Analyst meeting materials 3rd quarter, FY2012. Gala Inc. 2012/2/10

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1 Analyst meeting materials 3rd quarter, FY2012 Gala Inc. 2012/2/10

3 1. 3rd quarter results - Consolidated profit and loss FY2012 FY2011 Growth Growth (%) Sales 959,973 1,159, , % Cost of sales 216, ,450-28, % Gross profit on sales 743, , , % SGA costs 786, ,420-52, % Operating profit -43,052 75, ,820 - Pretax profit -24,878 81, ,057 - Net profit -41, , ,080 - Subsidiary Gala-Net Brazil s results were previously not included in consolidated results. Starting this quarter, the above figures reflect said company s results. As such, there will be discrepancies in some totals. Sales are down due to the strong Yen. Newly launched titles have had negligible impact on sales. Due to one-time restructuring costs in Korea, profits are negative. Copyright GALA Inc. All rights reserved. Gala-Net Brazil not included in consolidated results 2

1. 3rd quarter results - Impact of exchange rate fluctuations Impact of exchange rate fluctuations on sales FY2012 FY2012 FY2011 Growth (%) FY2012 average exchange rate FY2011 average exchange

22 KRW:JPY=1:0.073 FY2012 Average exchange rate: USD:JPY=1:77.39 EUR:JPY=1:104.36 KRW:JPY=1:0.

4 1. 3rd quarter results - Impact of exchange rate fluctuations Impact of exchange rate fluctuations on sales FY2012 FY2012 FY2011 Growth (%) FY2012 average exchange rate FY2011 average exchange rate As calculated with FY2011 exchange rate Sales 959,973 1,034,662 1,159, % Sales, online games 865, ,487 1,065, % FY2011 Average exchange rate: USD:JPY=1:82.66 EUR:JPY=1: KRW:JPY=1:0.073 FY2012 Average exchange rate: USD:JPY=1:77.39 EUR:JPY=1: KRW:JPY=1: ,034,662 Impact of exchange rate fluctuations on online games sales 940,487 As calculated with exchange rate as of FY2011 Difference Difference Sales Sales As calculated with exchange rate as of FY2011 Sales Sales Copyright GALA Inc. All rights reserved. Gala-Net Brazil included from this quarter 3

1. 3rd quarter results - Sales per country, online games Country Japan North and South America Europe Korea Consolidated adjustment Number of personnel 17 60 115 156-348 Sales, games portals Sales,

5 1. 3rd quarter results - Sales per country, online games Country Japan North and South America Europe Korea Consolidated adjustment Number of personnel Sales, games portals Sales, game development Total sales FY2011 FY2012 FY2011 FY2012 FY2011 FY2012 Total 97, , ,618 43, ,257 68, , ,908 9, , , ,823 81, , ,790 66,435 97, , , , ,823 1,065,728 68, , , , , ,798 Sales growth (as calculated in Yen) -30.4% -12.7% -15.3% -29.4% Sales growth(as calculated in local currency) % -8.2% -23.5% Sales, online games Game portals Game development Japan: Sales from titles IRIS ONLINE and Rappelz have declined North and South America: No significant changes (Gala-Net Brazil included here) Europe: Sales have decreased due to strengthened anti credit card fraud security Korea: Sales from title Kung Fu Hero have declined Copyright GALA Inc. All rights reserved. Gala-Net Brazil included in totals, starting this quarter 4

6 1. 3rd quarter results - Recent results Sales Gross profit on sales Operating profit Net profit 1,400,000 1,200,000 1,000,000 1,005,158 1,020, , ,471 1,114,639 1,107,522 1,150, , , ,234 1,092, ,977 1,159,640 1,157, , ,570 1,221, ,459 1,121, , , , , , , , ,530 94,625 8,304-34,631 99,315 77,695 35,128-15,978-26,190-53, ,676 75,768 87,317 45,309 36,670 32,981-41,464-43,052-41, , , , , ,000 FY2010 1Q 2Q 4Q FY2011 1Q 2Q 4Q FY2012 1Q 2Q Copyright GALA Inc. All rights reserved. Gala-Net Brazil が当四半期より含まれております 5

7 1. 3rd quarter results - SGA costs, number of personnel FY2012 FY2011 Growth Growth (%) Personnel costs 389, ,862-12, % Other costs 396, ,558-39, % SGA costs 786, ,420-52, % Personnel costs Other costs Directors Permanent Employees Temporary Employees FY 2011 FY 2012 FY 2011 FY 2012 Copyright GALA Inc. All rights reserved. Gala-Net Brazilが当四半期より含まれております 6

8 1. 3rd quarter results - Results of restructuring 1. Major restructuring at Gala Lab Corp. Number of personnel: 227 at the end of FY at the end of FY Costs cut by 16.2% (over JPY 18 million) as compared to FY2011 Directors Employees Gala Lab personnel costs Copyright GALA Inc. All rights reserved. 7

9 1. 3rd quarter results - Sales by business segment (other) < Data mining > < Community solutions > Risk monitoring services Other Sales, community solutions FY 2011 FY 2012 FY 2011 FY 2012 Copyright GALA Inc. All rights reserved. 8

13 2. Online games business - Online games portals, channeling Gala-Net Commenced channeling of six titles from Bigpoint DARK ORBIT SKYRAMA Seafight Battlestar Galactica Online Gala Japan DEEPOLIS FARMERAMA Commenced channeling of KAROS ONLINE Channeling arrangements enable gpotato users to play online games from other companies from within the gpotato portal, using their gpotato ID. Copyright GALA Inc. All rights reserved. 12

14 2. Online games business - Regions serviced Countries that Gala Group games are provided in Changes this quarter Publisher U.S., Oceanina, other English-speaking countries England Germany France Europe Asia S. America Turkey Poland Italy Russia Japan S. Korea Philippines Thailand Vietnam Malaysia Singapore Indonesia China Taiwan Hong Kong Macau Spanish speaking countries (Chile etc.) Portuguese speaking countries (Brazil etc.) Middle East Game Power7 Gala-Net Brazil Gala-Net Gala-Net GameCyber Technology GameCyber Technology Macrowell Game Assassin Entertainment Net Ease PT. KingSlaim Soft PT. KingSlaim Soft Eaglegame(M) Sdn. Bhd. Asiasoft INI3 Funbox Level up Eaglegame International Gala Lab Gala Japan Astrum Online Entertainment FUN FACTORY Gala Networks Europe Gala Networks Europe Gala Networks Europe Gala-Net (Previously known as IL) Gala-Net Gala Networks Europe Gala Japan Gala Lab Ini3 Digital Co., Ltd Shanda Games Limited Shanda Games Limited Gamania Digital Bejing 17game Network Launched To be launched (in or before beta testing) Published by a Gala Group company Copyright GALA Inc. All rights reserved. 13

15 2. Online games business - Regions serviced, portals Online games portals Changes this quarter Games developed by Gala Games from other companies Flyff Online Rappelz Street Gears Eternal Blade Luna Online Dragonica Castle of Heroes* Aika Online Allods Online Canaan Iris Online Age of Wulin * Prius Online SEVEN CORE Terra Militaris * gpotato.jp Japanese gpotato.com es.gpotato. com gpotato. com.br English Spanish Portugal German French gpotato.eu English Turkish Polish Italian gpotato.kr Korean Full commercial version launched To be launched * Differently named in some areas Copyright GALA Inc. All rights reserved. 14

16 2. Online games business - gpotato membership 25,000,000 20,000,000 15,000,000 10,000,000 Membership of European portal gpotato.eu reaches 8 million (January) 11,720, ,230 3,936,978 13,805, ,568 4,685,897 15,544, ,057 5,436,146 16,921, ,804 6,061,269 18,256, ,272 6,601,222 19,481, ,738 7,088,374 20,664, ,024 7,562,306 21,623, ,224 7,985,091 gpotato.jp(japan) gpotato.eu(europe) gpotato.com(u.s.) gpotato.kr(korea) gpotato.com.br(portuguese) 5,000,000 7,137,219 7,989,825 8,754,787 9,384,013 9,990,601 10,540,035 11,141,701 11,539,275 es.gpotato.com(spanish) 0 73, , , , , , , , , , , , , , , ,815 12,504 87, , , , , , ,513 FY2010 4Q FY2011 1Q FY2011 2Q FY2011 FY2011 4Q FY2012 1Q FY2012 2Q FY2012 Copyright GALA Inc. All rights reserved. 15

3. Future efforts - Entry into the smartphone social game market In-house developed games from Gala Lab Corp. Games licensed from developers in Europe, the U.S., Japan, and S.

18 3. Future efforts - Entry into the smartphone social game market In-house developed games from Gala Lab Corp. Games licensed from developers in Europe, the U.S., Japan, and S. Korea April 1, 2012 Planned establishment of Gala Pocket Inc. (CEO: Satoru Kikugawa) Gala Pocket s efforts will center around a social game platform for smartphones 21 million gpotato users worldwide

3. Future efforts - Games developed at Gala Lab Corp. ETERNAL BLADE IL, a game developed by Gala Lab Corp.

Third person, action-packed gameplay and non-targeting combat are among the many new features of the totally

19 3. Future efforts - Games developed at Gala Lab Corp. ETERNAL BLADE IL, a game developed by Gala Lab Corp. has been rebranded as ETERNAL BLADE and relaunched. Third person, action-packed gameplay and non-targeting combat are among the many new features of the totally revamped version of this action MMORPG. Schedule: January 16 Commencement of open beta test in S. Korea Late Feb. Full commercial launch The game will also be launched on gpotato portals in the Americas, Japan, and Europe. Distribution partners in Thailand, China, Malaysia, Singapore, Taiwan, and Hong Kong will also operate the game under license. Copyright GALA Inc. All rights reserved. 18

3. Future efforts - Games licensed from other developers SEVENCORE A new title from partial

28% ownership of South Korean online game developer Noria Co., Ltd.

Technology meets fantasy in Sevencore, the free riding action MMORPG.

unique postapocalyptic world with a rich companion system and compelling storyline.

20 3. Future efforts - Games licensed from other developers SEVENCORE A new title from partial subsidiary Noria October 2009: Gala acquired 19.28% ownership of South Korean online game developer Noria Co., Ltd. and publishing rights for the company s in-development title SEVENCORE in the Americas, Europe, and Japan. Gala will also receive partial royalties for sales from the game in other regions. Technology meets fantasy in Sevencore, the free riding action MMORPG. Players battle on land, sea, or sky on the backs of dragons, motorbikes, and more, in a unique postapocalyptic world with a rich companion system and compelling storyline. Launch schedule Mid-February Late February South Korean open beta test Full commercial launch in S. Korea Following the South Korean launch, the game will be launched on gpotato portals in the Americas, Japan, and Europe, beginning from next fiscal year. Copyright GALA Inc. All rights reserved. 19

21 3. Future efforts - Projections FY2011 results FY2012 projections Growth Growth (%) Sales 4,559 4, % Operating profit % Pretax profit Net profit Disclaimer: This meeting and these materials are intended to provide information to shareholders and investors, and are not intended to promote investment in securities. Actual results may be very different from projections described here, as said projections have been made based on currently available information and certain assumptions. This summarized translation is provided for convenience only. In the event of any discrepancy with the Japanese original, the original shall prevail. Copyright GALA Inc. All rights reserved. 20

Financial Results Briefing FY Q

Financial Results Briefing FY 2013 (April 1, 2012 thru June 30, 2012) Gala Inc. August 10, 2012 Today s topics I. 1st quarter results II. 1st quarter business report III. Future efforts I. 1st quarter