FY2023-FY2027

Mid-term Management Plan
A Platform for Creativity

KAD OKAWA C OR POR AT I ON

View on Our Business Environment• Demand for animation IP continues to grow following the
popularization of global video streaming
Demand forIP• Demand for content related to animation such as comics, novels,MD, events, is growing➢ There is a lot of room in the international media
mix

Domestically, paper books are decreasing while the ePublication book business continues to grow.
Growth continues globally, mainly in emerging markets.

• The global entertainment market expands both in size
and area. In Japan, the e-book business continues to
grow.

Video

Marketenvironment• Demand is also growing internationally in related
domains, led by animation

Gaming

The streaming market continues to grow globally.
Competition between streaming platforms is intensifying,including in emerging markets. IP is being hoarded by
platformers.
The global game market will continue to grow long-term.
Platform-based competition to retain production
companies continues.

The domestic creator economy market is expanding. MD
sales increase.
Web and The domestic live entertainment market is recovering
Otherstoward outgrowing what it was before COVID-19.
Consumption for favorite artists and animation charactersis rapidly increasing, mainly among young people.
The domestic education market as a whole continues to
Education/ grow. E-learning, correspondence courses and vocational
EdTechschools expand while home tutoring shrinks.

➢ Great potential for growth by developing
international markets➢ Domestic publishing can grow with e-books beinga driver• The creator-fan co-creation market expands➢ Fan Community business, events and MD have a
lot of room for growth• Markets for realizing diverse learning styles andworkstyles are expanding➢ Great growth potential in providing learning
environments centered on EdTech2Mid-term Management Policy (1) Inter-business Collaboration Strategy⚫ Accelerate 'Global Media Mix with Technology' to achieve sustainable growth

Maximizing the valueof IP created bypublication

１

Expanding global distribution capacity

Maximizing*
IPs' LTV

２

Rebuilding the license strategy

3

Animation Business

4

Gaming Business５

Fan Community Business６

Education/EdTech Business７

Profit improvement in the reform areas

IP creation

Enhancing game IP
Appealing to fans of our IP

Web Services

Maximally using
platforms andinternet technologies*Life Time Value

3

Mid-term Management Policy (2) Maximizing IPs' LTV
Steps to enhance the valueof IPsMaximizing IPs' LTV
Expand global distribution
capacity

Rebuilding the license strategy• Increasing the number of publication
titles internationally• Centralized management and operationof licensing business➢Maximizing
IPs'LTV• Expansion of international bases➢ Expansion into Europe, Southeast Asia,etc.

IPcreation➢

Promote full rights management toanimations➢

Integrate publication and animation
license teams (establish Global Licensing
Division)➢Centralize the management of IP rights.
Put into practice the long-term valueenhancement measure across different
types of media• Expand international distribution ofdigital publications
➢

Media
mix

Translation of IPs originating in Japan anddevelopment of more IPs originating
overseas at our local bases

E-book store made available in different
languages• Increase international distribution of
MD products• Strengthening international alliances➢

Coordination with international bases➢

Strategic license expansion throughpartnership with local enterprises• In-house game publishing4Mid-term Management Policy (3) Strategies in Each Segment
Create more than 7,000 IPs annually. Expanded each genre and strengthen digital-first readiness

Publication➢ Increase international sales through measures such as adding more international bases➢ Keep making our e-book business grow so it outperforms domestic market growth

Increase productivity through the digital transformation of publishing by means of the digitalmanufacturing and distribution system, etc.
Strengthen our animation production capabilities. Increase the number of stories produced per title andoptimize license management

Video➢ Strengthening and newly establishing Group production studios or acquiring and entering into business alliances with othercompanies➢ Promote full rights management to animations

For the live-action business, focus on major titles and improve profitability to higher return on investment

GamingExpand the game development lines. Aggressively invest in the development of mobile games using our IP
Expand the scope of FromSoftware's own publishing

Web Services

For the Niconico business, raise ARPPU by improving the services

Education/
EdTechEstablish ZEN University (tentative name) to enhance LTV per user and reach university students andworking professionals
Attract more students to N/S High School
Expand Vantan's business by adding more courses and schools in new areas

OthersExpand the fan community business through the use of our IP and functional enhancements
Increase products from the MD business and expand sales outlets globally
Improved profitability for the facility operation business by increasing the number of visitors and optimizing
costs

5

IP Creation from the Publication Business
Improvement of productivity throughthe DX of publication

Expansion of IP creation⚫ Operation of the facilities began in earnest in
the FY2023

IP creation plan (KADOKAWA Group overall, publication)⚫ Increase creation of original
IP to be the foundation forthe media mix
6,000(target)

Over
7,000
(target)5,300(result)

FY2021
22/3期

FY2023
24/3期

Comics andchildren's books

Significant
growthSolid
growthFY2027

26.8%

22.4%

Profitability improvement target — difference
between having the system and not having it

Operating profit

IP creation targets
FY2023

FY2027

Approx. 6,000

Over 7,000+1.3 billion yen

Editorial Support
Digital tools
Automation system

Digital-first reinforcement• Have more works come out firstin a digital form
• Add more works originally madein a digital form (increase them fromthe current 5% to 15% of the whole)Light novels andlifestyles

FY2022

FY2027

FY2027
28/3期

Expansion of genre

Digitalmanufacturing
and distribution
systemPaper-based books
return rate target• Keep making the e-bookbusiness grow so it outperforms
domestic market growth

Strengthenmarketing
Improve data
infrastructure
Deepen analytics

EBITDA+2.9 billion yen

Revitalize
bookstores

AI-basedbookstore staff
Send customers
from our app

Absorb the aggressive investment in growth and cost
increases resulting from the steep rise in prices
by improving productivity with DX measures in publishingand phased price revisions

6

Animation Business

New planning and development policy⚫ Increase the number of seasons and episodes
per title (increase the number of stories produced)
Lineupstrategy

Training and developmentof human resources

Strengthening of Group
Production Studios⚫ In addition to a diverse range of in-houseoriginal IPs, continue to acquire popular IPs
from other companies⚫ Roll out products in a way that suits theircharacteristics and the Internet era
MarketingpolicyStrengthen production system(Webcast, TV broadcast, sneak peeks at theaters)⚫ Increase our presence globally(Strengthen advertising, exhibition at events and otheractivities globally)

AI-based production
supportDeveloping a common
management system+
Addition of more studios(fully owned subsidiaries),
M&A activities andalliances

Secure production quality and increase productivity(Increase the annual number of titles produced in-house from 5 to 20)

Promote a new license strategy and collaborate with the game businessMaximize global growth and the LTV of works = Maximize the value of our IP led by animation
7

Gaming Business

Expand the game development pipeline

Expand global distribution capacity

Expand our development lines andadd more IPs through strategic
partnership and M&A activities

Develop our readiness to expand the scope of
FromSoftware's own publishing
FY2027

Console games
Enhancement ofdevelopment system

Strengthen our media mix throughinter-business collaboration(increase the size of thedevelopment staff within
the Group 20% or more)
FY2022

FY2027

PublicationVideo(animation)

Mobile games
Add more titles

Game media(increase from 1 title/year
to 8)

Events/MD

IP based on
game titles

Console games

IP
IP from
publication/video

Mobile games

FY2022

Strengthen IP originated from games and expand the media mix of IP originated for publications
8

Maximally Using Platforms and Internet Technologies

Expand the fan community business

Acquire new IPs
Develop new
genresUse many of
our IPs

Enhancefeatures toincreaseengagement

Expand our businessover the event/music domain
Pursue synergy between KADOKAWA and
Dwango in the event/music business domain

KADOKAWA

Achieve growth by providing
an attractive place for creators,
IPs and their fans to interact

Quickly increase our gross merchandise
volume to twice the current volume of
10 billion yen or more

Use both offline andonline events topromote our IP

DwangoUse the pieces ofmusic from Niconico inanimations anddevelop new stars

Use the web services to increase the value of
our IP and continue to boost Niconico as anopportunity for IP creation and dissemination
9

Education/EdTech BusinessContinue to attract more students
to N/S High School

Attract more students to Vantan

Students will continue to increase through measures
such as the establishment of more schools and thedevelopment of commuting courses

Increase genres and expand areas⚫ Add schools in more places and with new genres
21,735⚫ Expand existing school curriculum to the new
university courses

24,756

17,010

2,245
2016

4,513

7,025

10,637

Open KADOKAWA brand schools
2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

⚫ Open KADOKAWA brand schools for manga andanimation creators and voice-over actors/actresses

Dwango offers cutting-edge EdTech in AI and VR

Establish ZEN University (tentative name)
Make it more accessible to new targets including
university students and working professionals
Increase LTV through admissions from N/S High Schools

Develop and produce highly specialized
human resources and contribute to the
KADOKAWA Group's talent acquisition
10

Education/EdTech Business(develop and produce highly specialized human resources)
Environment forHighly specialized creativity
development of diverse
education
human resources

Produce human resources capable of playing
leading roles in an ever-changing society
Produce human resources

SocialClub activities: 13⚫ Front-line specialists provide a wide
variety of extra lessons⚫ Develop the animator development
program in partnership with
KADOKAWA(Tentative name) (Establishment in planning)⚫ Launch research projects inmathematics, AI, content industries
and other areas and provide the mostadvanced university education

Participants: 8,633
Hobby Group : 260
Participants: 14,971⚫ Receive guidance from
specialists in a variety ofareas such as business,investment, politics ande-sports and refine adiverse knowledge base

Human resources
proficient in AI utilization

Living abroad : 75

(2022, via schools)

Human resources fluent
in foreign languages

・・・⚫ Environment enabling
students to experienceand learn about being
global citizens

The Company

Creative human resources(e.g., animators, manga creators,
voice-over actors/actresses,
game creators)

Have studied abroad: 123⚫ With years of experience in creator
development, further expansion thedevelopment of creators in IT,
animation, voice-over acting, mangaand other categories by opening
KADOKAWA brand schools

Engineering humanresources

Contribute to society
through humanresources

Share knowledge and expertise

Contribute to the
KADOKAWA GROUP's
improvement ofcreative aspects andto the global growthof the business
Many of these human resources
have entered the Group's
companies in recent years

11Reform Areas
The live-action business shifts to a lineup of
mainly major projects

Improvement of the facility operation business(TOKOROZAWA SAKURA TOWN)

Review our planning and development policy

Purpose of the business

Mainly develop major projects with thepotential for success in the international
markets⚫ One of Japan’s largest pop culture
entertainment complexes that has
welcomed approximately three million
visitors over the years⚫ Activities for community
coexistence and cultural succession

Focus on KADOKAWA's original works
supported by core fans⚫

- Events for local kids and families- Events showcasing local specialties- Events and fairs linked to books⚫ Tapping into demand from inbound tourists
Futureinitiatives©2023 "As Long as We Both Shall Live" Film Partners©2023 KADOKAWA ©T.N GON Co.,Ltd.

Increase profitability by targeting the works
with the potential to become big hits andraising return on investment⚫ Encouraging local families and businesses to
use the facility⚫ Streamlining operations and optimizing staffing

Continue to improve profitability by increasing
the number of visitors and controlling costs
and transition to being a sustainable business12

Business Portfolio and Investment Management⚫ Strengthen investments in content development and technology utilization with a focus on active
investment areas⚫ Make the profitability assessment and withdrawal criteria more strict by, for example, introducing a newinvestment management system
Business portfolio analysis

Investment to expand business and increase profitability

CAGR (Net sales)
Live (*)

High

Promising growth
areas

Publication/Animation/
Gaming/Education

Business
expansion

Active investment
areas

ROIC
Low

High

Reform areas

Areas considered
for renewed
growthImplement profitability
improvement plans, and consider
withdrawing from businesses
based on certain criteria when it
is difficult to make improvements

Live-action/facility
operation businesses

Niconico business
Low* Shifted from reform areas in the previous mid-term plan, following the recovery from theimpact of COVID-19• Invest in M&A activities involving new internationalbases• Develop publications, videos (animation and liveaction) and game content• Develop an AI-based translation system• Develop an e-book app and a UGC service• Expand the scope of FromSoftware's own publishing• Invest in IT infrastructure in the Niconico business• Develop businesses for universities and open new Vantan
schools and courses• Introduce digital tools and AI systems for editing andanimation production
Improvement• Renovate the digital manufacturing and distributionofsystemprofitability• Introduce the BPR system for centralizing license
management

Investment management system• A new investment management system was introduced in FY2022→ Monitor profitability on a smallest organization basis and discuss
improvement plans and the withdrawal from investments• We will continue to make the criteria for assessing profitability at thetime of new investments and for withdrawing from investments morestrict13

Management Targets for the New Mid-term Management Plan
— Set targets for FY2027 when the new strategy will bear fruit —Forecasts for FY2023

251.1 billion yen

Net sales

Targets for FY2027

340.0 billion yen
Of which 70 billion yen

will be generated internationally
Operatingprofit(%)

17.8 billion yen

34.0 billion yen

24.2 billion yen

43.0 billion yen(7%)

EBITDA(10%)

34.0
billion yen

Projected
growth ofoperatingprofit27.0

Gaming Businessbillion yen

Publication, animation, etc.
FY2023

FY2027

14

Net Sales and Operating Profit by Segment: Targets⚫ Increasing both sales and profit is a common goal to all segments. The publication, animation andeducation/EdTech businesses will grow and live-action and web services will get back onto a growth path
⚫ It is assumed that the gaming segment can possibly fluctuate from the current plan in terms of both sales andprofit depending on the titles released and their schedules
Operating profit target

Net sales target

Targets for FY2027

Targets for FY2027

340.0 billion yen

8%9%251.1 billion yen

Education/
EdTechWeb Services

17%

OthersGaming

23%

Video

7%

Forecasts for FY2023

Web Services
GamingEducation/
EdTech

34.0 billion yen 18%

CAGR

Others4%

Video

Education/
EdTechWeb Services

Forecasts for FY2023

Gaming

65%
10%

Video

21%

17.8 billion yen
Education/
EdTechWeb Services

12%

GamingVideo

Publication
Publication

CAGR

Publication

4%

Publication

Others9%

Others15

Update on Basic Finance Policy⚫ In terms of KPIs for our basic policy, the ROE target will be raised from the existing target of at least 10% to atleast 12%. We specify a range to indicate the upper and lower limits of the capital adequacy ratio and seek toachieve the compatibility of ensuring financial soundness and the pursuit of capital efficiency
Again, clearly state that an annual dividend of 30 yen per share will certainly be paid to shareholders.
Basicapproach

Execution of financial strategies that contribute to sustainable growth of sales andprofit, capital efficiency that exceeds the cost of capital, and the medium- to long-term
increase of corporate value
Ensure financial soundness

Basic policy
Key KPIs

Allocationof funds

A capital adequacy ratio ranging between around
50% and 60% should be considered to be the proper
standard that should be maintained going forward.

Foundation funds

Growth investments

Set the level of cash and cash
equivalents to be retained
based on approximately 2.5
months of monthly sales,
working capital, future capitalneeds, etc.

Assume a maximum
investment of about 2/3 ofoperating cash flow by making
the strategic facilitation ofcore businesses and growthinvestments such as M&A
activities the top priority.

Pursue capital efficiency andstrengthen shareholder returns
Aim to achieve an ROE of at least 12%
in the medium-to-long-term

Shareholder return
Shareholder dividend
Seek to achieve a
payout ratio of 30% ormore and set a lower
limit of 30 yen per sharefor the annual dividend

Acquisition oftreasury stock
Flexible implementationin consideration of
investment capacity,
stock price level, etc.

16Human Capital Strategy⚫ Build an environment that enables employees to remain highly motivated and maximize their creativity.
Stimulate the continued improvement of human resources

Creativity

Motivation

Technology

Develop an environment thatfacilitates creativity

Enhance personnel systems to
improve employee motivation

Achieve in-depth business reform
through DX

Point

Point

Point

Workplace choice system

Enhance personnel systems that improve
motivation

Improve operational efficiency
through the digitization• In-house free agent system and encouraging
employees to have concurrent jobs
• Side job system• Enhance one-off payments for obtaining
qualifications• Open Call for group-wide cross-functional
projects• Use digital tools and AI to support
production

The system enables to choose workplaces forautonomous work styles unrestricted by timeand place.

Introduce and enhance a range ofleave systems and benefits for creativeideas and diverse work styles.
• Subscription allowance(subsidizes the cost of employees using
subscription services in the entertainment
genre)• Increase maternity gift money, childcare
allowance and related support• Childcare support events and measures
Example: Family interaction events within the
KADOKAWA Group

Examples: A project allowing anyone, experienced in
editing or not, to become a chief editor and makeplans and proposals, a project for translating andpublishing the world's top content, etc.

• Strengthen the program for supporting anddiscovering human resources for global
operations

Reduce the percentage of manageriallevel employees and streamline theorganization to accelerate decision
making• Effective use of sales promotion plan data
through dashboard• Centralize license management systems

Improve skills in the area oftechnology• Organize a hackathon focused on the latest
technologies• Open the programming courses of N/S highschools to employees• Organize training sessions, seminars andworkshops in the area of technology
tailored to the specific businesses

Expand various programs compatible
with the remote working environment
17

ESG Initiatives
Environment (TCFD)

SocialGovernance

The target of reducing greenhouse gas(GHG) emissions by 50％ by FY2030 is
expected to be achieved during FY2024,
earlier than planned.
Pursue virtually zero emissions
throughout the KADOKAWA Group
TopicsEncouraging employees to demonstrate
their creativity and increasing theirmotivation.
Developing an environment where diverse
employees can demonstrate theircapabilities

Strengthen the Board of Directors’supervisory function, increase
management transparency and accelerate
decision making.

Realize an office with virtually zero CO2emissions• The electricity used in our company's buildingin Tokyo's Chiyoda ward and TOKOROZAWASAKURA TOWN will be virtually transitioned torenewable energy (scheduled in December 2023) and a
88％ reduction will be achieved in FY2024• We are also considering switching the sourcesof the electricity at Group companies
Change in KADOKAWA's GHG emissions
over time and target
CO2 emissions (t-CO2) * Trial calculation with adjusted emission coefficient

5,000
4,000

3,783

4,187

4,555
3,100

3,000

88%
reduction
vs. FY2020

2,000

Seek
virtually zero
emissions
450 throughout
the Group

1,000
0
FY2020
21/3期

FY2021
22/3期

Our company's building
千代田区・自社ビル
in Chiyoda ward

FY2022
23/3期

FY2023
FY202424/3期
25/3期(Forecast)（予測） (Forecast)（予測）

Rental賃貸物件
propertiesTOKOROZAWASAKURA TOWN
ところざわサクラタウン➢ Target female manager ratio*
FY2022 19.3%

FY2030 30%* The ratio combines KADOKAWA and its domestic consolidated subsidiaries➢ Strengthen the recruiting, development

and support of human resources for global
promotion

TopicsIntroducing programs and systems
supporting creativity and motivation• Improvement of programs and allowances

Increase awareness of legal complianceand continue to strengthen corporate
governance by, for example, improving
the audit system
Topics
Shifting to a company with a nominating
committee, etc.
• A majority of directors are outside directors

Cultivating a corporate culture that places
importance on compliancesupporting employees' careers• Encouraging employees to make proposals• The Compliance Committee operates under

Active roles for diverse human resources• Improve the whistle-blowing system, the• Increase in the number of women in

managerial-level positions throughout the
KADOKAWA Group• Increase in the number of employees withdisabilities throughout the KADOKAWA Group
under the special subsidiary company system.
• Increase in the number of non-Japaneseemployees throughout the KADOKAWA Group

stricter supervision

questionnaires of officers and employees,
the provision of opportunities to increaseawareness of compliance and otherinitiatives

Reduction of cross-shareholdings• Reduce cross shareholdings aiming for acertain percentage of net assets

18

Sustainability achievements and policy⚫ Contribute to the spread and development of culture through the creation of sustainable content
Priority SDGs initiatives
Providing an equal and creativeeducational environment

Streamlining paper consumption
Reduce paper consumption by checking paper-based book
returns• Operate the logistics plant within TOKOROZAWA SAKURA TOWN

Provide cutting-edge EdTech to N/S HighSchools and ZEN University (tentative name).
Provide people seeking to acquire a high school
diploma while working, aspiring to establish a
career in culture, sports or other areas of
specialization and many other people with manydifferent learning opportunities• Shift book production from forecast-based

production to on-demand production• Improve the accuracy of book distribution andshipment and automate the replenishment of
store inventories

Change in the return rate of KADOKAWA Group
paper-based books over time and target
40

Develop and produce specialists in the creative industry andcontribute to the industry's sustained growth

32.3
30

27.4

27.1

26.8%

Target22.4%

21/3期
FY202022/3期
FY2021

23/3期
FY2022

28/3期
FY202720

20/3期
FY2019Through the education/EdTech business, we will provide
practical and specialized education opportunities which can
open up a future for a large number of people

Implement creative education in partnership with Vantan's vocational
schools, N/S High Schools and ZEN University (tentative name). Help
make a variety of dreams come true and also contribute to the industry's
growth19

Corporate Mission

A Platform for Creativity
We discover talent, maximize their value and bring thecontent they create to a global audience with the power oftechnology.

Harnessing the Group’s expertise, creativity and technology,
we continuously create and develop innovative businesses.
20

Appendix

Results of Mid-term Plan (FY2022-FY2024) and Improvements Needed
Mid-term plan targets were achieved in the first year (net sales, international net sales, operating profit and EBITDA)
Quantifiabletargets➢ Making a hit game and the growth of other businesses helped increase operating profit from 18.5 billion yen in FY2021 to 25.9 billion
yen in FY2022➢ We continued the sustained expansion of the publication, animation and other priority businesses and the growth and stabilization of
the gaming business which fluctuates significantly

The planned number of IPs created has been achieved
IP creation

Media mix
development

International
expansion➢ Five thousand or more publication IPs and 40 or more animation titles were created annually. We created global hit games.
➢ We continued the creation of strong IPs and the improvement of the publication business's operating margin

The international distribution of animation grew and we adapted our original works into animated works and mobile
games in-house➢ The Company's original animated title, The Eminence in Shadow became a hit simultaneously with its mobile game adaptation➢ We continued to strengthen our production capacity in the animation business and expand our gaming business

More of our publications, videos and games were distributed globally➢ More of our works were simultaneously distributed globally and more international bases were added (North America: IZE PRESS and ANIMENEWS NETWORK, Europe: JNC Nina)➢ We continued to add more international bases and rebuild our global license system

Our e-book business grew and our education business expanded
Digitaldeployment

Profitability
improvement➢ E-books are outpacing the market growth rate. Reinforced the lineup of TATESC works and began global expansion➢ The number of students of N/S High Schools and Vantan increased➢ We promoted the greater expansion of our education business and the development of the fan community business

Our facility operation business has been rebuilt➢ We withdrew from operating EJ Anime Hotel, Narita Anime Deck and EJ Anime Theater Shinjuku➢ We pushed forward with the improvement of our unprofitable businesses
22

•
•

Forward-looking statements such as results forecasts contained in this material are judgments of the Group based on currently available information.
The forward-looking statements include various uncertainties, and actual results may differ from these values. Please refrain from making
investment judgments, etc. by relying entirely on these values.