NEWSLETTER

September 2021
BANDAI NAMCO Holdings Inc.

BANDAI NAMCO Mirai-Kenkyusho
5-37-8 Shiba, Minato-ku, Tokyo 108-0014

Interview with the President

Leveraging the distinctive strengths of the
BANDAI NAMCO Group to make a strong startin what will be an important year leading up to
the next Mid-term PlanBANDAI NAMCO Holdings has announced its results for the first three months
of FY2022.3. In this issue of the newsletter, President Masaru Kawaguchi
discusses the circumstances in the first quarter, future outlook, current trends
in each business, and other matters.
The results for the first three months
of FY2022.3 have been announced.
Kawaguchi: In the first three months of
FY2022.3, we achieved net sales of ¥178.0 billion, operating profit of ¥27.0 billion, and profit
attributable to owners of parent of ¥20.9 billion.
These are record-high levels for sales andprofits in the first three months. The spread of
COVID-19 has had an influence, but we areapproaching changes in the business environment as opportunities to acquire customers
and create markets, and employees on the front
lines are taking on a variety of challenges. I
think that we have been able to leverage thedistinctive strengths of the BANDAI NAMCO
Group and make a strong start in what will be
an important year leading up to the next Midterm Plan.
Would you provide an overview of
the circumstances in each business?
Kawaguchi: In Digital business, SCARLET
NEXUS, a new home video game title, got off
to a good start. In addition, repeat sales of existing titles were up year on year on a unit basis.
In these ways, results remained favorable, centered on markets around the world. In network
content, the new My Hero Academia title got
off to a solid start, and mainstay titles also
recorded stable results. However, overall performance in network content did not reach thelevel seen in the same period of the previous
year, when results were favorable due to demandassociated with people staying at home. Furthermore, in the first three months of theprevious fiscal year, there were no major releasesof new titles in home video games and network
content, but in the first three months of this fiscal
year we recorded initial expenses for the introduction of new titles on an upfront basis.
The Toys and Hobby business achieved
record-high results for the first three months.
Products for the mature fan base, such as
Gundam plastic models and figures, recorded
favorable results around the world. In addition,
we saw a recovery in categories such as prizes,
which in the same period of the previous fiscal
year were affected by the suspension of operations at amusement facilities due to the spreadof COVID-19. Furthermore, new IP* products,
such as Demon Slayer: Kimetsu no Yaiba, continued to be popular, and favorable results werealso recorded by confectionary and capsuletoys, where hits have included not only
­products that utilize IP but also non-­characterproducts. Moreover, the Digimon: Digital­Monsters trading card game for the North­American market was popular. In these ways,
favorable performances by toy-­related items
also made a contribution to results. In the Visualand Music business, we sold visual and music
packaged products that leverage mainstay IP,
and game-­related licensing revenues made acontribution to results. In the same period of
the previous fiscal year, for the most part wewere unable to hold live events due to the influence of COVID-19, but in the first quarter ofthis fiscal year we utilized online distribution
and new technologies, and we substantially
increased the number of events held.

Masaru Kawaguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.

In the Creation business, revenues from theproduction of visual products increased, andlicensing revenues were favorable due to thegrowing popularity of Gundam IP. On the other
hand, at GUNDAM FACTORY YOKOHAMA,
which opened in December 2020, we took steps
to address the spread of COVID-19, such as
shortening operating hours and suspending
events. The Amusement business was affectedby the influence of the spread of COVID-19,
including the suspension of operations at facilities and the reduction of operating hours.
However, the influence was less than in the same
period of the previous fiscal year. Moreover,campaigns utilizing IP also had an effect. Sales
at existing facilities in Japan were up 115.6%
year on year (more than 70% of the level seenin the first quarter of FY2020.3). We are starting
to see signs of recovery. Sales of amusement
machines were also up year on year.
The results forecasts for the
first six months of the fiscal year havebeen revised.
Kawaguchi: For the first six months of
FY2022.3, our initial forecasts were for net
sales of ¥350.0 billion and operating profit of¥35.0 billion. Recently, with consideration forresults in the first three months, the current
market environment, and the circumstances inour businesses, we reviewed the forecasts for
the Toys and Hobby business and the Visualand Music business, and we revised theGroup-wide forecasts to net sales of ¥380.0
billion and operating profit of ¥43.0 billion.

* IP: Characters and other intellectual property

September 2021

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(Information in this section is as of the end of August 2021.)

Interview with the President

Deepening fusion and collaboration among the new Units
Further cultivating a sense of unity
What is the outlook for the full
fiscal year?
Kawaguchi: We have not revised our initialplans for the full fiscal year. The second half
includes the busy year-end/new-year sales
period, which is the largest sales period during
the year. In addition, we plan to launch major
home video game titles. With the current stateof emergency and the expansion of the regions
covered, we will continue to carefully assessthe uncertain market environment going
forward.
What types of initiatives have been
implemented since the Unit reorganization in April?
Kawaguchi: We are working to further deepen
integration and collaboration in the Entertainment Unit, which combines the Digital businessand the Toys and Hobby business, and in the
IP Production Unit, which combines the Visualand Music business and the Creation business.
In the Entertainment Unit, we currently have avariety of projects underway that are related toIP, products, and services. Looking around theworld, in China we are planning to integrate
the companies in the Digital business and theToys and Hobby business. We have alreadyconsolidated multiple offices into a single officein China, and we are also consolidating offices
in South Korea and Spain. We expect these
initiatives to further activate communication
within Units.
The IP Production Unit is also advancing

a variety of projects to promote understandingof mutual IP-creation know-how and tostrengthen integration and collaboration. In
addition, the IP Production Unit is taking steps
to activate communication and to cultivate asense of unity as a new Unit, such as jointly
sponsoring family events for employees andtheir families.
Would you discuss the trends in the
Digital business?
Kawaguchi: In the Digital business, in home
video games we expect to sell 1 million unitsof SCARLET NEXUS in FY2022.3. This product was created through strategic IP investment
under the previous Mid-term Plan. We will
nurture this title as new IP through collaborative
initiatives that involve both a home video gameand an anime produced by the creation business. We also plan to launch major titles, suchas Tales of ARISE in September 2021 and
ELDEN RING in January 2022. We will strive
to nurture these new products into long-lived
titles while engaging in close communication
with fans. Looking at repeat sales, we thinkthat the favorable effect of demand associatedwith people staying at home is gradually settling down. Last year, sales were centered on
repeat sales of existing titles, but this year, we
expect the percentage of sales from new titles
to increase, and we will record initial expenses
associated with the launch of major titles onan upfront basis.
In network content, as with home video

ELDEN RING, a highly anticipated major title©BANDAI NAMCO Entertainment Inc. / ©2021 FromSoftware, Inc.

games, we will launch high-quality new titles
and work to expand new mainstay titles. In
addition, in the digital field, we will continue
to advance technical research to rapidly
address intensifying competition and newtechnologies. Furthermore, the 2022 releaseof the latest theatrical version of DRAGONBALL SUPER has been announced. The entire
Group, including game content and toys andhobby products, we will collaborate with thefilm and work to create buzz.
What is the current situation in the
Toys and Hobby business?
Kawaguchi: In the Toys and Hobby business,looking at new series for established IP in Japan,
Ultraman Trigger products were launched in
July, followed by the launch in September ofKamen Rider Revice products, which are commemorative products for the 50th anniversaryof KAMEN RIDER, in September. Also, in
November we will start sales of Tamagotchi
Smart, a wearable Tamagotchi product. For
Demon Slayer: Kimetsu no Yaiba, which continues to enjoy high popularity, we will rollout products in a wide range of categories,
such as toys, in conjunction with the broadcastof the second season of the anime.
In toy-related items, which are recording
favorable results, in confectionary we will

Vital Bracelet Digivice V, producedin collaboration with the latest
Digimon: Digital Monsters anime©本郷あきよし・東映アニメーション©本郷あきよし・フジテレビ・東映アニメーション©BANDAIMobile Suit Gundam Hathaway,
a theatrical product©創通・サンライズ

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BANDAI NAMCO NEWSwork to develop product brands into pillarsof our operations, in a follow on to such series
as Charapaki. In capsule toys, we will increasecustomer touch-points in collaboration with theAmusement business. Moreover, The Digimon:
Digital Monsters IP started from a toy, and now
wearable devices and, in North America, card
games leveraging this IP are popular, centeredon younger customers. A new anime will bebroadcast from the fall in Japan, and we alsoplan to launch a home video game. Accordingly,
the entire Unit will work to create buzz.
In products for the mature fan base, Gundam
plastic models are recording favorable resultsin China, where we installed a life-size Gundam
statue, and in North America, where the rollout of products at large-scale distributors ismaking solid progress. Looking at businessdevelopment initiatives around the world, wewant to establish the culture of plastic model
making, rather than simply offering IP andproducts that are ended after a short-termboom. Also, in tandem with the highlightingof Gundam plastic models, we are also working to promote recycling of the plastic used
as a raw material, and to advance the use of
new materials.
What are the circumstances in the
Visual and Music business and theCreation business?
Kawaguchi: In FY2022.3, we expect to expand
the lineup in comparison with the previous fiscal
year, when the spread of COVID-19 had aneffect on the production and release of visual
products as well as the launch schedules forvisual and music packaged products. Looking
at visual products from SUNRISE, Mobile Suit
Gundam Hathaway, a theatrical product, hasbeen highly evaluated, and box-office revenues
surpassed ¥2.0 billion in early August. Also,
Love Live! Superstar!!, the new title in theLove Live! series, was broadcast on NHK Educational TV from July and has become a focus
of attention. Accordingly, the entire Unit will
work to create buzz through visual, music, andlive event initiatives.
We will strive to bolster IP creation by not
only working with in-house studios but alsocollaborating actively with external partners.
We will aim to increase IP value by developing
the IP for visual and music packaged products
and also taking on the challenge of other rollout methods. One of those is game licensing
revenues, which made a contribution in thefirst quarter. With the popular Pui Pui Molcar,
in addition to a visual packaged product, weare also implementing secondary developmentin the Toys and Hobby business.
In these ways, we are implementing multifaceted development of IP, centered on visualand music products. In live events, at this point,
the number of audience members has not
returned to the level in the period before
COVID-19. However, we will work to roll-out
new live events that combine real and virtual
elements, such as through the use of online
distribution and new platforms.

year. In July, we began to introduce a highly
anticipated new amusement machine, Mobile
Suit Gundam: Senjo no Kizuna II. We willcontinue to advance measures to increase
efficiency while introducing unique BANDAI
NAMCO topics for both amusement facilities
and machines. The amusement business is
an important outlet under the Group’s IP axis
strategy, and going forward we will aim tobolster the earnings platform in this business,
which provides important venues for directcontact with customers.

What are the trends in the
Amusement business?
Kawaguchi: In amusement facilities, future
market trends are not clear, but currently
initiatives leveraging Group resources are
drawing attention, such as BANDAI NAMCO
limited prize campaigns and Capsule Toy
Store facilities. We are also seeing resultsfrom the measures to increase efficiency
through structural reforms, which we havebeen implementing since the previous fiscal

Defining the BANDAI NAMCO Group’s presence
in a sustainable society
What is the status of the formulationof the next Mid-term Plan?
Kawaguchi: After FY2022.3, which is aperiod for establishing a foundation, the next
Mid-term Plan will start from April 2022. Currently, deliberations regarding the strategies
are reaching the most important stage, and in
the formulation of the next Mid-term Plan,rather than goals for three years in the future,
which will be the final year of the Mid-term
Plan, we are focusing on what challenges wewill need to address over the next three years
in order to foster continued growth for the
BANDAI NAMCO Group for five or 10 years
into the future. A stable foundation is necessary
to support initiatives to take on the challengeof growth, and accordingly we will steadily
implement defensive measures from a varietyof perspectives, including systems and finance.
At the same time, in areas where we need togo take a proactive approach, we will implement aggressive, finely tuned initiatives. In
addition, in formulating strategies, I haverequested that everyone hold thorough discussions at each worksite in order to reconfirm

their understanding of our strengths and theissues we face. Developing a shared awarenessof issues through discussions will be a major
positive factor within organizational units.
Employees will be able to take the initiativein addressing strategies that they have determined based on thorough discussions.
In the next Mid-term Plan, in addition to
our business strategies, we will also redefine
BANDAI NAMCO’s presence in a sustainable
society. In other words, we will redefine ourstarting point — how the BANDAI NAMCO
Group can fulfill our social responsibilities byworking together with society, fans, and otherstakeholders. I would like to ask for everyone’s
continued support of the BANDAI NAMCO
Group as we move forward.

September 2021

3

Closeup

Record high results in the Toys and Hobby business
Aiming for further growth through synergies among businesses
In April 2021, the BANDAI NAMCO Group reorganized its Units for the next
Mid-term Plan. In this section, Kazuhiro Takenaka, president and representative
director of BANDAI CO., LTD., which oversees the Toys and Hobby business inthe newly created Entertainment Unit, discusses the current circumstances andfuture outlook in the Toys and Hobby business.
Please discuss the effect of COVID-19
and the current results in the Toys andHobby business.
Takenaka: In FY2021.3, in the Toys andHobby business, the suspension of operationsat amusement facilities due to the spreadof COVID-19 had an effect on prizes foramusement facilities, digital card games, etc.,
especially in the first quarter.
On the other hand, we quickly strengthened
sales and marketing initiatives leveraging digitaltechnologies, and as a result we secured demandassociated with people staying at home. Products for the mature fan base, such as Gundam
plastic models and collectible items, recorded
favorable results around the world. In addition,
in Japan popularity was enjoyed by products
utilizing new IP and by related products, suchas confectionary. As a result, overall the Toysand Hobby business achieved record-high net
sales and operating profit.
In the first three months of FY2022.3, ourresults were led by businesses that continued
to enjoy favorable performances, and businesses that were affected by COVID-19 in thesame period of the previous fiscal year recovered. Consequently, we achieved record-high
net sales and operating profit for the first threemonths of a fiscal year.

Demon Slayer: Kimetsu no Yaiba — DX Nichirin Sword©吾峠呼世晴／集英社・アニプレックス・ufotable

What is the status of new IP initiatives?
Takenaka: We are working to quickly create
products based on new IP from other companies, such as Demon Slayer: Kimetsu no Yaiba,
Disney: Twisted-Wonderland, and Jujutsu
Kaisen. In addition to toys, these efforts havealso produced a large number of hits in related
products.
The business division in charge of prizes
and lottery-related products, which have arapid business cycle, has been gathering information about new IP from a wide range ofsources, and has rapidly commercialized new
products. Its methods of gathering information
are also being adopted by other business companies and divisions. The Toys and Hobby
business has a variety of outlets, such as toys,
figures, plastic models, toy confectionary andfoods, capsule toys, card games, apparel, anddaily use sundries. By working together andacting quickly, the Toys and Hobby businessis able to provide products at the optimal
timing, ranging from young customers to themature fan base. I believe that these comprehensive abilities and speed are a major
strength of the Toys and Hobby business.
In addition, looking at in-house IP, we have
hit products in the field of entertainment confectionary, such as Charapaki and Tsurigumi.

2020 Events
GUNPLA EXPO 2020 (above),
TAMASHII NATION 2020 (below)©創通・サンライズ ©ダイナミック企画

Going forward, we will strive to create thesetypes of IP that leverage the distinctive
strengths of the Toys and Hobby business.
The business is also devoting efforts
to sales and marketing initiatives thatutilize digital technologies.
Takenaka: COVID-19 has had an influence,and the pace of digitalization throughout society has accelerated. The Toys and Hobby
business is also working aggressively in promotions with online elements and in e-commerce.
The mature fan base has a strong affinity for
online initiatives, and 700,000 fans participatedin one of our online events over a period of threedays. The merits of online events include thefact that anyone can participate easily. As aresult, we have been able to connect with newcustomers as well as dormant customers.
On the other hand, real events have a special
ability to create buzz among the participants.
With a focus on the period after COVID-19,
we will conduct effective hybrid promotions
that leverage the merits of both online andreal events.
The Toys and Hobby business and theDigital business have been combined
into a single Unit.
Takenaka: In a general sense, the Toys andHobby business and the Digital business arein the same market — entertainment — but
there are major differences in the features ofthe products that they offer. For example, theToys and Hobby business turns over a large

DIGIMON CARD GAME BOOSTERBATTLE OF OMNI [BT05]©Akiyoshi Hongo, Toei Animation

number of products on a short cycle, fromseveral months to a year. In contrast, theDigital business develops and manages asingle title over a long period of time measured
in units of several years. The purpose of combining these businesses is not to make thesedifferent characteristics completely the same.
Rather, each will strive to learn from andleverage the other’s strengths. For the Digitalbusiness I think that gathering information
about the IP in the Toys and Hobby businessand a sense of speed will provide motivation.
And for the Toys and Hobby business too, I
think that further growth will result from adeeper understanding of the Digital business,
which rolls out a single product for an
extended period of time on a worldwide basis.
To foster integration, we are actively
advancing personnel exchanges among businesses. For example, from April, under a Groupinitiative, there has been personnel exchange
among executives from BANDAI SPIRITS CO.,LTD., and BANDAI NAMCO Entertainment
Inc. Also from June an idea contest was

conducted among three companies — BANDAI
CO., LTD., BANDAI SPIRITS CO., LTD., andBANDAI NAMCO Entertainment Inc. Each of
the three companies set themes related to its
own products, and proposals were recruited fromall employees. The plans that were submitted
were publicly shared among the three companies, and officers and employees could vote forthe proposals they like. By creating a venue for
employees of the three companies to freely
exchange ideas, this program became an opportunity to deepen mutual understanding.

Kazuhiro Takenaka,
President and Representative Director,
BANDAI CO., LTD.

Implementing organizational restructuring to expand overseas business
What is the situation withoverseas initiatives?
Takenaka: China and North America havebeen positioned as focus regions. In China,
in May we put a life-sized Freedom Gundam
statue on display in Shanghai, and in conjunction with that event, we opened our second
Gundam plastic model flagship shop in Shanghai. The response has been positive. In
addition, Ultraman and KAMEN RIDER products are also popular, and moving forward we
will aim to further expand sales.
In North America, business for the mature
fan base is recording favorable growth. In theprevious period, we succeeded in introducing
products in large-scale retailers, including
Target. Gundam plastic models were introduced in about 3,000 stores, and Gundam and
DRAGON BALL figures in about 4,000 stores.
Also, favorable results are currently being
recorded by a Digimon: Digital Monsters
trading card game, a new initiative. In theseways, we are seeing new progress.
For the BANDAI NAMCO Group to record
continued growth, we must strengthen business operations around the world. To that
end, the Group is advancing organizational

restructuring. In China, plans call for the combination of the company handling the Digitalbusiness and the company handling the Toysand Hobby business in January 2022. Also, inNorth America, the Group will combine thecompany handling the Toys and Hobby business for specialty retail shops and the company
handling the Toys and Hobby business forlarge-scale retailers. Through these reorganizations, we will aim for business growth overthe medium to long term in each region.
What is the outlook for the second
half and thereafter?
Takenaka: From the second half, new
KAMEN RIDER and Demon Slayer: Kimetsu
no Yaiba programs will start. Furthermore,plans call for the latest theatrical version of
DRAGON BALL SUPER to open in 2022. For
this type of IP from other companies, we will
step up our efforts in the planning and development of high-quality products, based onstrong partnerships with rights holders. In
addition, we will also actively work in collaboration with other Group Units in thecreation and nurturing of IP and in businessroll-outs, such as with Kyoukai Senki, CapsuleToy Store facilities, and official shops forichibankuji lottery-related products. In theseways, we will strive to make a contribution
to Groupwide results.
What are your policies toward work?
Takenaka: As someone in a field related to
manufacturing, I place the highest priority on
making products that delight customers. Products that customers enjoy lead to motivationfor employees, and as a consequence, to results
for the Group. That motivation then leads tothe creation of further products that customers
enjoy. The entire Toys and Hobby businesswill work together and do our utmost so that
we can create this type of favorable cycle.

©永井豪・石川賢/ダイナミック企画・真早乙女研究所
Voltron TM & © WEP, LLC. All rights reserved.

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BANDAI NAMCO NEWS

September 20215