EXPORTING VOCALOID

FROM JAPANTO AMERICA

WHAT IS VOCALOID?

• Voice-synthesizing software

FROM JAPAN TO AMERICA

Why Japan?‒ Developed in Japan‒ The information and technology gather

Why America?‒ US Toyota commercial‒ Held a concert in Los Angeles‒ Got No.1 on the US iTunes world album chart‒ 30% of sales of Vocaloid songs on ITunes

SOCIOECONOMIC FACTORS

• Emphasize on Music Education– In 38% of all households, at least one member currently

plays an instrument.– The number of people between 10 and 34 years old who

currently play an instrument is about 14,600,000– The sales of CDs and digital music were about 4 billion

dollars in 2011

• Japanese pop culture has been accepted– J-pop, Japanese animation, video games…

COMPETITORS

• The number of companies creating Vocaloid is only six in Japan‒ CRYPTON FUTURE MEDIA‒ INTERNET‒ YAMAHA

• The number of Japanese singing Vocaloids is 19‒ But they are not formally released yet in America‒ No Vocaloids specialized in English singing

‒ Ki/oon Records‒ AHS‒ 1st Place

PRODUCT

We will create adult female Vocaloid with high tone voice

PRICE & PLACE

• The average price of other Vocaloid is around 150 dollars‒ The package price is 140 dollars‒ The download price is 120 dollars

• On direct e-commerce

PROMOTION

• Display advertising

‒ Facebook display adverting

‒ Google AdWords

• Promotional events

‒ Contests of music composition with our product

‒ Contests of promotional videos, illustrations, singing, and playing for winning songs

FINANCIAL PROJECTIONYear 0 Year 1 Year2 Year3 Year4

The number of target customers 14,600,000 14,600,000 14,600,000 14,600,000 Traget rate 0.030% 0.035% 0.040% 0.045%Target number of sales 4,380 5,110 5,840 6,570

# of package 2,190 2,555 2,920 3,285 Price of package 140.00$ 140.00$ 140.00$ 140.00$ # of download 2,190 2,555 2,920 3,285 Price of download 120.00$ 120.00$ 120.00$ 120.00$ Total Revenue 569,400$ 664,300$ 759,200$ 854,100$

Total Cost of Goods Sold 78,840$ 91,980$ 105,120$ 118,260$ Gross Margin 490,560$ 572,320$ 654,080$ 735,840$

Total Operating Expense 373,400$ 385,400$ 486,400$ 498,400$ Operating Income (EBIT) 117,160$ 186,920$ 167,680$ 237,440$

Tax (35%) 41,006$ 65,422$ 58,688$ 83,104$ Net Income 76,154$ 121,498$ 108,992$ 154,336$

Withdrawing tax (10%) 7,615$ 12,150$ 10,899$ 15,434$ remitted after withholding tax 68,539$ 109,348$ 98,093$ 138,902$

Cum. NPV at stabl exchange rate (83.5) ¥-12,000,000 ¥-7,023,502 ¥-119,475 ¥5,266,075 ¥11,897,469Cum. NPV at favorable exchange rate (86) ¥-12,000,000 ¥-6,874,505 ¥236,229 ¥5,783,023 ¥12,612,962Cum. NPV at unfavorable exchange rate (81) ¥-12,000,000 ¥-7,172,499 ¥-475,180 ¥4,749,127 ¥11,181,976

ENTRY STRATEGY

• Establish our own subsidiary to enter the US market

Exporting SubsidiaryPro

–Low costs–Quick entry

Pro–Control marketing strategies–Storage local information

Con–Limited control over the marketing activities

Con–High costs–Takes time to enter markets

FINANCIAL STRAGETY

• Finance the project by using US dollar

• Expect that the US dollar appreciation against Japanese yen continues in the next few years

Finance the project by using US dollar

HEDGING STRATEGY

• Not sure that our expectation is right or not, so it is better to hedge the risk

• Purchase a put option of US dollar