainly due to the impact of ForEx and higher sales of image sensors for mobile devices. Operating income was JPY 74 billion, a significant increase of JPY 24.3 billion year-on-year, mainly due to the positive impact of ForEx and the benefit from the increase in sales. Our sales forecast remains unchanged. We have upwardly revised our operating income forecast by JPY 20 billion from the previous forecast to JPY 220 billion, primarily due to the positive impact of foreign exchange rates. The slowdown in the smartphone market, particularly in China, did not improve during Q2, but the impact was generally within the scope assumed in our previous forecast. However, for the high-end smartphone cameras are progressing as expected, with larger die size, higher resolution, higher performance, benefiting from this. Sales reached a historic high for the segment in the second quarter. Due to the improved supply of logic semiconductors, it has become possible to increase the production of large die size and higher-resolution sensors, which means that we can proactively introduce high value-added sensors. We expect image sensor shipments in the third quarter ending December 31 to remain at a higher level, but we also believe that we need to consider the risk of further economic slowdown in the end user product market. Therefore, in the current forecast, we have incorporated additional risk into ourselves, and we have made a conservative forecast. Regarding inventories, we are continuing to utilize existing production capacity and manage strategic inventories or optimize the timing of future capital investment. Inventory at the end of the quarter was up about 33% year-on-year, which we believe is broadly in line with our sales growth. From the next fiscal year onwards, we expect the trend of increasing adoption of large die size and higher resolution sensors in the high-end smartphones. At the same time, the automotive business is also steadily expanding, and we have great expectations for the business to grow. Last, the Financial Services segment. FY '22 Q2 Financial Services revenue decreased 17% year-on-year to JPY 304.5 billion, mainly due to the deterioration in net gains and losses in investment in the separate accounts at Sony Life Insurance. Operating income at Sony Life increased a significant 11.6% year-on-year to JPY 54.6 billion, primarily due to the impact of the recovery of the funds that were subject to an unauthorized withdrawal. The FY '22 Financial Services revenue forecast is JPY 1.310 trillion, a decrease of JPY 130 billion from the previous forecast. And there is no change from the previous forecast for the operating income. To summarize the earnings announcement, our biggest regret is that we have made a significant downward revision to the operating income forecast of the G&NS segment for the second consecutive quarter in a row. As CFO, I take this very seriously, and I've been improving the accuracy of our earnings forecast. On the other hand, when looking at the entire group in the first half of the fiscal year, we think that each business has responded swiftly to major changes in the business environment. Furthermore, the results of the investment we have made in the Music and I&SS segments have made up for the weakness of G&NS segment. And the cost structure of each business segment has balanced out the significant fluctuation in foreign exchange rates, and therefore, we are able to strengthen our resilience. We anticipate that the business environment will become even more severe from now into the next fiscal year, and each business is taking steps to prepare for this. In addition of facing these issues in the short term, we will also work to implement measures to grow over the long term. This concludes my remarks. Thank you.

That was the presentation by Totoki. From 4:25, we will start to take questions from the media, and from 4:50, we'll start the Q&A for investors and analysts. For each segment, we are planning for 20 minutes of Q&A. [Operator Instructions] [Break]

Thank you for waiting. We'd now like to start the Q&A by the media. The presenter will be Hiroki Totoki, Executive Deputy President; and Naomi Matsuoka, Senior Vice President in charge of Corporate Planning and Control, Support for Finance Business and Entertainment Area; and Sadahiko Hayakawa, Senior Vice President in charge of Finance and IR. We'd now like to begin the Q&A. [Operator Instructions] The first question is from Nikkei, Mr. Tsutsumi, please.

This is Tsutsumi from Nikkei. Can you hear me?

Yes, we can hear you.

About game and semiconductor. First, about the game segment. About the sales forecast, can you give the breakdown, software, hardware? And can you give me the breakdown -- specifics of your sales forecast? I think major titles, I think, you have a very good lineup. But including the year-end sales for the third quarter, the GameSoft sales compared to the previous year, how much of a level are you aiming towards year-on-year? And there is a slowdown of the economy, et cetera, these external factors. So including those factors, can you answer? And PS5, will the price increase have an impact on the demand? That's my first question. The second question about semiconductors. Earlier you said that China and the high end, especially low end decline is within your expectation. But going forward, I think there are some additional risks that you have factored in. But about the high end, there is a possibility that the sales would drop. Did you factor in this possibility? And especially North America customers, high end forecast, can you explain whether the high-end models are doing well now? And we have a lot of news about the problem at the production factory, et cetera. So can you explain how much of these factors have been included in your forecast? And what is the outlook?

Thank you for the question. The first about Game & Network Services question about the sales forecast and the breakdown of the forecast. As for specific numbers, I cannot disclose them here. But as a trend, I will say, software -- and first-party software, I think -- so I think it will be high and thanks to God of War. And about third party, the overall game trend will impact. But I think there will be less year-on-year. So we'll see a decline year-on-year slightly. And about the hardware, I cannot give a specific unit numbers. But as I mentioned in my speech, the second quarter production, it's reached 6.5 million already. And we want to use this to supply for the year-end sales. I think there's a lot of expectation here. And PS5 price increase impact. Well, so far, due to the price increase, we have not seen any dampening of the demand, but we have to monitor what will happen in the market going forward. And I&SS. Well, the China mid- and low-end models, the slowdown declined. This is something that we have already factored in. About high end, I think that is doing relatively well. But to a certain extent, it will, along with the economic slowdown, experience a slight decline. So this risk has been factored in. Including that in our forecast, we have come up with these numbers. So please take it to be that way. And about customer information, we cannot disclose any of such information. Thank you.

We'd like to move into the next question. Kyodo News Agency [ Mr. Yamasaki ].

My name is [ Yamasaki ] of Kyodo News Services, and I think I have 2 questions. First one is for the -- your performance forecast. Due to yen's depreciation, what extent of upward the effect do you expect because of the yen's depreciation? And in addition to that, there are so many areas that might be difficult for you to answer, but that's for upward, the revision -- what are the main factors for the upward revision? Is it possible for you to name a few? Second is for semiconductor trend. And October, you talked about U.S., the more stringent restrictions on to a China export. So what is the impact on to your business and the U.S. restrictions on China?

Thank you for your questions. First is for the business performance outlook and because of foreign exchange and some potential impact on to the revenue, and probably Hayakawa-san will answer the questions.

Thank you for your questions. And as for -- your question is concerning of foreign exchange impact on to our future forecast. And dollar, euro, if there is any difference by JPY 1, we have already indicated some extent. But other than dollar and euro, we have some other currency. And we have the foreign exchange hedging. And there might be some difference between the sensitivity to ForEx fluctuations and especially in the gaming industries. And we have the -- based on the dollar cost and that's -- we have to see a negative impact. But that's the year-on-year basis for the future forecast. And we have a downward focus, and almost 50% are the impact by the ForEx. And I&SS, we have the positive effect because of the ForEx rate fluctuation. And we have the positive profit. And as for the Game & Network Services and in the final consolidated, the settlement, and we have the limited impact. That's my opinion. And as for some other few, the main factors are for upward revision. One is the contribution by the Music segment and the growth in the streaming business and due to ForEx impact. Those are the main drivers for upward revision. And I&SS, another factors. And of course, we have the impact by the foreign exchange rate, but we have the quite steady sales in the Q2 and a record high revenue and sales, and that's why we came up with the upward revision for the forecast. And I&SS segment and the U.S. export restriction onto the Chinese market and what extent of the impact we have to foresee, that's announced back in the 7th of October. We have witnessed a minimal effect impact. We have already embedded for our future forecast. But the tension might be intensified between U.S. and China, so we would like to carefully monitor the situation, what's going on.

So we would now like to accommodate next question, please. From NHK, Mr. Shimai, please.

This is Shimai from NHK. I hope you can hear my voice. So I have 2 questions. So first is about yen's depreciation and looking at the business, there is a positive impact of weaker yen. However, please, for example, cost increase, there could be a negative impact. So what kind of impact is there? And also in comparison to competitors, for example, due to the weak yen, so they are going to review once again their production capability. And for Sony, are you going to review once again your production capability? Another question is about Sony relationship to the semiconductor. So for the PS5. So there was 6.5 million units. And therefore, not only the PlayStation, however, for the production of the semiconductor. So do you think this kind of impact of the semiconductor production have been already weeded out?

So talking about the exchange rate. So because positive, negative and also the segment, as Mr. Hayakawa had mentioned, there are both impacts. So for the time being, so looking at the sensitivity for the weaker yen, so there will be a positive of USD 1 billion. For the euro, it's 7 billion impact. So for the Game & Network Services, ET&S and for the I&SS. So this applies to all 3 segments. So talking about the projection, so because due to the exchange rate, we don't decide based on the exchange rate. And well, because looking at the condition with our supply chain and also the geopolitical risks, [ therefore ], we need to take in consideration those environments. So however, it is important to have a flexibility. And for example, I mentioned about the automation and also the DX. So I have included in my speech. Therefore, well, because it's going to have a standardization in the production. And therefore, if there is a standardization, we are able to produce everywhere. Therefore, we are going to take proactive action for that. Talking about the G&NS for the semiconductor and the parts and also looking at the logistics, there aren't too much pressure on that. And therefore, in the second quarter, 6.5 million units, we are able to produce that amount, and sales of the PS5 have been according to the plan. And therefore, for the production, we are able to have a more speedy production, and therefore, 18 million target can be achieved, and therefore, we are going to have a positive impact on that on units sold.

We'll proceed to the next question. Toyo Keizai, [ Sasaki-san ], please.

Can you hear me?

Yes.

[ Sasaki ] from Toyo Keizai. I have 2 questions. First, about PS5, the outlook of next fiscal year. Well, you said about the logistics and the component supply recovering. But next fiscal year, will you be able to produce and meet all the demands? When about will you be able to surpass the demand? And second, about Music. Earlier in the explanation, you said that the virtual media platform accounts for about 10%. But this ratio, is it growing? If so, what are the reasons for the growth? And anime within the segment profit, how much does anime account for?

Thank you. About your first question, PS5 and the outlook for next fiscal year. You're asking about the unit sales, I believe. At the presentation we gave in May, we said PS5 in the fourth year -- 2023 after PS5 was introduced. At this timing, PS5 would have surpassed PS4. And so this is the challenge that we have set out for ourselves. So if we could manage 18 million this year, so we next year, do some 23 million-plus then. And next year, we will be able to surpass PS4 next year. So this will be the target for the time being. And about Music. Well, the virtual -- visual platform is about 10%. But FGO is the largest part. It's quite some time since it launched. And in the mid- to long term, there will be a decline. But like Lasengle acquisition, there is the vertical acquisition. So it will -- it has exceeded last year. So we want people to enjoy as long as possible. We want to make it into such an IP. Now as the ratio goes down, for example, the Demon Slayer anime and the new IPs to follow, we want to develop them so that we can grow this business. As for anime, the profitability, I think it's very good. That's all. Thank you.

Time is running out, and we'd like to take the one final question. [Operator Instructions] There seems to be no questions, and I would like to adjourn the Q&A session for the media attendants. And as for investors and analysts, the Q&A session will start at the quarter to 5. 16:45, we are going to resume the session for investors and analysts. Thank you. [Break]

Thank you for waiting. And we'd like to start the Q&A session for investors and analysts. And my name is [ Shinichi ] of our Financial/IR Group. I'm going to take the chair of this session. And as for the media session, we have 3 representatives on the podium to answer the questions. [Operator Instructions] So we'd like to start Q&A session. [Operator Instructions] And from Morgan Stanley MUFG, Ono-san.

My name is Ono of Morgan Stanley. Do you hear me? I think I have 2 questions on ET&S and the game and respectively, 1 question. On ET&S, and as for cameras, the sales and the business has been performing quite well, not only for Sony but to the market as a whole seems to be quite promising. But as for the ET&S overall, the operating profit now JPY 180 billion. And that might be because of ForEx impact and the camera business with a higher margin. And I feel a bit [ rather ] awkward for those figures. As for smartphones, and the new Xperias 1 IV are now on the release. And many of the communication carriers started do a discount of the sales. So what is your take for that move? And I'd like to know why you didn't change guidance and mainly because of that. And the second is, and we have the 100 -- 18 million production is now on the scene. But as for MAU figures has been slowing down gradually. And you are going to have the first-party release for the next period. And do you expect some of the recovery in the Q3 period because of that?

Thank you for your question. And as for ET&S and as for camera business, in the first half, our business has been quite excellent and almost a record high. But as for pent-up demand since the last period because of a supply shortage, that might be the contributing factors. And the second half concerns for economic slowdown should be incorporated. So we have some [ implications ] that the camera business is now gradually going to slow down. So we should be more conservative. So that is why we came up with that guidance. And as for TV. As you know quite well, and the panel supply and the excess and DSPs are declining -- declines. And we do not follow too much because we like to pursue the interest as much as you can make on the profit, as much as you can make in the first half. And we will be more selective in the second half to secure the profit. And we will be ready for the recovery of the economic cycles of the next fiscal year, and we will be -- we will get ready for that notably. That's our policies. And the Game & Network Services and the production itself has been quite well. But according to the previous period, and we have the decline of the MAU and the other indices. And the second quarter, and more people are now going outdoors. And we have still -- we have yet to get out of the negative cycles. And PS4s and third-party software sales has been rather sluggish. And the catalog title and historical titles has been declining. And against that, PS5 engagement is quite high. So the Q3, we expect some recovery. And we have the strong titles from the first party, and we have some seasonal effect. And the Q3, we can see some of the recovery from the downturn trend. That's our expectations.

Thank you very much, Mr. Ono. So we'd like to move onto next question from JPMorgan Securities, Mr. Ayada, please.

From JPMorgan, Ayada. I have 2 questions. So I have 2 questions for the game. The first question is, as you have mentioned about the third-party sales, there have been a deterioration. And therefore, I would like you to explain in detail, well, because there hadn't been good kind of title sales. So thinking about the new titles. And talking about the current situation, there had been a hurdle in comparison to the last year. However, looking at the other platforms, including the consoles and PCs, the users have been taken by other players. So do you have any perspective on this point? And just one question is about -- talking about the PS Plus members, there have been a decline. And for this quarter, there have been a huge decline. So in order to recover the membership, how -- which area are you going to focus for the third quarter? Including the first party, you're going to release the large titles. Do you expect more members to come back or -- so talking about the -- and [ that state ] of PS4 and 5, and therefore, you are going to focus on the hardware by leading the PS5, you're going to increase the membership. So I think you're going to take both ways. So if there is any perspective on these points.

Thank you very much for the question. First -- for the first question, so there had been a weakness in the third-party software, well, because our initial forecast was too strong. And therefore, that is a point that we need to reflect for the second quarter. So there had been more expense. For example, I think the users are going out from home, and therefore, that had given up an impact to our sales. In addition talking about the new titles, the [indiscernible] title, for example, the third-party AAA titles, we are able -- we are going to maintain our strength. So for example, the Call of Duty, we are having a good release. And therefore, for the third quarter, we do have a very high expectation. And talking about the membership, and there have been a decline for the PS Plus. And there have been a decline in number of members with the PS Plus. However, in the second quarter, we had renewed our services. And also, there hadn't been a great momentum as a whole, and also, we didn't make aggressive promotion during the second quarter. And therefore, in the future, we are going to have more penetration on PS5, and we are going to have a very good titles. And in addition, we are able to make a good -- better promotion, and we think we are able to recover.

Thank you very much. And next question, UBS Securities, Mr. Yasui, please.

Two questions. First, about Music. Looking at the market, and the streaming market is very strong. And you have a lot of hits. And I think the top 10 hits are generating a lot of profit. So I think you are in a very good position. But if there is a negative about your business, I think you might be scared that things are going too well. But is there any possibility of a risk in Music? The second, about semiconductors, I&SS. You say profitability is 20%. There was -- when you had 30% -- when you had a Chinese major client. But I'm looking at the utility rate -- utilization rate. I was hoping that it would be higher, including the foreign exchange hedge. Do you have the power to exceed 20%, please?

Thank you very much. About Music, thanks to you and everyone. I think we are doing extremely well. Streaming is very successful. And well, we really don't have that much of a concern, but if there is going to be a change, that would be emerging service. TikTok, these new platforms, how we can try to compete against these newcomers. But meanwhile, different types of music, I think, can be delivered in different channels. So it could be a risk, and also it could be an opportunity. But what's important is that music -- it's very easy to provide music through new technology. And due to technology disruption, it could occur easily. The [ industry ] tells us this is the case. So we have to capture the trend in the world as soon as possible and quickly and swiftly respond. That's the first answer. And about I&SS and the profit ratio, you say that it should be higher or could be higher. Well, I think that we do have the capability to increase profitability. But if we think of the short term for the time being, we have to increase our capacity. Sales and increasing share is what we're focused on right now. And we have to really do what we plan to do. For R&D, we, from a competitive point of view, are not trying to reduce R&D budget, but instead, rather than trying to reap the results in the short term, we want to win in this market. And so we want to invest in future solutions. And therefore, we want to achieve and have a good balance between growth and profit in thinking -- managing our business mid- to long term. I also think that we should try to aim for a margin that is higher than 20%. As for the timing, it will be influenced by the external situation amongst others.

Thank you. And we would like to move on to the next question, SMBC Nikko Securities, Katsura-san.

My name is Katsura of SMBC Nikko Securities. And I&SS and strategic investment, I have 2 questions. As for I&SS, as you have already talked about. And some of the inventory investment and the capital investment, how they are related, if there is any update for your development strategies. For the capital investment, and you have raised the amount that might be because of the ForEx and the semiconductor. Is there -- has there any been change for the prospects for semiconductor business? And as for JPY 900 billion for the next period, and what is the peak period? And probably you need a flexible response and because the industry itself is now a bit more restraint. So including adjustment, and if you have any comment for the capital investment. And the second is for strategic investment. As for the year-end financial announcement, and you talked about more than JPY 1 trillion or JPY 1.06 trillion, and you talked about [indiscernible] and what the other on the second half prospects. So if you have any plans for strategic investment and the Bungie, the investment on the Bungie and because of interest rate hike and some of the background factors, if there is any impairment in the early period. And is it in your judgment? Or will it be -- impose any change for the macroscopic policies?

And as for I&SS and update for the inventory investment and the capital investment. And as for capital investment, and as of July, and you talked about JPY 350 billion, and that was raised to JPY 353 billion. And this is for the investment for the improved productivity. And that content is image sensor, the demand hike for the mobile phones and the shift to a higher-end product. And Nagasaki Fab 5 and the extension is one of that move. That's the capital investment. As for inventory investment. And compared to a year-on-year basis and second half of '21 and the second half of '22 and 39% of the revenue increase, and the inventory increased by 33%. So I think it is well aligned and no particular supplies, and those figures are as expected. And as for this quarter, we are going to continue our full capacity of production so as to accumulate the inventories to be ready for the next fiscal year. And there has been no change of our initial planning. So by the end of this fiscal year, and the inventory level will be raised a bit more. And as for strategic investment and what's going on. And as for Q2 and the financial announcement, and we have already realized the items. And including some of the share buyback, and that's about JPY 1.23 trillion. And that investment amount is almost aligned with our initial planning. As for Bungie and as for impairment, it's not intentional. But that's up to the environmental changes. And as for Bungie itself and if there is any change in the macroscopic, the context, there seems to be no change. So the investment. As for investment, we do not have any particular concerns, including investment to Bungie. So that's it. Thank you.

Thank you very much. So it's time. Therefore, we would like to conclude earnings announcement. So thank you very much for your participation. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]