Business ReportINVESTOR RELATIONS

The Business Reports provide information on management strategies, business progress and performance highlights, representative CEO message, topics, and other information to shareholders. The report used to be published semiannually and twice a year, however, with the publication of the annual reports, it has been publishing only first half/online from the fiscal year ended February 28, 2020.

“MEDIA DO will take the initiative to ensure that the entire content industry can fully benefit from the growing potential of digital technology.”


In the first half of fiscal year ending Febrary 28, 2023, representing our 24th year in business, we announced a new five-year Medium-Term Management Plan. Also in FY2022, we changed the two previous reporting segments of “eBook distribution business” and “other businesses” to “eBook distribution business” and “strategic investment businesses” in an effort to concentrate on our core competencies to achieve greater business growth.
We will harness our strength in the eBook distribution business of maintaining business relationships with more than 2,200 publishers and over 150 eBook retailers, along with our technical prowess, to invest in new businesses and build new pillars of earnings. At the same time, we will present novel approaches to content to evolve into MEDIA DO as contributor to the content industry.
After peaking in 1996, the sales value of printed publications nationwide in Japan has been roughly halved over the last quarter century, while the number of book retailers has fallen to around 10,000 locations, less than half of the previous number. Amidst this, MEDIA DO has partnered with TOHAN CORPORATION, a major book distributor, through a capital and business alliance, to distribute books with non-fungible tokens (NFTs) to book retailers nationwide in Japan. We launched this endeavor in October of last year to promote the revitalization and evolution of the industry by exploring the potential to increase book prices and grow sales. After some creativity ingenuity based on the results of individual initiatives, in the space of around one year we have achieved results and success that prove the potential of this relationship.
Book retailers play an important role in supporting regional culture and we are a strong advocate of their existential value. Brick-and-mortar spaces such as book retailers that carry content can further develop and evolve with technology and the Internet. Continuously creating and providing such services represents our mission of contributing to the content industry.

Yasushi Fujita President and CEO

First Half Business Performance and Progress

FY2021 1H FY2022 1H YoY
Net sales Result: ¥55.2 billion*1
Actual value: ¥49.2 billion
¥54.2 billion Result: -1.8%(-¥1.0 billion)
Actual value: +10.1%(+¥5.0 billion)
Operating profit ¥1.68 billion ¥1.33 billion -20.9%(-¥350 million)
EBITDA ¥2.22 billion ¥2.08 billion -6.3%(-¥140 million)
Profit attributable to owners of parent ¥0.83 billion ¥0.62 billion -24.8%(-¥210 million)

*1. Includes approximately ¥6.0 billion increase in transaction volume attributable to one-time large-scale campaigns by ebook retailer

The MEDIA DO Group’s business performance for the first half of FY2022 was as follows. Net sales declined slightly 1.8% year on year to ¥54,226 million, operating profit was off 20.9% to ¥1,335 million, ordinary income fell 23.5% to ¥1,287 million, and profit attributable to owners of parent dropped 24.8% to ¥628 million. This was attributed to a recoil from one-off factors such as the large-scale campaigns held at certain book retailer in the previous first half (contributing around 6,000 million to sales) and the booking of only five months of results of NIHONBUNGEISHA Co.,Ltd., after making it a consolidated subsidiary. Excluding these one-off factors, consolidated net sales were at a record high for the first half.
In terms of the eBook distribution business, the backend operations for LINE Digital Frontier Corporation (LINE Manga), a major business partner, will be transferred to eBOOK Initiative Japan Co., Ltd. This change has been baked into this fiscal year’s performance, but delays have been incurred in this process, which led to higher-than-expected sales in the first half. The plan to complete this transfer before the end of this fiscal year remains intact and we expect the process to move ahead roughly as planned.
As for shareholder returns, we have decided to raise our target for total return ratio from 20% or higher to 30% or higher. In fiscal 2022, we forecast a decrease in sales and profits year on year for the first time since becoming a listed company. Nevertheless, we consider returning profits to shareholders as an important management issue, and after a holistic assessment considering our stock price level and other factors, we have decided to acquire around ¥1,000 million worth of treasury shares. As a result, the total return ratio for this fiscal year is expected to be around 117%. After acquiring these treasury shares, we intend to cancel them at the end of May 2022.
Today, the MEDIA DO Group finds itself at a major turning point. Technological progress has made the world more convenient than ever, granting us increased leisure time. At the same time, content is being created at an unprecedented pace.
These tiny devices (smartphones) are now an integral part of our daily lives. As such, we are pressed to provide ways for earning opportunities to content and IP holders, and ways to deliver superior customer experiences through these devices. Another change is emerging with the development of blockchain technology, which has strong defenses against alteration. This technology has the potential to spark a massive increase in the presence of digital content, which until now has only been consumed.
Seeing the potential in this new technological development, MEDIA DO created a digital content asset (DCA™) model. This model endows digital content with the concept of finiteness that gives digital content value as an asset and makes it possible to trade. The digital content asset model is simultaneously an embodiment of our mission of “unleashing a virtuous cycle of literary creation” and a bold new undertaking for realizing our vision for the future of the MEDIA DO Group. Through this scheme, we aim to propose business models for raising the value of various digital content in order to provide new options to content creators along with new experiences for content users. This was the commitment that formed the foundation for the new medium-term management plan announced in April 2022.


Completion of New Earnings Pillars Founded on Trust

Consolidated Net Sales (Billions of yen)

Consolidated EBITDA (Billions of yen)

The Group’s has secured the strength of an unrivaled No. 1 position in the domestic eBook distribution industry through the acquisition of and merger with Digital Publishing Initiatives Japan in March 2017. In other words, by gaining a position in the industry as we are now, we have been able to build up our intangible assets that will enable us to explore a variety of new possibilities going forward.
A central theme of the new medium-term management plan is the completion of new earnings pillars founded on the trust we have fostered to date. In terms of evolving our business domains, we will transform into a company that contributes to the content industry through realization of DCA™, and in terms of stable earnings growth, we will develop new earnings pillars outside of the eBook distribution business.
Specifically, while our eBook distribution business will remain as our main business segment, we have classified new businesses into the imprint business, the publishing solution business, the global business, and the fan marketing business. These four businesses, which were cultivated in focus areas by taking advantage of our position in the industry and technologies we have amassed, are contained in the new strategic investment businesses segment. The stable earnings generated by the eBook distribution business will allow us to allocate more management resources to investments in strategic investment businesses. Through this aggressive approach toward investment, we plan to accelerate the growth of these businesses to raise the portion of net sales attributable to strategic investment businesses from the current 8% to 25% by the fiscal year ending February 2027, while also boosting the portion of consolidated EBITDA from these businesses to 50%. Moreover, in the eBook distribution business, we will further strengthen and upgrade our business capabilities by continuing to reduce the amount of energy spent on distribution through improvements to operational efficiency and to expedite distribution; for example, by shortening the lead time between sending the manuscript to printers and commencing sales of published works. In this manner, we aim to further deepen the foundation of our eBook distribution business. On the other hand, one area with high expectations in the strategic investment businesses is publications with digital NFT benefits created through our partnership with TOHAN CORPORATION, a major book distributor. They offer the potential to contribute to both business growth and the development of the publishing industry. In just its first six months, MEDIA DO and Tohan's alliance has already contributed to the proposal of new forms of publications and an increased range of ways to enjoy these publications. This alliance has also been a vessel for promoting the digital transformation of the structure of the publishing industry by proposing new value that creates earnings opportunities and connections with readers to publishers and distributors. As a result, currently, the average selling price of publications with digital NFT benefits is around 34% higher than paper books, and the sell through ratio is higher by around 44%*2, meaning that we have succeeded in raising prices substantially—a notion that was almost unheard of before. This will enable us to create a positive cycle where a number of different players are able to reap profits.
The novel technologies of blockchain and NFTs complement physical publishing because they enable co-creation. Physical publications with digital NFT benefits are just one success that we have achieved over this short period. Introducing society to this new form of value is an important innovation, not only for how it proves the benefits of NFTs but also in how it will serve as a bridgehead for other such efforts in the future.
Going forward, it will be important to connect offerings and involve industry players like publishers, wholesalers, and distributors in these efforts in order to form synergies and spread our initiatives across the industry. I am confident that this approach will help resolve the shared issues faced by the industry and create shared value. This process will in turn increase the value of the FanTop platform and subsequently produce clear financial benefits and enhance corporate value in the form of higher user numbers and sales.

*2. The average for publications with digital NFT benefits released from January 2022 to present calculated over a period of 30 days from the date of first publication (not including reprints).

FY2021 FY2022 FY2024
(3rd year of plan)
FY2026
(5th year of plan)
Net Sales ¥104.7 billion ¥100.0 billion ¥120.0 billion ¥150.0 billion
Operating Profit ¥2.8 billion ¥2.0 billion ¥4.0 billion ¥8.5 billion
EBITDA ¥3.9 billion ¥3.5 billion ¥5.5 billion ¥10.0 billion
Profit attributable to owners of parent ¥1.5 billion ¥0.8 billion ¥2.8 billion ¥6.0 billion
ROE 10.9% 5.2% 15.0% 23.0%

Strong Dedication to Accomplishing Goals

MEDIA DO is at an important turning point in its quest to move on to the next state of its development with the new medium-term management plan. In terms of management, we will establish new earnings pillars following the eBook distribution business and complete the evolution of MEDIA DO from an eBook distributor to a company that contributes to the content industry. I hope our shareholders, investors, and other stakeholders will look forward to the possibilities to be unlocked through MEDIA DO’s strategies and services in the years to come.

President and CEO
MEDIA DO Co., Ltd.