Summary of the Conference Call on the Japanese IP Toy Industry Industry Overview - The Japanese IP toy industry is primarily dominated by Bandai and Tomy, with a rich history and significant market presence. Bandai specializes in character-based toys, achieving annual sales of 20 million to 30 million units, with peak sales of 60 million units for its second-generation products. Tomy is known for its original toys, such as vehicles and dolls [3][3]. Key Points and Arguments - **Market Challenges and Consolidation**: The industry faced challenges in the late 1990s due to demographic and economic downturns, leading to a significant consolidation in 2005-2006, resulting in the formation of Bandai and Tomy. Bandai integrated its supply chain through the acquisition of Bandai Namco, while Tomy expanded its product line [3][5]. - **Bandai's Competitive Advantage**: Bandai's core competitive advantage lies in maximizing IP value through close collaboration with Toei Animation, monopolizing the Japanese boys' toy market. Their strategy includes diversifying revenue streams across toys, mobile games, and PC games [3][6]. - **Gundam's Revenue Structure**: Gundam, as Bandai's most profitable IP, shows a balanced revenue contribution from both games and toys, indicating long-term growth potential for mech-building products. Bandai enhances operational efficiency through copyright acquisitions and rapid product design approvals [3][7]. - **Tomy's Recent Developments**: Tomy faced difficulties pre-pandemic due to a lack of localized IP resources, relying heavily on American collaborations. Post-pandemic, Tomy leveraged the global toy market's beta effect, transitioning to online marketing and expanding into adult entertainment products [3][9]. - **Sanrio's Business Model**: Sanrio exhibits cyclical development, with significant profit growth through IP licensing, particularly in the Chinese market, where partnerships with Alibaba Sports have yielded profit margins exceeding 40% [3][12]. - **Valuation Trends**: The valuations of Bandai, Tomy, and Sanrio differ significantly. Pre-pandemic, Tomy and Bandai were valued at 15-20 times earnings, while Sanrio maintained around 20 times. Post-pandemic, Sanrio's valuation surged to 50 times due to successful global licensing and a focus on adult consumer trends [3][13]. Additional Important Insights - **Potential in China's IP Toy Market**: The potential for China's IP toy market is substantial, with the children's market estimated to be over three times that of Japan. The overall market for all ages also shows similar growth potential [3][18]. - **Investment Opportunities**: Notable companies to watch in the investment landscape include Brook (leading in building toys), Kayo (card game leader), TOP TOY (rapid revenue growth), and Guangbo (capitalizing on the two-dimensional IP economy) [3][19][20]. - **Global Card Game Market Trends**: The global card game market has seen a resurgence post-pandemic, driven by increased demand for collectible cards, revealing significant potential in the domestic IP commercialization market [3][14][15].