メディアドゥ（3678） – Medium-Term Management Plan (FY2022-2026)

MEDIA DO Co., Ltd.Medium-Term Management PlanFY2022–2026 (Five Years)More Content for More People!Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)1. Review of the Previous Medium-Term Management Plan2. Overview of the New Medium-Term Management Plan3. Initiatives by SegmentContents(1) eBook Distribution Business(4) Global Business(2) Imprint Business(5) Fan Marketing Business(3) Publishing Solution Business4. Corporate Governance System5. Financial Strategies / Shareholder ReturnsCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)1Policies Shaping the Medium-Term Management PlanPositioning of Medium-Term Management PlansEvolution of business and management to achieve successful transition to MEDIA DO 3.0201820192020202120222023202420252026Previous Medium-Term Management Plan(Launched in July 2018)New Medium-Term Management PlanIntegration of Digital Publishing Initiatives Japan and creation of foundations for new business developmentReinforcement of position in the physical and digital publishing industries and growth of new businesses to develop a second business axisMedia Do1.0Media Do2.0Media Do3.0Business operated solely by MEDIA DOPresence as industry-leading eBook wholesaler through integration of Digital Publishing Initiatives JapanCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Publishing PlatformerEvolution into entity supporting digital transformation of the content industry2Policies Shaping the Medium-Term Management PlanPositioning of Medium-Term Management PlansDrastic industry structure changesDigital TechnologiesContent ＝Rapid Growth in Global Content DemandShift in focus of content production, distribution, and consumption to digital venues (emerging issues related to counterfeit and pirated content)Increased competition in acquiring content due to influence of high-capital entitiesRevision of the medium-term management plan based on degree of changes in the content industryLeveraging of strength of MEDIA DO’s POSITION, i.e., the trust gained in the content industry due to its ability to handle authentic content and its access to people and informationCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)3Policies Shaping the Medium-Term Management PlanPositioning of Medium-Term Management PlansIssues and Successes of the Previous Medium-Term Management PlanIssue 1Success 1Success 2Lack of change in earnings structures dependent on main business despite business growth accompanying growth of the eBook marketPromotion of new business development and alliances, progress in cultivating future growth driversConcern regarding transactions with major business partners and downturns following large-scale campaignsCommencement of blockchain technology research in 2018, execution of M&A activities and investments in excess of ¥9.0 billionOrganizational integration with Digital Publishing Initiatives Japan, reinforcement of corporate governance systems, and development of other management foundationsEstablishment of differentiated position as the No. 1 domestic eBook wholesalerOngoing approach of aggressive investment under the new medium-term management plan, but policy of controlling costs and exercising discipline in investmentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)41. Review of the Previous Medium-Term Management PlanCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)51. Review of the Previous Medium-Term Management PlanConsolidate PerformanceConsolidated net sales target of ¥100.0 billion accomplished in thefourth year of the previous medium-term management plan; new medium-term management plan launched in FY2022Consolidated Performance1st year of previous planFY20182nd year of previous planFY20193rd year of previous planFY20204th year of previous planFY20211st year of new planFY2022Net sales¥50.5 billion¥65.8 billion¥83.5 billion¥104.7 billion¥100.0 billionNet sales doubled over four years to surpass ¥100.0 billion¥1.46 billion¥1.85 billion¥2.66 billion¥2.81 billion¥2.00 billionStart of new planEBITDA¥2.38 billion¥2.66 billion¥3.42 billion¥3.92 billion¥3.59 billionOperating profitProfit (loss)(¥1.24 billion)¥0.88 billion¥1.51 billion¥1.57 billion¥0.85 billionCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)61. Review of the Previous Medium-Term Management PlanQuantitative Results (1)Third-year sales and income targets accomplished;needfor revision in the fifth year due to ongoing investmentResultsRevised targetsInitial targets(Billion of yen)ResultsRevised targetsInitial targets(Millions of yen)Consolidated Net SalesNet sales massively surpassing target111% of target111% of targetMarket growth driven by demand associated with people staying at home104.71,000100.0Upwardrevision*75.083.565.863.090.080.0Market growth following closure of a major overseas comic piracy website50.5Consolidated EBITDAThird-year income target nearly accomplished; postponement of new business development in the fifth year to continue investment phase59% of target→ See next slide for details114% of target6,0006,0003,5003,4203,0003,9203,5902,3802,600FY2018FY2019FY2020FY2021FY2022FY2018FY2019FY2020FY2021FY2022(1st year of previous plan)(3rd year of previous plan)(5th year of previous plan)(1st year of previous plan)(3rd year of previous plan)(5th year of previous plan)* Targets were revised in January 2020 in response to the target for net sales being accomplished a year in advance.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)71. Review of the Previous Medium-Term Management PlanQuantitative Results (2)Greater-than-expected growth in the eBook distribution business, but failure to meet targetsConsolidatedNet Sales(Billions of yen)(Millions of yen)Consolidated EBITDAeBook Distribution Business3rd year of previous plan(FY2020)5th year of previous plan(FY2022)3rd year of previous plan(FY2020)5th year of previous plan(FY2022)eBook Distribution BusinessOther Businesses83.51.2（1.4%）63.08.7（13.8%）82.3（98.6%）54.3（86.2%）100.070（7.0%）80.019.1（23.9%）60.9（76.1%）93.0（93.0%）3,5003,4206（17.1%）3,520（102.8%）2,900（82.9%）6,0002,000（23.9%） 3,5904,000（76.1%）3,900（108%）Initial targetsResultsInitial targetsForecastsInitial targetsResultsInitial targetsForecastsNote: Only initial targets were set on a segment basis.-1.0（-2.8%）-3.1（-8.6%）Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Massive growth of the eBook market as a result of closure of a major overseas comic piracy website in 2018 and demand related to people staying at home due to the COVID-19 pandemic in 2020Cost reductions following system integration but expectation-exceeding bloating of operational management systems and next-generation system development due to growing needs of business partnersInability to engage in negotiations aimed at improving gross profit margins in light of competitive climateOther BusinessesOverall smooth progress in post-merger integration processes, but divergence from initial plans at certain subsidiaries due to substantial operating environment changesDelays in performance growth due to full-fledged M&A and investment activities conducted following fund procurement efforts announced in October 2020Ongoing losses projected in FY2022 due to upfront investments81. Review of the Previous Medium-Term Management PlanQualitative ResultsQualitative targets of the previous medium-term management generally met; full-fledge expansion of peripheral businesses scheduled going forwardFive Priority Measures of the Previous Medium-Term Management Plan ssenisubnoitubirtsidkooBe sessenisub rehtOStimulate the growth of eBook markets1. Building a content distribution platformCompletion of system integration between Digital Publishing Initiatives Japan and MEDIA DO but need to improve wholesale functions in response to intensified competitionInvent future eBook markets2. Providing metadata marketingEntry into the metadata marketing business through acquisition ofthe Firebrand Group; reinforcement of Supadü and other overseas businesses3. Creating services by leveraging advanced technologiesLaunch of FanTop blockchain-powered NFT service and sale of paper books with NFT benefits through alliance with TohanAggressively invest in business expansion4. Vitalizing the media promotion business5. Deploying new services across publishersExpansion of businesses developing the flier book summary service and globally top-tier MyAnimeList Japanese anime and manga community websiteCommencement of the imprint (next-generation publishing) business to support digital shift by small and medium-sized publishers and launch of the PUBNAVI publishing ERP businessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)91. Review of the Previous Medium-Term Management PlanAcquisition of Growth Investment Funds and Improvement of Financial Position through Equity FinancingImprovement of financial constitution through equity financing; investments performed to drive future growth①Third-party allocation of shares to Mizuho Securities (October 13, 2020)【Approx. ¥4.5 billion】②Capital and business alliance with Tohan (March 25, 2021)【Approx. ¥3.0 billion】Following investments performed to drive future growth (funded through on-hand funds and equity financing)・ M&A activities (over ¥9.0 billion)・ Blockchain technology development・ Next-generation eBook distribution system development ・ Human resource recruitmentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Total: ¥7.5 billion＋25,00020,00015,00010,0005,0000BenefitsImprovement in financial position marked by net assets surpassing goodwill(Millions of yen)自己資本Net worthGoodwill accounting＋のれん+投資有価証券Incestment securities accounting28.0%自己資本比率Equity ratio accounting32.0%14.1%17.0%① Equity financing② Equityfinancing16,815 13,857 12,104 8,474 2019年2月FY20182020年2月FY20192021年2月FY20202022年2月FY202135%30%25%20%15%10%5%0%101. Review of the Previous Medium-Term Management PlanExpansion of AlliancesExpenditures for capital and business alliances and M&A activities surpassed ¥9.0 billionAlliances formed in various investment fieldsCapital and Business Alliances and M&A Activities after July 2018Publishing Solution BusinessImprint BusinessGlobal BusinessFan Marketing BusinessJoint venture with Impress Holdings (established in April 2022)JIVE Ltd.noitisiuqcA dna latipaCecnaill assenisubInvestment Amount¥2.9 billion¥2.5 billion¥2.3 billion¥1.3 billionTotal: ¥9.1 billionNote: Figures above include projects for which individual amounts are undisclosed.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)11Investment Amount¥5.6 billion¥3.4 billion1. Review of the Previous Medium-Term Management PlanPMI reporting for acquired companiesProficient post-merger integration capabilities demonstrated in massive integration project following acquisition of Digital Publishing Initiatives JapanNameAcquisition TimingBusiness ProgressIntegration StatusDigital Publishing Initiatives JapanMarch 2017Post-merger integration completed through management, business, and awareness integration project spanning three years resulting in MEDIA DO claiming the No. 1 position in the eBook distribution industryGreatM&A Activities after July 2018ジャイブMarch 2019Delays in expansion and training of editorial and sales staff and other structural reinforcements resulting in sales falling below targets; organizational and management streamlining to be targeted alongside business expansion going forwardGrowth of MyAnimeList and improved reputation as globally top-tier Japanese anime and manga community website; capital injection from IP holders completed; accelerated overseas deployment of Japanese content commencedImpairment loss of ¥0.3 billion recorded in FY2021 based on intensified competition and operating environment changes in the comic app business; provision of fan marketing services to be promoted going forwardLower-than-anticipated income due to reinforced security and higher personnel expenses following rising wages and increased hiring, but smooth business growth as a company promoting digital transformation in the U.S. publishing industryGreater-than-expected performance improvement following strong performance of eBooks and how-to books and reduced rates of book returns due to distribution controls; exploration of vertical scroll comics and other new genresConversion to wholly owned subsidiary following March 2022 acquisition of equity stake from NTT DOCOMO; policy of developing media mix consisting of comic and video content based on submitted novelsLackingGoodProblematicGoodGoodAugust 2019October 2020January 2021March 2021December 2021Note: Supadü (acquired in February 2022) and PUBFUN (established in April 2022) have been excluded due to currently being in the very early stages of the post-merger integration process.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)121. Review of the Previous Medium-Term Management PlanChanges in Staff DistributionAggressive recruitment drive focused on engineers and project managers; expansion of Group staff to approximately 600 completed through M&A activitiesConsolidated Number of Employees*1(People)Full-time staffTemporary staffBreakdown of Employees by Company(582, Full-time employees, as of February 28, 2022)MEDIA DO(308)Firebrand Group (78)Nihonbungeisha (64)Flier (53)Staff increase from M&A activities, etc.683321Of which, Tokushima Data Service*2269430803623504121332794648537967492582MEDIA DO Co., Ltd.(As of March 1, 2022)Breakdown of employees by function(520, including other employees)Breakdown of employees by employment typeManagement 16 (3.1%)Operational management 107 (20.6%)Sales, planning 172 (33.1%)Engineering 156 (30.0%)Other (79)Corporate 69 (13.3%)FY20172018年FY20182019年2月期2月期FY20192020年2月期FY20202021年2月期FY20212022年2月期*1 Figures are as of February 28/29 of the given year. Figures for temporary staff do not include subcontractors.*2 Of the number of temporary staff for 2019, 269 employees were associated with Tokushima Data Service, which was a subsidiary at the time.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Note: The ratio of men in management is 78.8% and the ratio of women in management is 21.2%Men165 (52.2%)13Other (temporary staff, subcontractors, etc.)204 (39.2%)520 employeesWomen151 (47.8%)316Breakdown of employees by gender(Excluding other employees)Managers(directors, Audit & Supervisory Board members,executive officers)16 (3.1%)Full-time employees300 (57.7%)2. Overview of the New Medium-Term Management PlanCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)142. Overview of the New Medium-Term Management PlanPlan ObjectivesComplete cultivation of new earnings pillars founded on trust fostered thus fareBook DistributionCurrent earnings pillarTransactions with more than 2,200 domestic publishers and over 150 eBook distributorsTrustMissionUnleashing a virtuous cycle of literary creationPrior AccomplishmentsContribution to market growth by promoting distribution of authentic content as the No. 1 domestic eBook wholesalerCultivation intonew earnings pillarsImprintGlobaleBook DistributionPublishing SolutionsFan MarketingCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)152. Overview of the New Medium-Term Management PlanMEDIA DO’s Growth Strategies to Invent Future eBook MarketsIndustry digital transformation made possible by MEDIA DO’s POSITION and TECHNOLOGYMEDIA DO’s Strength 1:PositionTrust from business partners that can distribute authorized digital content and access to people and informationMEDIA DO’s Strength 2:TechnologyTechnological capabilities for leading digital transformation of the publishing and content industriesPublishing Industry Digital Transformations Made Possible by MEDIA DO1. Operational reforms and streamliningeBook distributionSale/royalty distributionBibliographical information managementOverseas expansion support2. Business model reformsPosition of digital content assets→ Provision of digital content endowed with a concept of ownershipCreation of new services→ Publishing imprint, media, etcCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)162. Overview of the New Medium-Term Management PlanPolicies Shaping the Medium-Term Management Plan Plan Logic and OverviewMEDIA DO’s Corporate Philosophy and VisionMissionUnleashing a virtuous cycle of literary creationVisionMore Content for More People!Management PolicyLeverage MEDIA DO’s position to help grow publishing and content markets through synergies between people, IT, and strategiesOpportunities, Risks, and Social Issues to Be AddressedOperating EnvironmentInternal ConditionsOngoing growth of the eBook market, despite rising impact of overseas comic piracy websitesChange in role expected of distributors (role of providing functions for reducing costs and boosting sales)New possibilities brought about by Web3 and digitization (NFT, vertical scroll comics, etc.)Inescapable need to redesign the wholesaling systemRequirement for human resource recruitment to boost competitiveness, internal workflow streamlining, and development of post-merger integration systemsExpectations related to financial strategies and also governance and sustainability measuresPublishing Platformer→ Evolution into entity supporting digital transformation of the content industryStrategic Directives1. Operational reforms and streamlining 2. Business model reformsStrategic DirectivesEstablishment of business-specific, medium- to long-term themes, strategies, targets, and KPIseBook Distribution BusinessGlobal BusinessPublishing Solution BusinessImprint BusinessFan Marketing BusinessBalance between managing risks and growing and strengthening progress management systemsCorporate DivisionsGovernance, ERMHuman capital / financial strategy developmentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)172. Overview of the New Medium-Term Management PlanNumerical TargetsTarget consolidated net sales of ¥150.0 billion and EBITDA of ¥10.0 billion in the fifth year of the new medium-term management planConsolidated performanceOperating profitFY2021FY2022FY2024(3rd year of plan)FY2026(5th year of plan)Net sales¥104.7 billion¥100.0 billion¥120.0 billion¥150.0 billion¥2,810 million¥2,000 million¥4,000 million¥8,500 millionEBITDA¥3,920 million¥3,590 million¥5,500 million¥10,000 millionProfit attributable to owners of parent¥1,570 million¥850 million¥2,800 million¥6,000 millionROE10.9%5.2%15.0%23.0%Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)182. Overview of the New Medium-Term Management PlanReportable Segment RevisionRevision of reportable segments in FY2022 to reflect the new medium-term management planPrior SegmentsNew SegmentsSegments as Displayed in StrategiesBusiness SegmentsBusiness SegmentsSegments as Displayed in StrategiesStimulate the growth of eBook marketsInvent future eBook marketsOther businesses1. eBook distribution business1. eBook distribution businessFY2021 net sales: ¥96,257 million (approx. 92% of total)Book distribution business2. Other businesses2. Strategic investment businessesFY2021 net sales: ¥8,897 million (approx. 8% of total)Imprint businessPublishing solution businessGlobal businessFan marketing businessAmbiguity in distinction between segments in presentation materials leading to intermixing and lack of clarity with regard to business growth and strategiesSeparate management of the mainstay eBook distribution businessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)192. Overview of the New Medium-Term Management PlanSegment BreakdownIP Acquisition/CultivationWholesaling/DistributionGlobalSales/MarketingPlanning/Publishing (Support)Imprint BusinessPublishing Solution BusinessGlobal businessFan Marketing BusinessBook Distribution Business対象子会社／サービスApplicable Subsidiaries/ServicesPublication and sale of how-to books, comics, novels, and magazines in both physical and digital formatsJIVE Ltd.Development of imprint next-generation publishing business and operation of girl’s comics label(Joint venture with Impress Holdings)Expansion of the print on demand market through integration of corporate and private print on demand services(Service)Novel submission website operation and image production businessComic coloring and picture production supporteBook sales management and integrated royalty management system for paper books and eBooksOperation of the flier book summary serviceThe MEDIA DO Group’s global business base in San Diego(Service)NFT marketplace developed by MEDIA DODevelopment of Japan’s largest eBook distribution business boasting relationships with more than 2,200 domestic publishers and over 150 eBook distributorsDeployment of bibliographical information management, information distribution, and eBook distribution servicesin the United StatesOperation of the globally top-tier MyAnimeList community website focused on Japanese anime and mangaProvision of wholesale business process outsourcing servicesProvision of NetGalley online book marketing toolOperation of comics app and provision of fan marketing servicesSupply of publisher sales websites on an SaaS basis to customers including major U.S. publishersOperation of free digital comics distribution service20Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)2. Overview of the New Medium-Term Management PlanSales Contributions by SegmentEstablishment of additional earnings pillars using stable earnings generated by the eBook businessBreakdown of Net Sales by SegmentPrior SegmentsSegment reorganizationNew SegmentsOthers Approx. 5%eBook distributionApprox. 95%ImprintPublishing solutionGlobalFan marketingStrategic investmentApprox. 8%eBook distributionApprox. 92%Strategic investmentApprox. 25%eBook distributionApprox. 75%FY2021FY2021Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)FY2026(Final year of plan)213. Initiatives by segmentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)22(1) eBook Distribution BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)2323(1) eBook Distribution BusinessBusiness PoliciesImprove frameworks and systems to solidify MEDIA DO’s position in the eBook distribution businesseBook Distribution BusinessNo change to unique position fostered as Japan’s largest eBook distribution business operatorSolidification of industry position through alliance with Tohan and development of operational excellence via streamlining and addition of functionsCore business gaining TRUST through ability to handle authentic contentImprint BusinessPublishing Solution BusinessGlobal BusinessFan Marketing BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)24(1) eBook Distribution BusinessVision under the New Medium-Term Management PlanVisionStrengthen position as an industry infrastructure provider through further reduction of distribution energy use and provision of additional functionsMeasure 1Measure 2Measure 3Grow the eBook market by reducing distribution energy useProvide data marketing and other new functionsDevelop new products and grow market for non-graphic eBooksStreamline database management, campaign operation, and banner production processesSupport small, medium-sized, and new market participants through comprehensive outsourcing for various processes required of publishers and eBook distributorsProvide data marketing and other new functions taking advantage of newly developed core system and industry-leading databaseCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Achieve compatibility with vertical scroll comics, audiobooks, and other new formats that may emerge in the futureCoordinate with publishers and eBook distributors to roll out sales promotion measures for growing market for non-graphic eBooks25(1) eBook Distribution eBook Market Size TrendsBusinessOngoing growth forecast in the eBook marketImproved performance and increased digital transformation investment among publishers and eBook distributors driven by eBook market growth→ Growth opportunities for MEDIA DO674.7641.4609.3+28.5%Stay-at-home consumption growth driven by pandemic577.2537.8482.1+22.1%Growth spurt due to shutdown of major overseas pirate sites in April 2018375.0312.2255.6227.8182.6(Billions of yen)141.1101.365.176.8FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Forecast in eBook Marketing Report 2021Forecast in eBook Marketing Report 2020Forecast in eBook Marketing Report 2019Annual upward revisions in response to greater-than-expected market growth26(1) eBook Distribution Publishing Market Size by GenreBusinessComics market grew 23% YoY Digitalization of non-graphic books still has a lot of room to runJapan’s publishing market by segment (2021) (Billions of yen)411.4(66.3%)Up 4.1pt YoY44.9(6.4%)Up 0.6pt YoY9.9(2.8%)Comics total208.7621.0Non-graphic books total701.5656.6342.7Magazines total352.6Note: AJPEA Statistics classify 90% of comic books in the “magazine” category. In the graph above, comic books classified as magazines in this way are counted as “comics.” Additionally, comic sales include only comic books (both hard-copy and digital) while comic magazines (both hard-copy and digital) are included in the “magazines” category.(Source: All-Japan Magazine and Book Publishers and Editors Association (AJPEA))Non-graphic eBooks account for 30-40% of US and Chinese publishing marketsCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)27(1) eBook Distribution BusinessImpact of Business Transference of Major PartnerFY2022 performance forecasts formulated by fully accounting for transition in sales channels for LINE MANGAFY2021 Earnings Contributions from LINE MANGA*1Impact on FY2022 Performance (Net Sales of LINE MANGA*2)¥19.0 billionMaximum possible impact on performance accounted for based on preliminary calculation assuming that sequential transition commenced in the second quarter of FY2022 (50% year-on-year decrease100%Incorporation of sales, operations, and development staff and related costs¥0.4 billion0%Net salesEarnings contributions*1 Figures use net sales of LINE Digital Frontier, the company operating LINE MANGA.1Q2Q3Q4Q*2 Prompt notification will be provided should a change in schedule or another event occur with the potential to impact performance warranting disclosure occur.Note1: The graphs are visual approximations and do not accurately reflect actual performance and plan target figures.Note2:For more details, please refer to “Notice regarding status of transactions with main business partner, and earnings forecasts for current fiscal year” announced on April 14, 2022.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)28(1) eBook Distribution BusinessCompetitive Edge in eBook DistributionNo change to unique position in the eBook distribution industry; potential for business growth in conjunction with future market growthGrowth Rate of MEDIA DO’s eBook Distribution Business and Market160.0%Growth rates exceeding market growth by 10.8 percentage points on average over past seven yearsTransactions with rapidly growing publishers and eBook distributors150.0%140.0%130.0%120.0%110.0%100.0%Growth rate for FY2017 omitted due to integration with Digital Publishing Initiatives Japan; FY2021 market growth rate represents estimatesOur eBook Distribution Business当社電子書籍流通事業 市場全体the market as a wholeSales planning and operation management team comprised of approximately 300 employeesIn-house developed wholesale platform and distribution system→ Possibility of temporary decline in sales, but potential for accelerated business growth in conjunction with future market growthSource: eBook Marketing Report 2021 on Japanese Market, Impress Research InstituteCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)29(1) eBook Distribution BusinessNext-Generation System DevelopmentTransition to next-generation core system in order to contribute to further market growth while maintaining competitivenessCurrent Core SystemNext-Generation Core SystemIntegrationTransitionMEDIA DODigital Publishing Initiatives JapanMarch 2017Conversion into subsidiaryMarch 2019: CompletionFebruary 2021: Discontinuation of prior systemsReduced costs following integration of systems of Digital Publishing InitiativesJapan and MEDIA DOHigher development costs due to technical debt and concern for future declines in performanceAlleviation of technical debt allowing for swift and flexible development2. New functions utilizing Japan’s largest eBook sales databaseCompatibility with vertical scroll comics and other new types of contentReduction of distribution energy use through efficient campaign operation, etc.Provision of dashboard services to publishers1.3.4.5.Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)30(2) Imprint BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)31(2) Imprint BusinessBusiness Policies新規英訳中Accelerate and streamline IP creation centered on eBook distribution functions in response to rising content demandImprint business = Next-generation publishing business based on digital technologiesMEDIA DO Group’s Publishing Platform FunctionseBook DistributionI. MarketingIP analysis, customer analysis, market analysis, etc.II. System DevelopmentInventory management, production management, sales management, etc.Provision of infrastructure functionsIII. Back-OfficeIV. POD SolutionsHuman resources, accounting, general affairs, legal affairs, etc.Inventory control through PUBFUNPublishing Shaped by New Ideals1. Marriage of market- and product-oriented perspectives in sales and planning2. Conduct production prioritizing digital formats (reduction of dependence on paper)Imprint labelImprint labelImprint label・・・Separation of infrastructure and editorial functions to develop efficient publishing processes and distinctive lineups32Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)(2) Imprint BusinessVision under the New Medium-Term Management PlanVisionProduce content and reinforce and expand publishing platform functions through intra-Group coordinationMeasure 1Measure 2Measure 3Develop new frameworks for generating contentStrengthen publishing platform functionsExpand the imprint business through alliancesEntrench new, digital-oriented content production processesCreate diverse content by utilizing Group publishing companies, submission websites, and picture production/color functionsSeparate editorial functions from infrastructure functions (marketing, system development, corporate, etc.)Streamline operations while maintaining distinctive editorial functions for generating unique contentPromote alliances with and acquisitions of content holders as well as IP creation and utilization within the GroupCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)33(2) Imprint BusinessMEDIA DO Group Imprint Business CompaniesContributions to content industry development by maximizing IP value for small and medium-sized publishers using MEDIA DO’s infrastructure【Publishers】【Publishers】JIVE Ltd.・ More than 14,000 published works・ Aggregate sales of 500.0 million works【Production support】【Free viewing service】Partnership with publishersNovelsVertical scroll and other comics・ More than 16,000 works availableAcceleration of multi-content approach through partnerships with content producers【Novel submission website】・ Distribution of more than 2.0 million works・ Contributions from more than 1.4 million authors・ More than 750 works published in physical formatsTV dramas, moviesAnimeCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)34(2) Imprint Business② インプリント事業Multimedia Strategy SuccessesMultimedia strategy involving comic adaptations of more than 200 works owned by Group companiesComic adaptions of submitted novels (some TV drama and movie adaptions have also been made)(Fan Marketing Business)Movie adaption available on Disney+(Starring Yuya Yagura)NFT products (available through FanTop)© Aya Tsukishima, Ririo, Futabasha Publishers Ltd., EVERYSTAR Co., Ltd.© Tori Hakamada, Morasu, FutabashaPublishers Ltd., EVERYSTAR Co., Ltd.© Hitori Renda, Nobuaki Kanazawa, Futabasha Publishers Ltd., EVERYSTAR Co., Ltd.TV drama aired on Nippon Television Network(Starring Ryo Narita)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)35© Mai Mochizuki, Ichiyo Akizuki, FutabashaPublishers Ltd., EVERYSTAR Co., Ltd.© Yukino Natsugawa, Akiyo Kurosawa, Manga Box Co., Ltd.© Welzard, Katsutoshi Murase, SHUEISHA Inc.(3) Publishing Solution BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)36(3) Publishing Solution BusinessBusiness PoliciesEnhance BtoB services that contribute to industry development by taking advantage of our position in the eBook distribution industryIndustry Issues1. Slow progress in digitization due to presence of large numbers of small and medium-sized publishers2. Shrinking paper book market and room for efficiency improvement given high rate of returned books3. Globalization and growth of market for non-book digital content4. Rising complexity of industry needs pertaining to usage formats, campaigns, etc.eBook distributionPaper books with NFT benefitsDigital library servicesAccessible librariesPrint on demand servicesVertical scroll comic production and distribution support services…Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)37(3) Publishing Solution BusinessVision under the New Medium-Term Management PlanVisionCoordinate with the industry to explore new business opportunities; cultivate vertical scroll comics ecosystemMeasure 1Measure 2Measure 3Promote digital transformation of physical and digital publishing through coordination with TohanPromote new alliances(print on demand joint venture, etc.)Cultivate vertical scroll comics ecosystemExpand the business of selling paper books with NFT benefits; collaborate with physical bookstores to sell eBooks and otherwise invigorate the physical publishing marketPopularize digital library services and pursue other coordinated approaches for promoting the digital transformation of the publishing industryContinue to develop alliances for invigorating the publishing industry (PUBFUN print on demand joint venture established with Impress Holdings in April 2022, etc.)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Establish environment for importing content from overseas and producing original contentDevelop eBook wholesale and other distribution infrastructureMaximization of IP value through coordination with other companies38(3) Publishing Solution Business③ 出版ソリューション事業Coordinate with TohanCoordinate with Tohan, realize new creation and distribution eco system of publication by Physical x NFTThe largest e-book distributor in Japan connecting 2,200 publishers and 150 e-book storesConnects 3,000 publishers and 5,000 book stores, occupies over 1/3 of paper book distributionCollaboration of lead distributors of paper books and e-books, for solving industry’s issue and value creation1.Publication with NFT benefitsCoordinate with Tohan, acquires the market by distributing books to about 5,000 bookstores across JapanOnly collaboration of MEDIA DO and Tohan can distribute “Genuine Products” via Physical (paper books) Gain recognition by delivering trustworthy NFT to users2.Promoting Introduction of e-book library Utilizing Tohan’s 16 branches across Japan, promote introduction of OverDrive system, which can provide over3.7 Mn. Contents in 100 languages Contributing to solve social issues under limited access to physical books due to COVID-19 pandemic and progress in digitalization Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)39(3) Publishing Solution BusinessCoordinate with TohanEstablishing trustworthy brand of “MEDIA DO” who can distribute genuine NFT Expanding recognition of NFT and development of the market As distributor of paper and electronic books, fully utilize its position and relationships in the industry, promote distribution of genuine products. Achieved price increase of book by giving additional valueContributes to gain recognition and user acquicition of FanTopActual sales※Over 80%（2 mths. after release)※According to TOHANUnit Price increased Approx.+37.9%TohanPublisher: Kodansha; On sale: December 8PurchasebooksAcquirebenefitsStoresUsersVersus regular editionActual sales of special edition: Apporx.+20%Average price increased: Approx.+20%UPCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)40(3) Publishing Solution BusinessAlliance with TohanProgress in removing prior accessibility obstacles; massive increase in usage projectedLargest Domestic eBook DistributoreBook distribution expertiseWorld’s Largest Digital Library Service ProviderSystem with more than 3.7 million pieces of contentLargest Domestic Paper Book DistributorSales capabilities and network comprised of 16 nationwide basesAccessible LibraryText-to-voice engine that provides easy-to-understand output even at high speeds developed based on the needs of people with impaired visionUser interface allowing for easy use by people with impaired vision without the need for assistanceContributions to provision of reading opportunities for people with impaired vision based on relevant legislation; promotions capitalizing on advantages of unrivaledIntroduction Rate※27.7%Digital Library ServicesUsable without trips to the libraryBenefits for addressing disparities in education and providing learning opportunitiesNo. of contracts: 31Of Which 21 cases collaborated with TohanAdoption growth rate: +50%※Source：Association for E-publishing Business Solution41Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)(3) Publishing Solution Business③ 出版ソリューション事業PUBFUNPursuit of unrivaled share through establishment of PUBFUN joint venture between two print on demand service leadersContent productionIndividuals(Authors)Companies(Publishers)PUBRID subsidiary boasting strong corporate servicesImpress Holdings, Inc.Next Publishing Authors Press service with strengths pertaining to individual users*StoresAmazonOthersBenefits of PODPublication of works that previously would not have had the opportunityReduction of inventory risks through small-lot publication (prevention of books from going out of print)Improvement of publication diversity for readersPromotion of market growth by flexibly addressing new needs of authors and publishers,including those related to the self-publishing individuals that have recently been gaining attention or to the provision of publishing opportunities for non-publishing companies* Operated by Impress Holdings subsidiary Impress R&DCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)42(3) Publishing Solution BusinessGrowth of the Vertical Scroll Comics MarketRapidly growing vertical scroll comics market stimulating new growth in the publishing marketCharacteristics of Vertical Scroll ComicsPotential for global deploymentHigh unit prices and continuation ratesContribution to new business models unrestrained by previous frameworksAbility to capture new usersScale of South Korea’s Webtoon MarketSource: 2021 webtoon company survey report, Korea Creative Content AgencyNote: Won values were translated to yen at a rate of ¥0.1 to ₩1.Rapid growth to 2.8 times in size over three years₩1,053.8 billion(¥105.4 billion)₩640.0 billion(¥64.0 billion)₩463.3 billion(¥46.6 billion)₩379.9 billion(¥38.0 billion)(CY)20172017年20182018年20192019年20202020年Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)43(3) Publishing Solution BusinessEntry into Vertical Scroll Comics MarketContributions to healthy market growth through involvement in both production and distribution of vertical scroll comicsGlobal webtoon market expected to grow from scale of ¥440.0 billion in 2021 to ¥3,150.0 billion by 2028*Contribute to healthy market growth through content distribution taking advantage ofPositionContent distribution/procurementContent production/production supportOriginal work provisionJIVE Ltd.＋ Coordination with market participants (publishers, production studios, eBook distributors, etc.) worldwideSource: Source: Global Webtoons Market Size, Status and Forecast 2022-2028, QYResearch (Dollar values translated to yen at a rate of ¥120 to $1)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)44(4) Global BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)45(4) Global BusinessBusiness PoliciesAcquire high-share publishing SaaS business operators; develop global infrastructure for supporting market growthExpansion of customer network and supplementation of functions (including M&A activities)JapanOverseasExportation of NFT and other new technologies, provision of capitalBtoB operations linking publishers to distributors(Customer base including four major domestic publishers, Kadokawa, Kodansha, Shueisha, and Shogakukan)Cutting-edge publishing digital transformation success stories, global publishing networkBtoB operations supplying tools to publishers and distributors (customer base including Penguin Random House and four other major global publishers)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)46(4) Global BusinessVision under the New Medium-Term Management PlanVisionImprove presence of the MEDIA DO Group as a publishing service platform provider in the global marketMeasure 1Measure 2Measure 3Establish global position as a publishing infrastructure providerDeploy new services on global basis, introduce successful digital transformation approaches into JapanEnhance functionsand systems ofMedia Do InternationalAdvance post-merger integration of the Firebrand Group and Supaduand coordinate sales and systemsImprove presence as a vertical SaaS provider in European and U.S markets and become an indispensable entity to the industryUtilize network of European and U.S customers, including five major U.S. publishers, to develop an NFT platform and export Japanese contentApply successful digital transformation approaches to the Japanese publishing industry and develop services through intra-Group coordinationEnhance management systems of overseas subsidiaries to facilitate future M&A activitiesBolster the MEDIA DO Group’s overseas information distribution capabilities through W3C and other venuesCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)47(4) Global BusinessImportation of Overseas Digital Transformation ServicesPromotion of publishing industry digital transformation through importation of industry-specific SaaS services boasting high overseas sharesPublishing Market Scales by Country(2010 indexed to 100)Source: All-Japan Magazine and Book Publishers and Editors AssociationDomestic publishing market excluding comicsComics Market in JapanPublishing Market in the U.S.Publishing Market in GermanyMassive disparity between the domestic market for comic and non-comic eBooks due to progress in comic digitization145.5Ongoing decline in the domestic non-graphic publishing market; strong growth in overseas markets due to self-driven progress in digital transformationImportation of digital transformation services with high overseas sharesStrong position in the domestic publishing industry95.692.0Clear difference in strength of European and U.S. markets over the past decadeNote: The U.S. publishing market is growing when including self-publishing (digital publishing, print on demand, submission websites, etc.)68.1201020112012201320142015201620172018201920202021Provision of services that contribute to invigoration of the domestic publishing industry and cultureCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)4815014013012011010090807060(4) Global BusinessOverview of Global Business Group CompaniesAbility to capitalize on growth of the global content market following development of global publishing infrastructure network* * Shares of U.S. companies Quality Solutions (Firebrand) and NetGalley acquired by San Diego-based subsidiary Media Do International; shares of U.K. company Supad ü acquired by NetGalley’s U.K. subsidiary NetGalley UK.Digital TechnologiesContent= Rapid globalization of the content market resulting in unprecedented content demandSteady business growth to be pursued in conjunction withcontent market growth by bolstering presence as an infrastructure provider supporting the global publishing marketComprehensive Publishing Data Management and Analysis ToolsCommunication Marketing ToolsComprehensive Direct-to-Consumer ToolsServices boasting No. 1 shares used by more than 100 companies, including two major U.S. publishersAnnual churn rate of zeroServices used by more than 500 companies, including five major U.S. publishersAnnual churn rate of 3%Services used by more than 240 companies, including five major U.S. publishers (when including indirect provision)Annual churn rate of less than 3%Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)49(5) Fan Marketing BusinessCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)50(5) Fan Marketing BusinessBusiness PoliciesCreate unique NFT distribution frameworks capitalizing on MEDIA DO’s strengths in technologies and contentTrends in the Brisk NFT MarketTechnologiesContentMarketEntry by numerous players ranging for venture companies to large-scale companies backed by technological capabilitiesSmall number of promising players in the content industryStrong appetite for market entry among Disney and other IP holders of all sizesActs carefully due to its generic characteristics of NFT (e.g. transparent, unerasable)Speculative capital influx targeting certain art contentLack of authentic quality, issues with counterfeit content→ Necessary to lower barriers to entry of IP holders for further market expansionLimited number of players capable of contributing to healthy market developmentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)51(5) Fan Marketing BusinessVision under the New Medium-Term Management PlanVisionStrengthen relationships between IP holders and fans; develop made-in-Japan framework fordistributing authentic NFT contentMeasure 1Measure 2Measure 3Promote development of NFT content through coordination with IP holdersStrengthen relationships with publishers as well as holders of music, images, games, and other diverse IPCreate unique NFT fan items in addition to the physical fan items currently availableDevelop differentiated NFT ecosystemPromote sales through FanTop, establish NFT marketplaces for overseas use through MyAnimeList, and support NFT business initiatives of IP holders3D items viewed via 3D app. and further advanced NFT contentsFacilitate direct communication between IP holders and fansProvide various services for realizing content production, distribution, and sale based on communication with fans in preparation for Web3Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)52(5) Fan Marketing BusinessMEDIA DO’s Solutions and Basis for SolutionsUnderstanding of aims and issues of IP holders backing ability to drive the NFT market by increasing authentic content distributionMEDIA DO’s Roadmap to SuccessMissionUnleashing a virtuous cycle of literary eBook distribution track recordcreationTrack record of handling authentic content using No. 1 position in the domestic eBook distribution industryNFTtrack recordDistribution of paper books with digital NFT benefits through alliance with Tohan→ Distribution of only authentic NFTstsurTInspectionsDirect verification of authenticityRare position with view of the entire industry allowing for an accurate understanding of content and IP holder issues・FY2021 gross transaction value: ¥158.0 billion・Relationships with all major publishers*1*1 “Major publishers” defined as all companies among the publishers that are members of the Japan Book Publishers Association (394 as of July 31, 2021) excluding those involved with audiobooks and other activities not traditionally considered publishingCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)53(5) Fan Marketing BusinessSource of Differentiation 1: Track Record in Distributing Authentic ContentAcceleration of authentic content distribution by bolstering MEDIA DO’s presence through utilization of sources of differentiationJapan Publishing Market¥1.6 trillionJapan Music Market¥0.8 trillionContent HoldersPublishers, image producers, music labels, etc.Sources of Differentiation for MEDIA DO1. Connections with bookstores across Japan through alliance with Tohan2. Functions of FanTop app3. White-label product sales4. Marketing support through direct-to-fun servicesInstitute of Publication ScienceDigital Content Association of Japan「Digital content white paper 2021」Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)A preliminary figure of ¥9.0 billion is used for FY2026 gross transaction value for the purposes of the medium-term management plan.54(5) Fan Marketing Busness(5) Fan Marketing BusinessSource of Differentiation 2: Development and Technological CapabilitiesGuarantees of content authenticity through FanTop;provision of functions for enjoying contentAR room functionAR functionProvision of functions spanning the value chainTradeProtectEnjoyProtection features for IP holder• Protection of Digital Content Assets® (registered trademark of MEDIA DO) through digital rights management•“Flow” technology has been adopted to ensure smooth tradingFeatures for fans • 3D model display functions• AR display and room functions• New functions for enjoying virtual spaces with VR technologiesCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)Provision of both protection and enjoyment functions55(5) Fan Marketing BusinessSource of Differentiation 3: Direct-to-Fun ServicesNew way of supplying content to fans in Web3 realized through MEDIA DO Group services equipped with direct-to-fun functions* Direct to Fun1. Marketing Changes Brought about by Transition to Web32. Changes in Values and Consumption BehaviorWEB2.0Web3Tracking key to targeting usersImportance of forming direct connections with customers due to decentralized controlPurchasing and ownership activities not driven purely by price or function value among core fans; rising importance of communicating the sentiments and concepts encapsulated in contentNeed to form communities to create direct connections with fansSolving issues through each service with marketing functions.••worldGlobally top-tier Japanese anime and manga community website• NFT market place where digitalized “Fan Items” Services allowing for no-code production of monthly subscription Ability to reach Japanese anime and manga fans around the (collectibles for fans) are distributed, and fans can fully fan clubsCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)enjoy by collecting, viewing and Ability to tailor marketing based on communities formed by sharing/transferring/trading among fans. individual fan clubs56••4. Corporate Governance SystemCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)574. Corporate Governance SystemStrengthening of Corporate Governance SystemsReinforcement of corporate governancein conjunction with transference of stock tothe Tokyo Stock Exchange (TSE) Prime Market202020212022•Introduction of the executive officer system• Publication of the first integrated report• Formulation of ESG policies• Formulation and revision of the MEDIA DO Basic Corporate Governance Policy in conjunction with revision of Japan’s Corporate Governance Code• Appointment of the first female director• Establishment of the Nomination and Compensation Committee• Transference of stock to theTSE Prime Market• Establishment of the Sustainability Committee Improvement of Groupwide governance through enhancement of Group management frameworksCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)584. Corporate Governance SystemNew Management TeamNew director appointments scheduled for approval at the General Meeting of Shareholders to be held on May 26, 2022; pursuit of more transparent and objective oversight functionsNote: The following directors will be proposed for appointment at the General Meeting of Shareholders scheduled to be held on May 26, 2022.Four Internal DirectorsSix DirectorsTwo Outside Directors Designated as External DirectorsNewNewYasushi FujitaPresident and CEOMember of the Nomination and Compensation CommitteeShin NiinaAtsushi MizoguchiDirector, Vice President, and COODirector and CBDOHiroshi KandaDirector, CSO, and CFOChairperson of the Sustainability CommitteeAyako KanamaruChairperson of the Nomination and Compensation CommitteeHaruo MiyagiMember of the Nomination and Compensation Committee→ Phased increase in the ratio of outside directors and transition from management-oriented Board of Directors (involvement of directors in executive decision-making) to monitoring-oriented Board of Directors (oversight of operational execution of managers)Copyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)594. Corporate Governance SystemEstablishment of the Sustainability CommitteeEstablishment of the Sustainability Committee;incorporation of risks and opportunities into management strategiesSustainability CommitteeReportAuditBoard of Directors(4 internal directors, 2 outside directors,1/3 ratio of outside directors)Audit & Supervisory BoardEstablished in June 2022 by reorganizing the Risk Management Committee, tasked with comprehensive risk management and maximization of business opportunities based on social issuesNomination and Compensation Committee(3 or more members including representative director, majority of outside directors, chaired by outside director)Established in June 2021 to improve objectivity and transparency of officer nominations and compensation decision processesReportRepresentative DirectorExecutive CommitteeExecutive Officers(6)Operating Divisions / CompaniesInternal Audit OfficeReportCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)605. Financial Strategies / Shareholder ReturnsCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)615. Financial Strategies /Shareholder ReturnsInvestment and M&A PoliciesPromotion of aggressive investment for becoming a game changer; regular revision of business portfolioFuture Investment and M&A TargetsImprint BusinessPartnerships and alliances with IP holdersPublishing Solution BusinessAlliances with vertical scroll comic production studios andeBook distributorsGlobal BusinessFan Marketing BusinessEnhancement of SaaS businesses with large shares that serve major publishersAlliances for growing businesses and bolstering competitiveness in the NFT and Web3 fieldsNumerous M&A opportunities made possible due to presence based on trust earned in the eBookdistribution businessBusiness portfolio revision policyConduct policy or leadership changes or sale of / withdrawal from acquisitions projected to generate ROIC of less than 7% after the third yearCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)625. Financial Strategies /Shareholder ReturnsFinancial Targets and Cash Flow ManagementCreation of ongoing growth cycle through earnings capacity augmentation and disciplined cash flow managementFinancial Targets (FY2026)Cash Flow ManagementGrowthNet sales of ¥150.0 billionProfitabilityOperating margin of 5% or moreEfficiencyROE of around 20%Shareholder returnsTotal return ratio of around 30%Augmentation of business earnings capacityProfit attributable to owners of parent¥15.0 billion or more*1CashF lowsDepreciation¥5.0 billion or more*1*2Growth investments, etc.Shareholder returnsDebt repaymentCopyright 2022 MEDIA DO Co., Ltd. All rights reserved. ｜MEDIA DO Co., Ltd. Medium – Term Management Plan FY2022-2026 (Five Years)*1 Five-year aggregate for period of medium-term management plan*2 The boxes are