TOSE CO.,LTD. (4728) Stock Price

Tose is a company whose core business is contracted planning, development, and operation of game software and mobile content. The company provides development and operational support services across a wide range of platforms, including home gaming consoles, smartphones, and arcade systems.

Its primary customers are game makers, publishers, and platform operators. Revenue is primarily generated through work fees associated with contracted development and operational outsourcing. In addition to development costs and operational support fees per project, the company is expanding revenue through content production and solution provision in non-gaming sectors.

The business is divided into two main segments: "Game Business" and "Other Business." The Game Business operates development facilities in Japan, as well as through a local subsidiary in China and a base in the Philippines. The Other Business focuses on digital content, enterprise solutions, and new business creation, with Fonex Communications Inc. handling non-gaming business operations. The Philippine subsidiary was decided to be dissolved in August 2024 and is currently undergoing liquidation procedures.

The company is committed to "building a company that lasts forever" and has designated operating profit, net income attributable to parent company shareholders, and ROE as key performance indicators, aiming to improve profitability and capital efficiency. In the near term, leading up to the fiscal year ending August 2026, the company faces overlapping completion of multiple major projects and launch of new initiatives, making it a priority to improve developer utilization rates from the underutilized state at the end of August 2025 to appropriate levels. To sustain growth, the company is working on both revenue stabilization and profit margin improvement.

In its game business, the company differentiates itself through high-performance platforms for home consoles and remake projects, pursuing a strategy to become a preferred development partner through multi-platform deployment and Nintendo Switch 2 compatibility for existing titles. New smartphone game development is not planned for the current fiscal year. Given the planned reduction in smartphone operations and declining revenue share (success-based compensation from game sales with no associated costs), the game business is expected to see operating profit decline in the fiscal year ending August 2026. Despite these headwinds, the company aims to maintain competitiveness through its strength in top-tier development talent in both quality and quantity, leveraging high-quality development capabilities.

The company is also expanding into non-game sectors, applying its digital development expertise to create new businesses in education, mental health and well-being, and entertainment services utilizing intellectual property. The fiscal year ending August 2026 will be an investment phase focused on market research and R&D, with the other business segment expecting temporary revenue and profit declines. However, the company plans to drive mid-to-long-term revenue growth through enterprise solutions and content supply via subsidiaries such as Phonex Communications Inc.

The company is advancing AI utilization and business digitalization (DX) to drive technological innovation, enhancing development capabilities and productivity. Specifically, the company is expanding research opportunities for development staff, strengthening internal knowledge sharing, and enriching career hiring and in-house training to elevate expertise and development capacity, aiming to build teams capable of handling large-scale, complex projects. Additionally, the company is improving employee engagement through workplace environment enhancements, including new office setup in Nagaokakyo and revision of compensation and evaluation systems.