MEDIA DO Co.,Ltd.

The Electronic Book Distribution Business is the core business, accounting for ¥93,767 million (92.0% of consolidated net sales) in FY2025 (ended February 2025). There are concerns regarding the obsolescence and commoditization of services and technology due to increased entry by competitors, growth of new forms of published content, and delayed response to rapid changes in user preferences. Barriers to entry are low in terms of legal systems, regulations, and patents, and publishers also provide content on a non-exclusive basis, meaning that changes in the competitive environment directly affect business performance. As countermeasures, the company is pursuing differentiation through reducing distribution costs ("calories"), strengthening system integration with publishers and eBook stores, and responding to advanced technologies.

If communication networks or information systems fail to operate normally due to large-scale earthquakes, typhoons, heavy rain, or other natural disasters, fires, power outages, terrorism, or unauthorized access, business activities and the provision of various services could be disrupted. If recovery takes a considerable amount of time, this could lead to a decline in reliability and corporate image, along with the burden of substantial recovery costs, resulting in a medium to large impact on business performance (in the range of several hundred million yen to ¥1 billion). The company is developing emergency response systems through redundancy of systems and operations, and the formulation of crisis management manuals and BCPs.

Unauthorized duplication and distribution of eBook content through pirate sites causes losses to publishers and copyright holders, and impairs the revenue opportunities of the Company Group. Since June 2024, access to large-scale pirate sites based overseas has increased sharply, and expansion of the damage could result in a medium to large impact on business performance (in the range of several hundred million yen to ¥1 billion). The company is advancing information gathering and awareness-raising activities through the ABJ (a general incorporated association), and cooperating with the government and publishing industry to identify site operators, remove sites from search results, and shut down sites.

In the Electronic Book Distribution Business, the concentration of content procurement from major publishers continues, and the proportion of major publishers in the total procurement amount has remained persistently high. Since ongoing transactions are not guaranteed, changes in transaction terms could result in a medium to large impact on business performance (in the range of several hundred million yen to ¥1 billion). In addition to regularly reviewing terms and maintaining and expanding cooperative relationships, the company is working to build a second revenue pillar beyond the eBook wholesale/distribution business.

As of the end of FY2025 (ended February 2025), the company recorded software of ¥624 million, goodwill of ¥4,198 million, and investment securities of ¥5,669 million. There is a risk that if business progress does not proceed as initially planned due to intensifying competition or other factors, impairment losses or unexpectedly high costs could occur. Delays in business execution and related effects could result in a medium to large impact on business performance (in the range of several hundred million yen to ¥1 billion). The company strives for disciplined investment behavior and efficient business operations through careful deliberation by the Investment Committee and the establishment of a monitoring system based on an 8% ROIC standard.

There is a risk that system downtime or the loss or unauthorized acquisition of personal information or business partner information could occur due to temporary load increases from surges in access, hardware or software defects, unauthorized external access, or errors by staff. If such risks materialize, in addition to direct damages, this could lead to a decline in social credibility and trust, resulting in a medium impact on business performance (in the range of several hundred million yen). The company continues to implement security enhancement measures, including operating information security regulations, conducting vulnerability assessments and penetration testing, and expanding and accelerating anomaly detection.

If the acquisition, placement, and development of talented personnel such as business promoters, system engineers, and administrative staff do not proceed smoothly, this could cause delays in business execution and result in a medium impact on business performance (in the range of several hundred million yen). Demand for talent acquisition, particularly among engineers, is already increasing, which could become a constraining factor in achieving further business growth. The company is working to build a system that enables long-term employment and success by improving the workplace environment, health environment, and D&I environment, and by renewing and continuously reviewing personnel systems.

If a situation arises that violates laws and regulations, misconduct by internal parties occurs, or the development of internal control systems fails to keep pace with rapid business expansion, this could damage trust and reputation in the Company Group, resulting in a medium impact on business performance (in the range of several hundred million yen). In addition to establishing compliance regulations and setting up an internal audit office, the company is working to strengthen effectiveness through the introduction of e-learning across group companies and the review and reorganization of its Compliance Code of Conduct (17 items).

Representative Director, President and CEO Yasushi Fujita plays a central role in creating business models and formulating management policies and strategies. If he becomes unable to carry out his duties for any reason, this could cause delays in business execution and result in a medium impact on business performance (in the range of several hundred million yen). The company is working on considering and formulating succession plans through the Nomination and Compensation Advisory Committee, and building a system for swift decision-making with a two-representative-director structure.