1. Basic management policy

The Company aims to help realize the future society that will be brought about by mobile devices. To this end, it will continually provide customers with user-friendly services that employ cutting-edge technologies and offer satisfactory quality and product variety by extensively understanding their views and expectations. The Company also aims to position itself as lifelong friend that customers can continually call upon by offering emotionally-moving experiences, and become a “mobile dream factory” that produces a series of services which make customers’ dreams come true and their lives more convenient and enriching.

2. Target management indexes

The rate of sales growth and the degree of improvement in operating income ratio are important management indexes for us here at MTI. We aim to continuously raise corporate value by always improving these indexes. To achieve sustainable growth, the Company will enhance its capabilities in marketing, quality control, the development of products and services, design, and sales. By continuing to improve these capabilities that are essential for business expansion, it seeks to address changes in market environments and customer needs flexibly.

3. Medium- to long-term management strategy

Our strategy is to use a portion of the stable earnings generated by our content distribution and Real Affiliate business, our main earnings pillars, to invest in fields with high growth potential with the aim of fostering new fields capable of generating steady earnings. At the same time, we will invest in fields expected to have large markets and high growth.
We will also strive to increase the number of subscribers in new fields amid the rapid growth in the market for smartphone services. Additionally, we will aggressively work to create business opportunities by developing new services targeting smartphones and we will work to realize sustained sales and continuous growth of profits.
Medium- to long-term management strategies for each contents category are explained below.

a) Improvement in average revenue per user (ARPU) in the content business
With smartphones on the verge of surpassing the high level of 50% penetration, customers are expected to be increasingly demanding in search of services that are easier to use and understand, while at the same time requesting services that offer added value that is greater than that of the current services going forward.
Music, books, comics and video are uniquely popular among customers. That being said, the Company expects that the video-streaming market will continue to grow. To improve ARPU, it is therefore seeking to enhance the lineup of video content through an increase in the number of Hollywood movie titles.
In addition, it will facilitate the integration of individual services that have been conducted separately to date (integration of music, books, comics and video, integration of Weather Information and Maps & Navigation services, etc.), and continue to push forward with efforts to enhance the value of individual services, thereby improving ARPU.

b) Strengthening of the Real Affiliate (RAF) Network
The sales channel (RAF network), through which cellphone shops encourage customers visiting them to subscribe to MTI’s own or other companies’ content, enjoys the largest and most overwhelming operation scale among the same type of businesses owing to the expansion of transactions with cellphone shops nationwide.
Given the advantage of the established sales bases throughout Japan, the Company will expand the number of shops for the RAF network and strengthen its sales system to provide detailed support to cellphone shops nationwide. Through these efforts, it will focus its efforts on securing opportunities to deliver content that customers need most.
The RAF network was established to encourage customers to subscribe to MTI’s content. The Company successfully launched the business by including other companies’ content in the service after the penetration of smartphones. It will work on other uses of the service as well.

c) Initiatives in the Healthcare-related business
The Company seeks to conduct the Healthcare-related business from a medium- to long-term perspective, given its future growth potential and the possibility of becoming a service that will be used by customers as a “lifetime friend.”
Currently, “Luna Luna” provides a healthcare service that aligns with the life stages of women, by enhancing services that comprehensively support them in terms of pregnancy, childbirth and child rearing, and the prediction of menstruation and ovulation dates. The Company will further enhance this service.
The number of paying subscribers to KARADAmedica, a service via our website where healthcare providers answer questions on health 24 hours a day, continues to rise. The Company will therefore enhance the service and work to strengthen collaborations with other healthcare services.
It is also planning to develop a service covering all types of healthcare support. It will facilitate the collaboration between and the integration of services such as genetic analysis, electronic prescription records, health checkups, nutritional counseling, and the linkage of devices and work to establish a new business scheme.

4. Issues to address

1) Enhancing marketing capacity
Customer needs are continuously changing and becoming more varied due to the evolution of mobile devices and the expanding base of mobile content users. We realize the importance of constructing a system for continuously improving our marketing capacity by accurately grasping these trends and delivering contents with a high degree of customer satisfaction.
To this end we have strengthened organizational systems for our marketing divisions, bolstered personnel with specialized capacity and promoted the education and training of personnel by enhancing in-house training systems. These steps are allowing us to make marketing capacity, one of our strengths, even stronger.

2) Enhancing quality control capacity
We are aware that in order to encourage customers to use mobile contents on a continuing basis, customer needs obtained from marketing research must of course be reflected in the actual sites. We are also aware of the importance of building a strong quality control system in order to provide a product line up and a level of quality that will satisfy these customers.
To this end we have clarified the procedures and quality standards for each step in the production of our content materials, while conducting thorough management of these steps. At the same time we have made continuous improvements through the training and education of personnel as well as through PDCA activities, while building a system for the efficient production of high-quality content materials.

3) Enhancing development capacity
We will be able to provide mobile content services with even higher added value as mobile handsets become even more advanced and as the speed and capacity of communication infrastructures increase. Building a high quality technical development system will be essential for continuing to win the support of customers well into the future.
To promote development methods that can quickly and flexibly respond to changes in the technological environment, we are working to acquire and develop skilled personnel, while raising the technical skill levels of all development personnel. We will also promote offshore development to realize a high-quality and efficient system.

4) Enhancing design capacity
Services for smartphones allow for improved contents operability and greater expression. We realize that it is important to have a system in place for providing high quality designs, an extremely important point when customers select which services they will use.
Therefore, we are researching user interfaces and customer preferences, while working to acquire and develop highly skilled personnel. In this manner we are building a system capable of providing high quality designs.

5) Enhancing the sales capacity
The acquisition of subscribers through cellphone shops nationwide, the mainstay sales channel of mobile devices, has proved to be the most efficient method for acquiring paying subscribers on smartphones on a monthly billing basis. Thus, the Company believes that it is important to develop cellphone shops that promote the sales of the Company’s own content and the content that it handles for other companies.
For these reasons, the Company will take initiatives to establish a business structure capable of providing more meticulous support to cellphone shops nationwide. These initiatives include establishing sales offices in major cities outside the Tokyo metropolitan area which have a large number of cellphone shops, and by focusing on securing, training, and developing human resources with superior sales skills.