So-net and GDH Announce Capital Tie-Up

Collaboration of Animation, Character and Online Games
In Pursuit of a New Frontier in the Online Entertainment Industry \

2007.01.19
So-net Entertainment Corporation (Head Office: Shinagawa-ku, Tokyo, President: Kenichiro Yoshida, hereafter So-net), a leading internet service provider and operator of "So-net" services, and GDH K.K. (Head Office: Shinjuku-ku, Tokyo, CEO: Shinichirō Ishikawa, hereafter GDH), an international media company providing high quality animation produced by its group company GONZO, have agreed to a capital partnership today to aim to collaborate business operation in the continuously growing animation market.

The animation industry is expected to expand from 233 billion yen in 2006 (up 14% from the previous year) to over 250 billion yen in 2010 (Data from Industrial Structure General Research Institute, Ltd.) with the advance of online video distribution to computers and mobile phones driven by the explosive proliferation of broadband network, increased number of satellite TV channels, and the expansion of the distribution scale of videos as seen in the overseas market.

So-net and GDH will leverage their respective areas of expertise to engage proactively in the following collaborative operations to be implemented in the expanding animation market.

<Concept of Business Collaboration Between So-net and GDH>


Collaborative Business Operation Exploiting So-net's Character Brand and GDH's State-of-the-Art Animation Technologies
- Joint development of animation based on the digital pet characters of So-net's unique programs such as "PostPet" and "Livly Island." The exploitation will increase opportunities for So-net's characters to be more widely recognized and hence boost its character-related business. Additionally, GDH will introduce new genres to the line-up of GONZO titles and extend GDH's reach to a wider audience in its animation business. - Development and/or search for new characters launched from the internet. So-net and GDH will also look into franchise opportunities for newly-created characters including animation and online games.


Collaborative Development of Online Community Business within the Animation Market
- Optimizing the potential derived from the synergy of animation content and CGM (consumer-generated media) services. So-net and GDH will draw models from existing CGM-based services such as So-net blog, So-net SNS, and GONZO LOUNGE to develop new forms of online interaction strongly tied to GDH's animation titles.


Collaborative Business Development of Online Games
- So-net and GDH will jointly explore ways to bring online game characters to life in the form of animation or create games from existing animation titles.
In this capital tie-up, So-net will receive new stocks from GDH, becoming the second largest shareholder of GDH with 14.30% of the total stocks issued.

The details of the background and purpose of the capital tie-up are as follows:

<So-net Entertainment Corporation>
- Animation as well as online games have elements of entertainment and community participation, and the characteristics of the industry resonate with So-net's corporate strategy and direction it sets as a provider of entertainment services. So-net will strive for enhancement of corporate value by establishing a stronger alliance with the animation business that continues to grow both inside and outside Japan.
- So-net will explore the development of a new form of network entertainment business model through a mid to long-term alliance with GDH, renowned for innovative and high quality animation as seen in Brave Story, released nationwide in the summer of 2006, global competitiveness and expertise in the development of online games synergistic with animated works. The alliance with GDH will unite animation contents and So-net's CGM-based services such as blogs and SNSs, characters and online games.

<GDH K.K.>
- The alliance with So-net will allow GDH to secure mainstream audiences in addition to the existing hardcore animation fans, as seen in the production of Brave Story, released last summer. Complemented by So-net's expertise in the provision of entertainment via the internet to a vast number of users, GDH will have optimized opportunities to provide appealing online contents and services.
- GDH will continue to proactively engage in the cultivation of the corporate brand value and consolidation of strategic backbone by the joint exploration of new areas of entertainment business with So-net.

For more details, visit:
So-net Entertainment Corporation website
http://www.so-net.ne.jp/corporation/IR/release/
GDH K.K. website
http://www.gdh.co.jp/ir/

[ About So-net Entertainment Corporation ]
So-net Entertainment, formerly Sony Communication Network Corporation, runs an integrated internet service called So-net, which has provided communication and portal services since January 1996. There are currently 3,040,000 So-net subscribers (as of Sept. 2006). So-net's corporate objectives for 2007 are enhancement of revenue models and pursuit of growth.

[ About GDH K.K. ]
GDH (Security code: TSE Mothers 3755) is a globally-focused Japanese media company founded in February 2000. The group produces cutting edge entertainment for teens and young adults through its GONZO animation brand. Kids and family product are distributed through the recently launched GONZO FILMS and GONZINO brands.
GDH is a world leader in content development targeting both domestic and international audiences with Japan's trend-setting animation culture and, usually, GDH controls licensing management and international distribution for the content it produces. GDH group companies include GONZO K.K., G-creators K.K., Future Vision Music K.K., GONZINO K.K., GONZO Rosso Online K.K., GDH Capital K.K. and GK Entertainment K.K.
For additional information, visit http://www.gdh.co.jp/english.