Bushiroad Inc.

In the software industry, employee turnover is extremely high, and competition among companies to secure personnel with strong technical, marketing, development, and production capabilities has become the norm. Should this risk materialize, the Group may be unable to secure sufficient human resources, which is recognized as having a significant impact on business performance. As a countermeasure, the Group is enhancing its corporate presence through the creation of attractive IP and promoting talent development and reinforcement through specialized training and management training programs.

Representative Director and President Takaaki Kidani has accumulated content creation and production know-how and plays a critical role in actual business execution, and it is recognized that the risk of business dependence on him is ever-present. Should this risk materialize, it is expected to have a significant impact on business performance. As a countermeasure, since the fiscal year ended June 2023, the Group has introduced a unit system, promoting delegation of authority such as the appointment of young unit heads, with the aim of building a management structure that does not rely excessively on a specific individual.

As overseas transactions increase across TCG, games, figures, animation distribution rights, and professional wrestling promotions, the Group may be exposed to country risks such as rising manufacturing and shipping costs, suspension of foreign exchange transactions, tariff increases, and asset confiscation. In addition, there are litigation risks related to product liability and labor issues, as well as the risk of unexpected bankruptcy of business partners, and it is recognized that the impact of overseas business on performance is significant. As a countermeasure, risks are shared and discussed at management meetings attended by directors and executive officers.

New products in TCG, mobile games, and console games carry the risk of release delays due to a wide range of factors including the development process, licensor approvals, production capacity, debugging, and additional development requirements. The timely release of new products constitutes the revenue foundation of the Group, and it is recognized that any resulting delay would have a significant impact on sales. As a countermeasure, the Group is building the Global Mega Character Platform to establish a business portfolio that does not rely solely on in-house IP development, thereby diversifying risk.

Centered on a media mix strategy, the Group pursues diversified IP development across TCG, mobile games, music, merchandise, and other areas, and conducts aggressive promotional activities accordingly. However, if the originally intended advertising effects fail to materialize, operating profit may be affected. As a countermeasure, the Group diversifies risk by utilizing multiple advertising channels including digital marketing, TV commercials, and transit advertising.

The domestic TCG market grew 12.1% year on year in fiscal 2024, and the North American market grew 4.1% year on year; however, if growth fails to continue going forward, sales in the TCG segment may be affected. As a countermeasure, the Group is expanding its presence in the global market through the strengthening of English-language editions of "Weiss Schwarz" and "Cardfight!! Vanguard" (since 2020), the rollout of Chinese-language editions (since 2022), and licensing out to multiple languages.

The mobile game market has numerous competitors, and the domestic market shows signs of stagnation along with growing oligopolization among top-performing titles, which is affecting sales in the Group's mobile game segment. As a countermeasure, the Group adopts a multi-platform strategy utilizing both proprietary IP and licensed third-party IP, focusing on diversifying risk—including through console games—and releasing competitive new titles.

The ratio of overseas sales has expanded to over 27%, with overseas revenue increasing centered on the English-language TCG business, as well as Chinese-language TCG, figures, animation distribution rights, and professional wrestling promotions. Fluctuations in exchange rates used to translate the financial statements of overseas consolidated subsidiaries may affect the Group's financial position and operating results after translation into yen, and in cases where the Group is contractually obligated to bear foreign exchange risk, a monetary burden may arise.

The Group is pursuing M&A and capital alliances aimed at business growth; however, if progress does not proceed as planned due to changes in market conditions or other factors after an acquisition or alliance, this may affect the Group's financial position and operating results. As a countermeasure, the Group works to mitigate risk by conducting due diligence on target companies and regularly monitoring existing investees.

There are multiple technology and information management risks that could significantly affect the Group's financial position, operating results, and cash flows, including quality control of software products, infringement of third-party intellectual property, management of personal information, and ensuring system continuity and security measures. These risks are shared and discussed at management meetings attended by directors and executive officers, requiring a Group-wide response.