Advance Questions (15 Questions in Total)

Regarding the Approach to Director Compensation
Response: Based on data from nationwide company sizes number of employees and other statistics compensation is revised and decided annually through discussions by the Compensation Committee. For individual compensation we strictly adhere to the established table mentioned earlier and decide unanimously after evaluating the company’s sales profit margins and the performance of the directors in the previous term. Additionally we will continue to consider whether director compensation is being appropriately awarded including the possibility of stock-based compensation.

Do you have any specific thoughts on shareholder return policies (e.g. share buybacks dividends)?
Response: Our policy is based on the recognition that the VTuber market remains a high-growth sector. We prioritize sustainable growth through business investments funded by the proceeds from our business activities. Both at the time of listing and currently we are committed to medium- to long-term growth. Discussions on returns including dividends should take place within the timeframe required to achieve these goals. While the company is still in the process we will continue to strive to enhance corporate value through our business activities. However although there is nothing specific to mention at present we will consider all possible measures if it is determined that business activities significantly compromise corporate value.

Please tell us about your future IR (Investor Relations) activities policy.
Response: We have received opinions and questions regarding stock prices but since short-term stock price movements are greatly influenced by external factors such as interest rate trends we refrain from commenting directly. However we believe that our growth potential remains significant. In addition to our previous response our IR policy aims to clearly communicate our long-term expansion plans and progress to the market as a growth company. Increasing the ratio of long-term investors will also help stabilize the stock price. For the fiscal year ending March 2024 we disclosed IR content widely primarily through quarterly earnings presentations and meeting summaries. We have also held over 300 meetings with institutional investors annually and participated in major conferences. Looking ahead with an eye on transitioning to the prime market we will further enhance our IR initiatives and maintain a focus on IR activities related to long-term investments.

How do you plan to proceed with your overseas expansion policy?
Response: As outlined in our global expansion policy announced on June 22 we believe that providing a platform for creators including VTubers to thrive is crucial. By growing our content to be globally beloved we can offer more opportunities for creators worldwide. In terms of overseas expansion we initially focus on regions with significant anime culture penetration such as North America Asia and Europe. We plan to increase localized content products and services through local agencies familiar with the local business landscape. Regarding China we plan to expand in a similar manner to other regions. This includes participating in events in Paris hosting live viewings in Seoul and organizing collaboration cafes. In China we will conduct content and event promotions centered in Shanghai collaborate with agencies and companies and increase B2B transactions. By expanding transactions with platforms and game companies worldwide we aim to increase the number of game streaming permissions creating a broader activity environment for our talents. Initially we had fewer than 100 employees when we started overseas expansion but we now have over 500 employees. We are enhancing our management systems and will continue to strengthen our structure and appropriately address any issues that arise.

Can you tell us about COVER USA including its purpose activity policies and goals?
Response: As announced in March 2024 COVER USA is scheduled to begin operations in July of this year with no delays from the initial schedule. This company is intended to serve as a base for business development focusing mainly on sales activities in North America and managing BtoB partnerships for local business expansion. When expanding overseas it is important to conduct business that fits the different commercial flows of each region. To achieve this we believe it is necessary to establish a system that allows us to negotiate with local partners in the local time zone. We are still in the development phase and do not have clear goals yet but we believe there is potential for sales to grow to the same scale as in Japan in the future.

What measures are being taken to address external attacks and information leaks?
Response: We cannot discuss specific measures for security reasons but our general approach to information management includes improving information security literacy keeping up with updates on security equipment ensuring appropriate internal communication on updates and strengthening authentication measures for logging into various accounts. In case of incidents we follow a clearly defined internal process. Regarding information leaks we continuously update our information control measures such as authority management to implement preventive measures in advance. If a leak occurs we consider and implement disciplinary actions based on internal regulations and demand measures such as suspension of transactions or compensation from external parties ensuring effective responses.

Regarding the new studio can you tell us about its operational status and future outlook?
TBRResponse: The new studio is operating smoothly and we have established a system ready for streaming projects. Concerns have been raised about increasing the burden on staff and talents including guest appearances. We will continue to monitor the situation and seek a balance in selecting talents for streaming. In the future we are working on improving the environment to use the studio more flexibly. We also plan to continue utilizing it for research and development of technology and content using 3D motion capture.

Can you tell us about the future event hosting policy and plans? What are your thoughts on holding events in collaboration with other companies?
TBRResponse: For both group and solo live performances we strive to hold events in venues with the most appropriate capacity based on the usual activities of the participating groups and talents. We also base our hosting methods on providing a certain level of experiential value to customers when deciding whether to proceed. Events are not necessarily limited to being self-hosted but we cannot provide specific future plans at this time.

How do you plan to address issues that have arisen during event hosting?
TBRResponse: Our policy prioritizes the experiential value for fans and we address shortcomings as challenges for the following years. Troubles that diminish the experiential value are considered significant issues. We evaluate multiple external contractors and select the most suitable ones but unforeseen troubles may still occur. We will take the received opinions into consideration as we work on future improvements.

Can you tell us about the management policy of Hololive Production?
TBRResponse: Our company has a variety of talents with different charms including singing gaming and talking each with their unique appeal. We have been considering and implementing measures that maximize each talent's unique qualities. Regarding overseas expansion as announced in our recent global expansion policy we consider overseas talents to be an important part of our business. This year in addition to the recently debuted talents we plan to hold events and live tours to bring overseas talents to local audiences aiming to create a globally beloved culture that transcends regions.

What are your thoughts on talent support?
TBRResponse: For managing the health of our talents talent managers regularly monitor the health status of the talents share information on streaming frequency and duration with the talents and build a system that promotes health management. Additionally the company covers the costs of health check-ups for talents and supports them in undergoing medical examinations which helps in the early detection of illnesses and health issues. Regarding talent education we have enhanced pre-debut training and take the best possible actions whenever issues are identified including issuing alerts to all and implementing post-issue responses. As for overall talent support we believe it is important to provide the necessary environment according to the talent's stage and will continue to assess and adapt appropriately.

Can you tell us about the development progress and future plans for HoloEarth?
TBRResponse: We are making steady progress with the implementation and adjustment of milestones among other tasks. Currently we are in the verification stage of the development process so there is no information available for disclosure at this time. The metaverse business aligns with our vision and we are starting with areas that maximize our strengths anticipating a long-term effort. However we recognize that we are in a favorable position with our virtual characters already established as a business both domestically and internationally. We believe we can leverage this position to find winning strategies and envision creating a space where virtual characters can freely operate as part of our metaverse. While various developments and verifications are ongoing we cannot provide specific answers at this time.

Can you tell us about the development progress and future plans for HoloPlus?
Response: We are currently releasing the Japanese version and conducting beta tests for the English version while working on expanding the basic features. We believe that HoloPlus has the potential to be similar to other fan community platforms and once the basic features are sufficiently expanded we will be able to implement new strategies. Although we cannot provide specific details at this time we are considering various options.

Can you tell us about the background of the establishment of holo indie and its future plans?
Response: Holo indie was established as a game brand for derivative works with the goal of collaborating with Hololive Production fans and creators worldwide. We have been promoting the involvement of creators in derivative works such as allowing monetization on platforms for clip videos. Holo indie aims to provide a return ecosystem that supports the continuous activities of derivative game creators and creates opportunities to deliver a variety of derivative games to many fans. So far in addition to revenue returns we have supported localization and voice recording cooperation as part of development support. In the future we are considering measures to assist in game development and provide an environment that makes it easier to expand titles. We plan to actively approach the indie game market and community contributing to the activation of the community and creating opportunities to increase awareness of the holo indie brand and game creators.

Can you tell us about the hiring situation and your thoughts on human resource development?
Response: As part of our company structure we are recruiting positions necessary for the specialization and advancement of human resources in each business as the organization expands with business growth. While there are closed recruitment positions we believe that making them open might catch the eye of potential candidates and we adapt our recruitment strategy based on the position. For positions requiring professional skills hiring as regular employees may not match the career aspirations of candidates so we also hire some positions on a contract basis. We recognize the importance of developing professional talent within the company and are expanding our efforts to nurture talent through internal and external training.

On-the-day Questions (46 Questions in Total)

I heard rumors that Representative Director Tanigo lost a lot of weight last year due to illness. Are there any current health concerns?
Response: The weight loss was due to dieting for health reasons to ensure that future business operations can proceed without hindrance and there are no health issues at present.

What is the company's view on generative AI?
Response: We are currently deepening our understanding of AI. While we have not yet established unified rules we will continue to monitor developments and consider our approach.

It was stated at the time of listing that 2.7 billion yen would be invested in facilities. Has this been completed and are there any future investment plans?
Response: As stated in the listing materials the investment in establishing new studios and the working capital for IP development are being carried out as planned. Regarding future investments we cannot provide details at this time due to disclosure considerations but we plan to invest in areas necessary for future growth strategies.

Can you provide an update on the hiring plans including fluctuations since last year's shareholder meeting?
Response: We plan to continue increasing staff in line with business expansion aiming for a staffing structure that enhances profitability by increasing the ratio of business development personnel. Since last year's shareholder meeting our hiring plans have been adjusted slightly upward in line with our business plan.

Are you considering allowing the sale of goods by users (UGC) in addition to sales by the company (PGC)?
Response: We are not currently implementing this. We allow monetization for certain derivative works such as clip videos and derivative games based on our guidelines. Any changes will be communicated through the guidelines.

I feel that there is room for improvement in the speed concept clarity and communication of your business and projects. Shouldn't you quickly seek external cooperation for struggling areas? Also please provide clearer and more impactful public relations for users.
Response: Thank you for your feedback. While I have already addressed the overall policy we are discussing the best strategies for each group. We will actively improve based on your feedback.

The collaboration with the Yomiuri Giants last August was very successful. Can you tell us about future collaboration plans?
Response: We cannot provide specific details about future plans at this time. However this term includes collaborations with the Dodgers and projects like hololive CITY. Please stay tuned for further updates.

Recently the jacket image for EN Justice's new song the EN 2nd LIVE and the title for HoloWitch were leaked on the X timeline before the official announcement. Can you explain your confidentiality measures?
Response: We continuously educate our staff on information security and literacy but unexpected incidents can occur when new initiatives are undertaken. We respond to incidents with clearly defined internal procedures and strive to build appropriate preventive measures to reduce information incidents.

How do you plan to prevent reoccurrences of information leaks by talents considering the significant impact their departures have on the business?
Response: We are preparing information management training for our talents having already conducted it twice for domestic talents and plan to extend it to EN and ID talents as well.

Is there a plan to change the fiscal year-end from March to December?
Response: As stated in the first agenda item of the Articles of Incorporation amendment proposal our fiscal year currently runs from April to March.

What criteria do you use for IR disclosures? There have been recent positive news items such as TCG and the World Tour. There were also collaborations with the Dodgers hololive CITY and the debut of new EN talents. Shouldn't these be disclosed as IR news?
Response: Disclosures are made considering the impact on business performance and other factors as conveyed in earnings presentations and other important measures.

Can you provide some direction on your future streamer recruitment policies?
Response: We meticulously plan each new talent debut and unit design. At present we cannot provide specific answers regarding business strategy.

Do you have a plan to handle large-scale incidents and ensure the safety of talents while supporting them to resume streaming activities?
Response: We have established certain policies and execute them accordingly.

Considering the situations of other companies it has become clear that entering markets with different cultures poses significant risks. Does Cover intend to continue expanding EN? Are you conducting pre-research and preparing specific measures to avoid repeating past mistakes?
Response: We understand that each region has its own culture and customs and we must be mindful of these when expanding globally. We have increased our staff to handle global expansion ensuring that our talents can operate safely and expand their activities worldwide.

What are your plans for streaming on the video-sharing site 'bilibili' and how are you addressing various concerns?
Response: We are executing content expansion through talent streams and event participation on 'bilibili' under sufficient preparation and company supervision. Official accounts are managed by us to deliver content to fans worldwide including in China.

There were rumors of leaks by some related parties but our investigation found some of the information to be untrue. While the leak did not originate internally we have identified the sources and are addressing them appropriately.

We have noticed that sales of goods at several events have been halted due to a lack of inventory or support systems. When these sales have been stopped, each time, the company has suffered opportunity loss.
Response: The types of events we produce make it difficult to stock an adequately large inventory of event goods, so we prepare systems, such as pre-orders, to take into account expected demand. We will continue to improve in this regard, including to overall event policies.

What do you think about spreading VTubers to new fans who have not caught on to the trend?
Response: We believe that it is important to introduce people to VTubers without negative bias. As an example, our music-related activities have exposed many people to VTuber-produced music without a preformed association with VTubers. This is an important introductory avenue, so that people can be exposed through music, merchandizing, and media other than YouTube.

hololive DEV_IS has a different management style, led by a producer, but does not seem to be successful, as they do not grow at the same rate as other talents. While we think the project is a failure, how are the producer responsibilities set up? Do they have hiring or firing authority with respect to the talents?
Response: In order to move from a VTuber company to an IP company, we believe that we need to diversify our IP. For VTubers, it is important to discover and nurture new talent, looking not only at current performance but also future potential. In addition to the all-encompassing management of hololive production, we also want to set up a new group, separate from this framework, with an emphasis on group activities.
The producers do not have the sole authority over hiring or firing.

As public attention becomes more prevalent in the VTuber industry, it is important to look at compliance issues, such as live streaming content and what talents say and do. What specific efforts have you taken?
Response: We have been conducting information management training for hololive, which we have done twice, and we are planning to conduct similar training for hololive EN and ID. We have also been conducting training on avoiding leaks, done before debut, in order to avoid flaming.

I know that a high-spec PC is needed in order to use Holoearth, but do you plan to lower the required graphical settings after official release? Do you have any plans for mobile release? The larger is the user base, the more successful will be the service, but I think Holoearth's success will be tied to the integration of IP such as Hololive members.
Response: We want as large of a userbase as possible. For this reason, we plan to develop services on other devices, but at the moment we are focusing on high-end PC performance. After that, we will expand our service in stages. As to policy, I have answered that in a previous question.

We have seen a number of cyberattacks on business recently. Due to the company's business structure, a cyberattack, either on the company or the distribution platform, could be significant. What are your countermeasures against this risk?
Response: We have reduced our susceptibility to cyberattacks by maintaining an information system that is more secure and by providing information security training for staff and talents. When an incident occurs, we respond according to an established incident flow system.

This year, one talent's contract was terminated owing to a leak. Are you taking measures to ensure compliance from other talents?
Response: We are preparing by conducting training, which we have done twice for JP and will be doing for EN and ID.

I see that contract terminations owing to leaks by talents have been a regular occurrence [in the industry]. Mental care, medical check-ups, and training come to mind, but what other preventive measures does the company have in place now or are planning to have in the future?
Response: We have been conducting information management training for hololive, which we have done twice, and we are planning to conduct similar training for hololive EN and ID. We also budget medical examinations of the talents at the company's expense.

In terms of the talents' health, we have developed a system wherein the talent's manager can share information with the talent to encourage positive health outcomes, such as monitoring the talent's health daily and by examining the frequency and duration of live streams. In addition, by paying for talents' medical examinations, we promote a system which will lead to the early detection of illnesses.

Although the cases of slander and countermeasures relative thereto have been explained, the number of doxxsites* and false rumors that can interfere with normal business operations have increased. Shouldn't COVER further deterrent effects by denying malicious rumors or naming individual cases?
The literal phrasing is "bad-collection sites," which seems to be the corpo-speak for doxxsites.
Response: We consider internally, based on the information available, what course is prudent and, if necessary, will take action, including a press release.

I would like to know about the sex ratio in senior management, including directors, such as percentages. I believe that some women are needed in management in order to cater to a female audience, and I would like to know your thoughts on the promotion of women now and in the future.
Response: We have numerous senior-level female employees and the ratio is increasing. We will continue to consider the appointment of women in the future.

Regarding action against defamation, what is your plan to counteract overseas crime as your business expands globally?
Response: We know that defamation of our talents is a serious issue, and we take strict countermeasures, including issuing warnings and filing requests to sites hosting defamatory material. We are taking the same actions overseas; in the case of defamation, we do so in cooperation with local law firms.

Mr. Suda ("Outside director" Kimiyuki Suda) seems to own some stock in the company. Can he provide appropriate supervision that is not blinded by his self-interest?
Response: We do not see any problem with an outside director holding shares of the company, as it enables him to provide guidance from the view of a shareholder.

The time between the notice for the shareholders' meeting and the deadline for submitting questions was very short.
Response: Your concern is duly noted.

The average employee salary does not seem to be very high.
Response: We have been raising our salaries against the backdrop of social support for higher wages, but we will continue to consider the matter of appropriate expenditures in this area.

Looking at current or former engineers, a few weeks ago KADOKAWA was attacked by hackers. I saw on the news that it was an inside job. Is your company safe?
Response: We have been strengthening our procedures relative to account verification, and we take active measures to suspend the accounts of employees as soon as possible after they retire or are terminated.

Please tell us about the progress of your company's preparations relative to stock market classification.
Response: I have nothing to report at this time. We will continue to update you when anything new arises.

For the handling-of-personal-information case, was that incident not caused by a lack of clarity in the rules? I would like to ask what you would think about more work in that area.
Response: There are no problems at the moment. Personal information is appropriately handled, in accordance with policy. We are continually assessing the situation, and may modify our policy if necessary.

The live concert in March was held in Makuhari, but the venue was not large enough. Is there are a plan to use a larger venue or, due to the virtual nature of the concert, hold it at multiple venues simultaneously throughout the world, in Japan or elsewhere?
Response: We have not yet decided for future events, but the 5th fes held at Makuhari Messe, in the same location as previous year, but the number of attendees greatly increased from 15,000 to 56,000. We have considered a variety of options, and while we believe that we can continue to work with the capacity of Makuhari to some extent, we are discussing other options.

I remember that ReGLOSS was identified by the President with K-POP. I think that this can be promoted by activities in Korea, so why are they active in Japan?
Response (after Mr. Motoaki's confusion): We are not aiming for ReGLOSS to be a literal K-POP group; we intended to emulate the K-POP style of groups and group activities within the established hololive brand. Therefore, we do not intend to engage in activities in Korea at this time, but we want to take lessons from K-POP idols to further our success.

Please explain the benefits of long-term growth in relation to IR for foreign institutional investors. Also, tell us about your company's evaluation of the current trend in stocks.
Response: In short, as a growth-focused company, we believe that the stability of our stock price is reliant on attracting more investors in the long term by firmly communicating our company's mid- to long-term growth policy and market potential. Currently, as seen in our financial statement and promotional materials, we are expanding the potential of the VTuber business through our market superiority and a new business roadmap based on industry expansion.

Your company tends to focus on the talents, but your success is also due to many excellent employees. What are you doing to secure good employees? What is your impression of your company from the managerial side?
Response: In addition to improving recruitment efforts, such as targeted employee attraction, we are also reviewing our HR system to meet the needs of our employees at this stage of our growth.

What are the benefits of transitioning to a company with an audit and supervisory committee and delegating important business execution?
Response: We believe that by delegating decisions related to important business execution to specific directors, a significant benefit is the ability to make swift decisions regarding management.

I understand that the numbers of employees and the budget increase rapidly with the growth of your company. What checks and balances do you have in place to counteract embezzlement?
Response: We are preventing business embezzlement through several means, including compliance training and a requirement that all expenses and costs be verified by a committee.

Is there a stock ownership plan for talent staff?
Response: As part of our employee welfare plan, we established a stock ownership plan in FY 2024.

There were three solo live shows last year. How many do you plan to hold this year? What are your thoughts on the frequency of solo lives?
Response: What has been announced is confirmed, and we will continue to hold solo lives, but we will not announce a definite policy. We consider various plans to maximize fans' enjoyment, including event format.

In an interview with the President, I believe that he said that AI was not being considered for IP generation, but AI technology has increased in recent years. What does President Tanigo envision to be the use of AI?
Response: Considering our development of VTubers in various regions, we believe that AI could be valuable for content delivery simultaneously in different languages, as an example.

Are you considering any shareholder benefits, such as hololive merchandise? I feel that merchandise or priority tickets would be a good opportunity to increase the shareholder base.
Response: As for hololive production-related content, we are not considering any measures which would distinguish between shareholders and non-shareholders, especially as we have many young and teenage fans. It is our policy to reinvest in content development so that we can expand the VTuber market, and to commit to a growth model which will increase our business performance through enjoyment by our fans.

Are there any plans to hold future shareholders' meetings with HoloEarth?
Response: We have not yet decided on the details of future shareholders' meetings, but we will consider this matter in light of feedback which we have received.

What is the effect of the exchange rate on COVER?
Response: Depending on foreign currency, the gain or loss will be filed as non-operating [cost/benefit].

I understand that your company is an IP company which operates through the characters of employed talents, but there have been cases where this IP has been lost due to reasons which are not known to fans or to shareholders. What is your opinion on this sudden loss of IP?
Response: Our company's talent base is very diversified, so even our most successful VTuber, we receive less than 5%; even so, we continue to work to diversify our earnings. The most important thing is our support for the talent's continued activities. As I have emphasized, it is important to create a system that allows the talent to be supported within the company, and to assess the talent's situation at a given moment.

What are your plans in relation to actions and costs for talent training?
Response: We have already answered this question so far as support is concerned. I will refrain from giving any details about costs for strategic reasons. We continue to strive to maximize the appeal of VTubers.