Investors

[PS business]

Q1: “Pachinko EVANGELION:3.0＋1.0” is your group’s first smart pachinko. I would like to hear about smart pachinko trends in the marketplace.

A1: The current status of smart pachinko is not favorable, with the installed market share still around 2% (according to our survey at the end of September 2023).
In addition, the contribution from utilization and gross profit is not yet steady.
With featured titles appearing in September and October, our “Pachinko EVANGELION:3.0＋1.0” in December is highly expected by pachinko halls.

Q2: A major hall operator applied for the application of the Civil Rehabilitation Act, so I would like to know about the future trading policy with the comany.

A2: We have heard that the corporation will continue to operate.
Pachinko/pachislot machines we already delivered have been paid for without any issues.
The pachinko/pachislot machine is indispensable for the operation of pachinko halls, and we intend to continue doing business with them while keeping an eye on the situation going forward.

[Content and digital business]

Q3: We would like to ask about the development of card game in China from FY2022 to Q2 FY2023 and future trends.

A3: Sales of card games, which have been developed in China, rose when we expanded its sales channels last year.
Although the expansion of sales channels has run its course, we continue to focus our efforts.
In addition, as the card game market is expected to continue expanding worldwide, China is also expected to expand further. Therefore, our policy is to further develop the market for both existing and new card games, which are planned to be developed globally.

Q4: I think that the sales in China did not reach the market expectation in Q2 which has led to a decline in stock prices, so please tell us if there is any change in sales due to technical factors.

A4: We believe it has been slightly affected by the treated water issues that occurred in the late August.
We are continuing with the factor analysis.

Q5: Ultraman Card Game will be presented at an event in Singapore. I expect this card game to be a major driver of results from the next fiscal year onward, and I would like to see the briefing for shareholders/investors.

A5: We plan to disseminate information through promotional and other activities, but we will continue to work out the details.

Q6: I recognize that the trading card game industry has a limited number of talented planning personnel. To what level has your company’s card game business been established?
We would also like to ask the status of the acquisition of highly scarce planning personnel.

A6: Fortunately, we were able to invite a leader who is very familiar with card games a year ago.
In addition, we have invited personnel who have experience in sales of card games worldwide and have close relationships with distributors, who are able to give us various advice on production.
As we are working with companies that have a considerable track record in merchandise development. Therefore, the system for card games that will be launched next year is sufficiently in place.

Q7: I would like to ask about the status of toys other than card games in China.

A7: Especially, the sales of block toys are doing well, and there’s steady growth overall including other toys.

Q8: What is the status of the non-toy categories in China?

A8: Against the backdrop of high popularity for Ultraman, there's progress in acquiring new licensees. Product categories such as apparel, stationery, and books have significantly expanded compared to the previous year.

Q9: I would like to know about the sales situation of domestic MD licenses.

A9: In the H1 of the year, sales of related products due to the release of the movie “SHIN ULTRAMAN” were recorded.
In comparison on a basis excluding specific events unique to the previous fiscal year, the attendance and merchandise sales at various events and live shows far exceeded the previous year. Additionally, sales of products related to the movie
“GRIDMAN UNIVERSE” continued to perform well, resulting in sales surpassing those of the previous H1 of the year.

Q10: I would like to know the current trend of Ultraman's popularity in China.

A10: While there was a temporary impact due to societal factors, the popularity and recognition of Ultraman remain high. As a company, we continue to actively work towards establishing the Ultraman brand in China and Southeast Asia.

[Overall management]

Q11: We would like to know your stance on shareholder returns. Please also tell us about the balance between investment and return.

A11: As we have been communicating shareholder returns to everyone for some time, we intend to aim for the highest level of dividends by firmly expanding earnings in terms of medium-to-long-term.
In May, we announced a three-year medium-term management plan. We believe that both the content and digital business segment and PS business segment will have growth investments needed to ensure the achievement of results in two to three years. We will do this while balancing shareholder returns.

Q12: Could you share insights on the medium-term management plan (future outlook) for the content and digital business segment?

A12: Regarding Tsuburaya Productions, following a successful lawsuit in 2020, the company embarked on a full-fledged global business strategy.
Leveraging the popularity of Ultraman in China, the company experienced rapid growth, achieving the final year’s target of the medium-term management plan (FY2022 to FY2024) in its initial year.
Subsequently, an update to the medium-term management plan was announced in the following year.
We have told the employees at Tsuburaya Productions that they must not make short-term figures, but must establish a system that ensures that targets are achieved in three years, and emphasize business development from a medium-to-long-term perspective. You are very worried about quarterly trends. However, we have put in place human resources and systems, and are firmly managing to achieve results next year and again.
Please be sure to look forward to the final year of the medium-term management plan.