Creative Sector Stumbles Amidst Investment and Market Shifts

While Creek & River Holdings’ creative sector in Japan experienced a marginal revenue increase, profitability suffered due to strategic investments and evolving market dynamics.Meanwhile, the Korean creative sector faced steeper declines.

Japan’s Creative Division: Sales Up, Profits Down

The Japanese creative sector of Creek & River 4763 saw a slight uptick in sales, reaching ¥35,305 million, a 0.7% increase year-over-year. However, operating profit decreased by 12.0% to ¥2,532 million.This decline is attributed to several factors, including increased investment in new graduate recruitment and original content development, totaling ¥100 million. These investments, while strategic for long-term growth, have temporarily impacted the bottom line.

Furthermore, the sector faced headwinds from reduced projects with major game publishers and extended contract periods for recruitment services. Despite these challenges, growth in the television, video, web, and e-book sectors contributed to the overall sales increase. The company’s proactive recruitment strategy, initiated in 2023, resulted in a meaningful increase in new hires, with 316 new employees joining in 2024, compared to 277 in the previous year. This expansion reflects a commitment to future growth despite current profit pressures.

sector-Specific Performance: Video Thrives, Gaming Falters

A closer look at individual sectors reveals a mixed bag. The video (television and film) sector experienced single-digit growth in both revenue and profits, driven by an increase in programme production, corporate commercials, and promotional videos. While the cessation of some regular programs impacted sales, the overall performance remained strong.

In contrast, the gaming sector faced a single-digit decline in both revenue and profits. This downturn is linked to a broader industry slowdown impacting recruitment services and a reduction in projects from major game publishers. To counter these challenges, Creek & River Holdings has expanded its global footprint, establishing a business base in Canada to tap into overseas markets. Full-scale sales activities commenced in the fiscal year ending February 2025.

The web sector (including paper media) saw revenue growth but a decline in profits. Strong sales in web production and promotional projects for companies and government agencies were offset by the absence of large, highly profitable projects. The e-book sector, however, bucked the trend, achieving double-digit growth in both revenue and profits, fueled by increased distributor sales to e-book stores like Amazon.However, profits were impacted by lower sales of original e-comics from Manga LABO.

Creek & river is also expanding its reach through video streaming services,increasing contracts for tie-ups with YouTube creators,product promotions,and event plans.The total number of channels, including those of networked YouTube creators, has grown from approximately 500 to 620.

Strategic Diversification into emerging Fields

Recognizing the need for diversification, Creek & River Holdings is actively expanding into new agencies and fields, including architecture, AI/DX, life sciences, CXO, athletes, performing arts, and XR. A notable initiative is the establishment of a free AI/DX consultation desk for small and medium-sized enterprises. This service has already supported approximately 70 companies in implementing AI/DX tools, demonstrating the company’s commitment to innovation and technological advancement. While sales in these areas are currently modest, the company is steadily securing contracts, laying the foundation for future growth.

Korean Creative sector: A Challenging Landscape

The creative sector in Korea faced significant challenges, with sales declining by 13.4% to ¥3,078 million and an operating loss of ¥10 million.This represents a slight improvement from the previous fiscal year’s loss of ¥41 million. The decline is primarily attributed to a continued decrease in demand for temporary workers in the mainstay agency business for television stations, with sales falling by 13.8% to ¥2,879 million.

Despite efforts to promote the distribution of original digital comics (Webtoons) both domestically and internationally, secondary use, such as merchandise sales and filming, also declined. However, cost-cutting measures implemented since the management revamp in May 2024 have helped to reduce losses, with the company achieving profitability in the nine months since the second quarter.

Medical Sector: Navigating Structural Reforms and Shifting Priorities

The medical sector experienced a slight decline in both sales and operating profit, reflecting the impact of structural reforms and changing market dynamics. While demand for doctor referrals remains strong, the number of referrals has decreased due to a review of the sales structure.

Sales Decline Amidst Strong Demand

Sales in the medical field decreased by 2.0% year-over-year to ¥5,307 million,while operating profit fell by 16.2% to ¥1,083 million. The primary driver of this decline was a 4.6% decrease in sales of the physician referral business, which totaled ¥4,063 million. Despite continued strong demand for doctor referrals, the number of referrals decreased as an inevitable result of structural reforms initiated in the second half of the previous fiscal year.

The end of a spot project for coronavirus vaccination also contributed to the decline, resulting in a ¥35 million reduction in revenue. Though, sales of production businesses, such as Reginavi Fair and Reginavi Fair Online, increased by 6.0% year-on-year to ¥873 million, driven by an increase in the number of events. Other factors,such as the insurance distributor business for doctors,also contributed to steady growth,increasing by 11.7% year-on-year to ¥370 million.

The medical sector operates through its subsidiary,Medical Principle,which provides services such as “Reginavi Fair” and “Reginavi Fair Online” for medical students and residents,the clinical training information site “Reginavi,” and “Reginavi Connect,” an information gathering site for young doctors,focusing on doctor referral projects under the “Private Medical Bureau” brand. Additionally, Community Medical Innovation Co., Ltd., established in june 2021, focuses on developing effective regional medical peripheral services, including nursing care businesses and new clinic management support services.