Japan Internet/Game Sector: Presentation Material

UBS presentation material on the Japan internet and game sector covers game names (Bandai Namco, Capcom, CyberAgent, Koei Tecmo, Konami, Nexon, Nintendo, Square Enix) and internet names (LY Corp, Mercari, Recruit). The report highlights that sector rotation moved funds from games to AI-related names, though valuation recently recovered as semiconductor peaks-out concerns eased; memory price increases are likely to pressure Nintendo Switch 2 and Sony PS5 hardware costs in 2026 (Switch 2 memory cost per unit rising from ~US$47 to US$187 in FY3/28); and the shift of mobile games to external settlement cuts platform fees from 30% to only 5% of gross revenue, with CyberAgent and Konami moving fastest and around 25% COGS savings, while IP value is increasingly emphasized. On ratings, Bandai Namco, CyberAgent and Konami are Buy; Capcom, Koei Tecmo, Nexon and Square Enix are Neutral; Nintendo is Sell; in internet, Mercari and Recruit are Buy and LY Corp is Neutral.