Stabilizing Performance Volatility (Minimizing Fluctuations)
The Group has developed branded characters starting with Hello Kitty and has captured profits and expanded our business by licensing our characters to other companies and by planning, manufacturing, and selling gift merchandise.
Our main business was the license business centered on Hello Kitty.
In the fiscal year ended March 31, 2014, we achieved its highest-ever operating profit at that time. In the years that followed, however, we experienced repeated ups and downs in performance, such as the decline in operating profit for seven consecutive fiscal years from the fiscal year ended March 31, 2015, through the fiscal year ended March 31, 2021.
Nevertheless, since the fiscal year ended March 31, 2022, using a wider range of Sanrio characters has proved successful, and the proportion of Hello Kitty in the character portfolio (on a gross profit basis) decreased from 75% in the fiscal year ended March 31, 2014, to 30% in the fiscal year ended March 31, 2024, and operating profit also reached a record high.
The entertainment business in general is subject to significant performance fluctuations, and reducing and stabilizing performance volatility through the diversification of Sanrio's character portfolio and other measures remain management challenges for the future.
Review of Marketing and Sales Strategies
Changing our branding is important to move the Group's IP away from booms that are dependent on external factors.
We will implement various measures to achieve Evergreen IP (where recognition and favoritism are always fresh and maintained), focusing especially on overseas.
The key measures include: “investing in global content" for large-scale anniversaries and other events; “collaborating with global platformers" as a way to engage video distribution channels; “strengthening branding supervision on a global scale" including cross-character marketing; and “enhancing local designs and local creatives" based on the needs of each overseas region.
Developing a Foundation for Global Growth
To strengthen the Group's overseas development, the establishment of a management system with a global perspective, the development of corporate governance and a financial strategy that can appropriately allocate management capital are all essential.
Specifically, we will launch the Global Strategy Office to strengthen corporate governance, design investment criteria, and organize the investment process through the newly established Investment Committee.
In addition, we will make solid investments in human resources (e.g., global talent and creative talent) to build our human resource infrastructure.
Expanding IP Portfolio and Monetizing in Multiple Layers
In initiatives to broaden the range of value provided by IP, we will expand from the previous “merchandise-centered" approach to providing value that does not depend on merchandise. These initiatives include providing added value such as activities for supporting my fave, establishing story-based IP linked to video and games, and creating IP experiences through education and other real-world journeys.
As for initiatives to expand the market and target demographic, in addition to the multi-IP development of Sanrio characters, we will work to develop businesses related to UGX-based creation support and secondary creation, create new market-based IP, and develop untapped segments, including those for kids and boys.
*User-Generated x (UGX) is a generic term that includes user-generated content and user-generated intellectual property.
Leveraging Diversity Management
The Group operates our character business in 130 countries and regions and plans to expand our business regions further in the future.
Moreover, the market for the character business is expanding irrespective of age from children to the elderly, and product development rooted in diversity and close collaboration with companies is essential.
On the other hand, strategies fragmented by region, culture, or ideology make it difficult to secure global talent, maintain the flow of products, and respond swiftly to trends.
As such, the establishment of a global marketing system formed from a globally integrated information management system and diversity management as well as consolidated group management is essential.