Toho (9602) analysis: Will it transform from a movie company to an IP platform company?

[Summary]

Toho is transforming from its traditional ``movie performance company'' to ``an entertainment company that operates IP over the long term.''

Of particular importance is "TOHO VISION 2032," which integrates anime, games, overseas expansion, and the membership base.

Up until now, Toho has had a strong focus on one-off profits from hit movies. On the other hand, the company is currently shifting to a model where it continues to operate the IP and expand horizontally into games, product sales, distribution, and overseas expansion.

The game business still accounts for a small percentage of the company's overall revenue. However, through games such as Jujutsu Kaisen Phantom Parade and Kaiju No. 8 THE GAME, it has begun to function as a device to increase user contact time.

In particular, Godzilla is a strategic IP that Toho can develop with the greatest degree of freedom. The company is aiming for an IP market size of 80 billion yen in 2032, and will continue to make large-scale investments in games, overseas markets, and commercialization.

In the short term, the backlash from large-scale movies and investment burdens tend to suppress profits. On the other hand, in the medium term, the biggest issue will be whether the company will be reevaluated as an ``IP platform company'' rather than a ``movie company.''

Toho is the largest domestic movie box office company.

However, the company is currently transitioning from a traditional movie company to an IP management company.

The growth drivers are as follows.

• Anime *Game
• Overseas expansion
• Membership base integration *IP commercialization

In particular, the company is strengthening its animation business as its "fourth pillar" and plans to significantly expand TOHO animation's supply capacity by 2032.

Summary

We are currently changing from a ``company that makes movies'' to ``a company that operates IP over the long term.''

Starting from the fiscal year ending February 2026, Toho has made the ``IP/anime business'' an independent segment from its traditional movie business.

This is not just a display change.

This means that the company has entered the stage of managing anime, games, merchandising, and overseas expansion as independent growth businesses, rather than as ancillary businesses to movies.

In the past, Toho was often seen as a hit company at the movie box office.

But from now on,

• Create IP with movies
• Increase your fan base with anime
• Increase contact time with games
• Accumulate customer data with TOHO-ONE
• Make money through product sales and overseas

This circular model will be evaluated.

This is one of the most important points of change when analyzing Toho.

Quantity

Expand the number of anime supplies.

The aim is to have a system of 30 courses per year by 2032.

This is one of the largest supply systems in Japan.

At the same time, production capabilities such as Science SARU are being strengthened.

Price

Shifting focus to LTV through horizontal development of IP rather than individual movies.

Revenue sources have expanded to the following.

• Delivery *Game
• Goods *Event *EC
• Overseas license

Cost

Acquired an anime production company.

Game investment.

Overseas distribution investment.

A burden on short-term profit margins.

Exchange

A weaker yen benefits from an increase in overseas sales ratio.

However, there is also an increase in overseas investment costs.

Structural change or temporary factor

There is a strong aspect of structural change.

The essence is to shift to a long-term IP management model rather than a one-off movie hit.

The fiscal year ending February 2026 will be at a record high profit level.

On the other hand, the company's plan for the fiscal year ending February 2027 is for a decline in profits.

The background is below.

• Concentration of big hits in the first half
• Increase in IP investment
• Increased gaming investment
• Increase in overseas expansion costs

In other words, they are entering a phase where they are prioritizing medium-term growth over short-term profits.

From an investor's perspective,

“Temporary slowdown in profits”

Do you see it as

“Investment period for IP platformization”

Evaluations differ depending on whether you view it as such.

Continue investing in anime and games

Expanding anime-linked games such as Kaiju No. 8 THE GAME and Jujutsu Kaisen Phantom Parade.

They are starting to position games as an expansion device for IP exposure time, rather than as a sole source of revenue.

TOHO-ONE starts

Progressing customer ID integration.

Build a member economic zone that crosses movies, theater, product sales, and games.

Strengthen North American expansion

Acquired North American anime distribution base through acquisition of GKIDS.

Proceed with the transition to an overseas direct sales model.

Godzilla large investment

Plan to invest approximately 15 billion yen in Godzilla over three years.

Targeting IP market size of 80 billion yen in 2032.

Market view

The market still has a strong tendency to view them as "movie companies."

On the other hand,

• IP management
• Member economic zone
• Overseas IP development *Game

If the company makes a full-scale contribution, the evaluation axis may change.

Source of revenue

• Movie box office
• Film distribution
• Anime
• Commercialization *Game
• Real estate
• Overseas license

Profit margin

Real estate provides stable profits.

While the IP business is subject to large fluctuations, there is also plenty of room for profit growth.

Strengths

• One of the largest theater networks in Japan
• IP management ability
• Animation production/promotion ability
• Owns Godzilla IP
• Overseas expansion ability
• Cash generation ability

Weaknesses

• Hit dependent
• Increased production load
• Lack of game management know-how
• Rights restrictions for committee works
• Investment upfront risk

Toho's game business is not currently its main source of revenue.

However, it is of high importance.

The reason lies in the "contact time".

Basically, you watch a movie once and then it's over.

On the other hand, games can be accessed every day.

This difference is huge.

When a game is successful, IP changes from one-time consumption to continuous contact type.

Specifically,

*Character attachment

• Community building
• SNS spread
• Purchase goods
• Event participation *Watch movies
• Subscription viewing

It becomes easier to spread the influence to

In other words, games need to be viewed as a device that increases the LTV of the entire IP, rather than as a sole benefit.

Godzilla is the most important part of Toho's IP strategy.

There are three reasons.

1. Rights and freedom

It has a strong in-house color.

There is more freedom than committee-style animation.

2. Overseas recognition

It is well known globally, including in North America.

This is rare even for domestic IPs.

3. Game aptitude

Godzilla is

*Action

• Battle
• Strategy
• Collection

Goes well with.

It is easier to manage long-term games than anime IP.

This is why Toho is investing heavily in Godzilla.

TOHO-ONE is not just a point system.

A platform for Toho to hold customer data cross-sectionally.

In the future,

*Movie *Game

• Goods *EC *Event

may be integrated.

In other words,

“Who likes what?”

Toho itself will be able to understand this.

This is extremely important as an IP company.

In the future, this may lead to improvements in advertising efficiency and product sales conversion rate.

Toho has set an overseas sales ratio of 30% as a long-term goal.

Particular emphasis on North America.

GKIDS Acquisition

Acquired North American anime distribution base.

Shifted from the traditional focus on licensing out to direct deployment.

Toho International

Strengthen overseas expansion of products such as Godzilla.

Implications

When it comes to overseas direct sales,

• Improve profit margin
• Customer data acquisition
• IP value improvement

Leads to.

This is important in the medium to long term.

Positive

• Longer IP lifespan
• Increase in overseas ratio
• Increased gaming revenue
• Formation of member economic zone
• Godzilla IP regrowth

Negative

• Upfront investment
• Hit dependent
• Risk of game failure
• Rising production costs

Inclusion status

The market tends to react to movie hits.

on the other hand,

• TOHO-ONE *Game
• Overseas IP revenue
• Data economy zone

is a possibility that has not been fully factored in yet.

What is important about Toho's stock price is not the PER number itself.

What kind of company does the market view Toho as?

As a movie company, we are highly dependent on hits.

On the other hand, if you look at it as an IP company,

• Recurring revenue
• Overseas expansion
• Membership base *Game
• Commercialization

will be subject to evaluation.

In other words,

"Movie company PER"

From

"IP company PER"

The biggest issue is whether the transition can be made.

The points to note are as follows.

• New movie screening
• Anime sequel
• Game KPI
• Godzilla new development
• Overseas sales
• Number of TOHO-ONE members

In the short term, the influence of hit movies continues to be large.

In the medium term, the focus will be on the following:

*IP business profit margin

• Game revenue continuity *Overseas sales ratio
• Expansion of membership base
• Increase in-house IP ratio

In particular, the biggest issue is whether it is possible to transition from a movie company to an IP management company.

Bullish: 40%

Conditions:

• Godzilla IP expansion
• Game business becomes profitable
• Overseas sales growth
• TOHO-ONE established
• Increased IP rating

Stock price direction:

Reevaluated as an IP company.

Neutral: 45%

Conditions:

• Movies and anime are strong *Games have limited contribution
• Continue upfront investment

Stock price direction:

Maintain current PER range.

Bearish: 15%

Conditions:

*Large productions slump

• Increased game deficit
• Delay in investment recovery
• Overseas expansion stalled

Stock price direction:

A return to movie-dependent evaluation.

Toho is currently not just a movie company, but is trying to transform into a company that continues to operate IP.

What's important is not the movie itself being a hit.

Based on the movie,

• Anime *Game
• Merchandise sales *EC
• Overseas expansion
• Membership base

The essence is whether we can extend the IP lifespan.

Of particular note are the following.

• Concentrated investment in Godzilla
• Independence of IP/anime business
• Expansion of game business *Customer integration with TOHO-ONE
• Overseas direct sales model

In the short term, the backlash from large-scale movies and the burden of investment are likely to put pressure on profits.

However, the evaluation axis itself may change in the medium term.

As long as the market views Toho as a ``movie company,'' its ratings tend to depend on hits.

On the other hand, once we begin to be recognized as an IP platform company,

• Recurring revenue
• Member economic zone
• Overseas IP value *Game LTV

will be subject to evaluation.

In the future, the focus is starting to shift from one-off hits to whether IP can continue to be monetized for many years.