Q1. I would like to hear about changes in the global imaging business environment.
Would it be right to think that the recent increase in the distribution of original
programs by video streaming service providers will have a positive impact on
your business?
A

Recently, the number of original programs created by video streaming service
providers has been increasing. Pixelogic and Imagica Entertainment Media Services,which belong to the Production Services segment, are engaged in the localization(subtitling and dubbing) and distribution (file creation and distribution) services fortheatrical releases as well as the original works of these video streaming service
providers. In particular, the increase in orders from these companies has had asignificant positive impact on our performance.

Q2. The subtitles and dubbing services seem to be offered by other companies.
Please tell us about your company's superiority and competitive environment.
AMajor video streaming service providers have very strict security requirements andtend to order from companies that are global and can guarantee security. There aremany companies in the world that provide only subtitle, dubbing, and filecreation/distribution services, but there are only a few companies like our group
Pixelogic that can provide both services in one company, and we recognize thatcompanies that provide both services on a global scale are rare.
Pixelogic has two strengths. The first is that it is a system that can provide highquality services in a short delivery time using its proprietary IT system. Another isbuilding strong relationships of trust with customers and building up a track record tosupport them.

Q3. Could you give us more details about the operating income margin of 8% in themedium-term management plan for FY2025?
AThe Global E2E Business, centered on Pixelogic, is the primary driver of operating
income growth. We expect to achieve 2.4 billion yen in operating income (beforegoodwill amortization), 30% of our 8 billion yen target for FY2025 by achieving sales
growth and high profitability.
The Imaging Systems & Solutions business has been highly profitable for some time,
and we believe that profitability can be maintained by expanding the business into
peripheral areas. We expect its Imaging Systems & Solutions business to account for35%.

In the Live Entertainment business, sales are around 10 billion yen but are expected
to have the highest growth rate.
The largest portion of net sales is in the field of existing businesses, which it has
positioned as a transformation business (part of the Content Creation segment and
the Production Services segment). In content creation, securing profitability is an
issue due to the impact of COVID-19. In this field, we aim to achieve an operating
income (before goodwill amortization) margin of 5% by expanding services in growthareas such as video streaming services and games, and by strengthening cost
control.
Q4. Please tell us about the background and policy behind your decision to enter
the metaverse business.
AThe reason why we entered the metaverse market was when we were consulted by
the TGC side to hold the Tokyo Girls Collection (TGC) in the VR space, which could
no longer be held at the venue due to COVID-19. Our group company had alreadyaccumulated production know-how utilizing cutting-edge technologies, such as XR*(cross-reality) direction in the VR space, in order to carry out live music performancesin online streaming from the second half of 2020, so we were able to gain anopportunity to enter the metaverse business.
In the metaverse business, our group will develop and operate VR platforms incollaboration with prominent partners such as TGC, as mentioned above. Theplanning, presentation, and production of "visual content" for users to enjoy asavatars in the VR space will also be our domain.
Our group's metaverse business will specialize in the entertainment field, providing
VR spaces such as fashion shows, live music, theatre such as kabuki etc, and sports
event. Visual presentation in the VR space is the field in which our group is the most
specialized, and this is a differentiating factor of our metaverse business.
This was triggered by inability to hold physical events due to COVID-19, but even if
physical events are resumed, we expect this type of metaverse business to growsignificantly, and we will focus our resources into it as we see business opportunities
in the future.
*XR is a generic term for all virtual space technologies, such as VR (virtual reality), AR (augmentedreality), and MR (mixed reality), and is a technology that realizes a real-world convergence withvirtual reality.

Q5. What is the difference between the Content Creation segment and theProduction Services segment?
AIn the film production process, the Content Creation segment involves shooting themovies, as well as gathering film directors, producers, and actors to shoot the film.
Then, the Production Services segment provides services such as editing the images
and sounds of the filmed files, adding subtitles and dubbing, and finally delivering thefilm to the film distribution company according to various formats of each theater.