NEWS LETTER

December 2016

BANDAI NAMCO Holdings Inc.

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

Management
Interview with the President

Taking On a Range of Challenges, Including
Investing to Achieve Sustained Growth andExpand Corporate Value
We have passed the half-way point of the Mid-term Plan ending FY2018.3. BANDAI
NAMCO Holdings’ consolidated results in the first half of FY2017.3 recorded favorable
progress. For example, we reached new record highs in both sales and profits. In thisissue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses
the progress with the Mid-term Plan and the situation with each of the Group’s businesses.
Would you provide an overview ofthe first half of the fiscal year?
Taguchi: In August 2016, we made an upwardrevision to the results forecast for the first halfof the fiscal year. We ended up surpassing therevised figures and achieved record highs forboth sales and profits. In the Toys and Hobby
Business, favorable results were recorded byestablished IP* products in each region, suchas Mobile Suit Gundam in Asia and Japan andPower Rangers in Europe and the Americas.
In general, results were in line with initialplans. Also, in the Network Entertainment
Business, DARK SOULS III home video gamesoftware became a major hit, and smartphonegame applications for domestic and overseas
markets, such as DRAGON BALL Z DOKKAN
BATTLE, maintained high levels of popularity. The Network Entertainment Businessprovided a strong driving force that supported the Group’s overall results. In the Visualand Music Production business, favorable
performances were recorded by initiatives
centered on popular IP, such as Love Live!
series and GIRLS und PANZER. These IP arereceiving strong support from both existingfans and new fans.
The outlook for the full fiscal year
has been revised.
Taguchi: Considering the results in the first halfof the fiscal year and the current situation ineach business, we revised the full-year projections to ¥590.0 billion for net sales and ¥57.0
billion for operating income. These challenging
projections represent record-high levels of net
sales and operating income for the BANDAI* IP: Intellectual property, such as characters

NAMCO Group. In the second half of the
fiscal year, we will continue striving to achieve
our projections while taking on the challengeof implementing a variety of initiatives, including investment for sustained growth.
The Mid-term Plan is making
favorable progress.
Taguchi: The goals of the Mid-term Plan comprise further strengthening the IP axis strategy and expanding our overseas business. We
are already starting to see results from ourinitiatives, and we will further reinforce thesetrends. In this way, our first task will be tobuild a platform that can generate net sales of¥500.0 billion and operating income of ¥50.0
billion in a stable manner. We will then aim
for the next stage. I think that there are still
many things that we need to do to achievesustained growth. To resolve these issues,
we need to step up innovation in order toheighten the sustainability of businesses and
IP. We also need to strengthen strategic investment in order to cultivate new initiatives. In
addition to typical investments, in FY2016.3 wealso implemented strategic investments, suchas acquiring commercialization rights for new
IP and making WiZ CO., LTD., a planningand development company, a subsidiary. In
FY2017.3, we are continuing to step up IP
initiatives overseas and are starting to invest
in such areas as strengthening relationships
with IP rights holders.
We have passed the half-way point of the
Mid-term Plan, and our performance has beenbasically in line with the plan, including ourfinancial results. However, it will not be easy

Mitsuaki Taguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.

to achieve our objectives for the final year of
the plan — net sales of ¥600.0 billion andoperating income of ¥60.0 billion. In addition,these objectives do not represent a one-timeachievement of a certain level of performance.
We must approach them as a transit point on
the way to sustained growth in the future.
Accordingly, we will take on the challenge of
implementing initiatives to further strengthen
our foundation.
What steps are being taken for the
next Mid-term Plan?
Taguchi: Specific details have not been finalized, but we recently started the formulation
process by discussing where we want theGroup to be in 10 years. We had an off-site
meeting of all officers, including outside
directors and outside audit & supervisoryboard members, to determine the Group’s
long-term vision. At this meeting, we reemphasized the need to bolster the IP axis strategy, which will remain our biggest strength
in the years ahead. We also recognized that
we will achieve growth by leveraging thisstrength on a worldwide basis. Accordingly,
I believe that, rather than striving to finalize
things on our own, we need to think about theGroup’s growth while drawing on outside
knowledge and capabilities through the formation of a wide range of partnerships.

December 20161

Management

Interview with the President

Leveraging technical capabilities and rapidly
addressing new platforms
Would you discuss the circumstancesin the Toys and Hobby Business?
Taguchi: From the fall, new programs werelaunched for KAMEN RIDER Ex-Aid, Heybot!,and Digimon Universe App Monsters. Of these,
KAMEN RIDER Ex-Aid has drawn considerable attention. Children can easily adapt to its
TV game motif, and its design leverages
luminescent colors. This bold challenge has
been well received by children, and KAMENRIDER Ex-Aid products have made a strong
start, even for products in the Heisei Riders
series. This will be a key product for the busy
year-end sales period. Repeated broadcasts
have been establishing the popularity andrecognition of Heybot! animations, which arefor elementary school boys, and of Digimon
Universe App Monsters animations. Accordingly,
we will utilize products to carefully nurturethese IP.
In addition, targeting the busy year-end
sales period, we will launch major productsin the Power Rangers and Ultraman series
for boys and the Pretty Cure! and Himitsu no
Cocotama series for girls. Also, Tamagotchi
reached its 20th anniversary, and we launched
an anniversary product, Tamagotchi m!x.
Characters that appeared in the first-generation
Tamagotchi also make an appearance in theanniversary product. In this way, two generations — parents and children — can enjoy
playing Tamagotchi together.

offering localized transformation belts withvarying specs and at different price ranges. In
these ways, we are implementing initiatives
to deepen our ties with local markets.

What is the situation overseas?
Taguchi: For Power Rangers, which is a lead-ing IP in Europe and the Americas, there will
be a nationwide movie launch in the UnitedStates in March. In advance of this opening,a new TV series — Ninja Steel — will start.
In conjunction with TV and movies, we willconduct a series of large-scale promotions,and we will work to build on these initiatives
to promote business in FY2018.3 and thereafter. For girls, the Miraculous action doll has
become popular, and moving forward we will
nurture it as new IP. In addition, in Europe
and the Americas, we are working to step up
initiatives for figures and other collectableproducts as well as for plastic models. As oneof those initiatives, this fall we commenced
sales of DRAGON BALL plastic models in
conjunction with the launch of DRAGONBALL XENOVERSE 2 game software and an
overseas campaign for DRAGON BALL Z
DOKKAN BATTLE game application.
In Asia, Gundam plastic models continue
to record favorable results. We have started
the distribution for the second season of Mobile
Suit Gundam: Iron-Blooded Orphans at thesame time in Japan and overseas, and we arealso holding events in locations throughout
Asia. In these ways, we are implementing
detailed marketing initiatives. Moreover, for
KAMEN RIDER, in overseas markets we areselling products that have the same specs as
products in Japan. In addition, we are also

What is the situation in the Network
Entertainment Business?
Taguchi: Currently, virtual reality (VR) andaugmented reality (AR) are drawing attention.
In conjunction with the recently introduced
Play Station VR, we have launched SUMMERLESSON, which enables users to enjoy characters and communications, and The iDOLM@
STER Cinderella Girls: Viewing Revolution,
which enables users to enjoy highly realistic
live performances. Both of these products havebeen highly evaluated. In addition, we also plan
to offer titles for Nintendo Switch, which isNintendo’s new platform. One of our strengths
is the ability to rapidly respond to the launchof new platforms because we are always incontact with advanced new technologies.
Moving forward, we will continue to take onchallenges that leverage the technical capabilities of the BANDAI NAMCO Group.
Moreover, in home video game software,as I mentioned, DARK SOULS III has becomea major hit. In addition, DRAGONBALLXENOVERSE, which launched in February
2015, has recorded shipments of more than 4
million units. DRAGON BALL XENOVERSE
2, the latest entry in the series, was launchedin October and initial shipments surpassed
1.4 million units. We will continue to implement
online events and other initiatives to sustain
the popularity of DRAGON BALL XENOVERSE
2 for an extended period of time.

Focus Products in Each Business

KAMEN RIDER Ex-Aid transformation belt is off to a good start.

©2016 石森プロ・テレビ朝日・ADK・東映

2

BANDAI NAMCO NEWSWorldwide, DRAGON BALL Z DOKKAN BATTLE has
surpassed 100 million downloads.
©バードスタジオ／集英社・フジテレビ・東映アニメーション©BANDAI NAMCO Entertainment Inc.

In visual packaged products,
the new series Love Live! Sunshine!! isrecording favorable results.
©プロジェクトラブライブ！サンシャイン!!

How is the Network content businessdoing in Japan and overseas?
Taguchi: In Japan, The iDOLM@STER
Cinderella Girls: Starlight Stage, which has
been available for more than a year, continues
to maintain one of the top popularity rankings
among rhythm game applications. It has become
an extremely well-established, long-lived
product. Moreover, DRAGON BALL Z DOKKAN
BATTLE recently surpassed 100 million downloads worldwide. Overseas, solid market
presences have been created by DRAGONBALL Z DOKKAN BATTLE and other productsthat are distributed online around the world,
as well as by Naruto Mobile in the China
market. In the second half of the fiscal year,
we will launch additional new titles in Japanand overseas. We will also work to promote
DOKKAN BATTLE and ONE PIECE Treasure
Cruise by implementing large-scale campaigns
overseas. In these ways, we will strive tofurther increase enthusiasm for the network
content business.

Would you discuss the situation in
the Amusement Business?
Taguchi: Existing amusement facilities in Japan
have recorded year-on-year improvement inresults. In addition, our differentiated content
and locations are popular. These include Seaside
Kids’ Beach, which leverages our technicalcapabilities, as well as ANI ON STATION andNazo Tomo Cafe, which are new businessformats. In amusement machines, which faceddifficult conditions in the previous fiscal year,
we will aim to improve revenues throughinitiatives with a streamlined group of popular titles. Furthermore, we are also working
on a variety of projects that combine amusement facilities and machines. VR ZONE Projecti Can, which is offered on a limited-time basis,grew out of those initiatives. This projectprovides value that is only available from the
BANDAI NAMCO Group. Moving forward,
we will continue working to provide differentiated locations and content.

Working with the attitude that we must takeon challenges in order to gain momentum andaccelerate evolution
What is the situation in the Visualand Music Production Business?
Taguchi: GIRLS und PANZER has become an
exceptionally long-run theatrical film, and thisIP has earned a high level of popularity, centered on visual and music packaged software.
Recently, we announced that we had decided
to produce GIRLS und PANZER: The Final
Chapter, and fans are showing increasing
interest in the series. For the Love Live! series,
Love Live! Sunshine!! has been introduced,
and the Aquors school idol group has beenlaunched to follow up the ’s group. Support
has been received from existing fans and newfans are also being created, resulting in ideal
launches. For Mobile Suit Gundam, we willcontinue to provide products aligned with thecharacteristics of each target group. THE
ORIGIN series and Thunderbolt are for older
customers, while the second season of Mobile
Suit Gundam: Iron-Blooded Orphans is forteenagers.

In addition, IDOLiSH7, which originatedfrom a game application, has recorded rapid
growth. The game itself is popular, and themusic CD has also recorded extremely favorable
sales. From this fall, we launched the Dream
Festival! and Magic-Kyun! Renaissance animations, which are targeted at adult womenand feature multidimensional male idols. The
Group will focus on implementing IP development initiatives that will foster the acquisitionof new groups of customers.

times and to rapidly implement initiatives.
Moreover, in addition to taking steps to address
current issues, we will also invest in IP, businesses, and services from a medium to longterm viewpoint. We will work to build a business portfolio that includes not only Japan but
also markets around the world. Thanks toeveryone’s hard work, the Group is now making good progress. Moving forward, the entire
Group will work together with the attitude that
we must take on challenges in order to gain
momentum and accelerate evolution.

Where will the Group focus its
enthusiasm?
Taguchi: In addition to working to achieve theMid-term Plan, our top priority will be to achievesustained growth for the Group and to expand
corporate value over the medium to long term.
Targeting those objectives, we will always workwith a sense of urgency, and maintain a rigorous focus on the customer. On that basis, wewill strive to track the current changes in the

December 20163

Business Angle
Introduction of Group Officers

Future Outlook for Sunrise, Which is Creating Multiple Attention-Getting Products

The approach of “taking on any challenges thathave interesting potential” has been adopted
throughout Sunrise, which has created a numberof visual products that are the focus of attention.
In recent years, Sunrise Inc. has created a number of popular visual products,
such as the Mobile Suit Gundam series, which is a big hit, and Love Live! series,
which has become a major boom that could be called a social phenomenon. In
this section, Sunrise President Yasuo Miyakawa discusses the role of Sunrise asa member of the BANDAI NAMCO Group, the Group’s distinctive strengths, thecurrent status of BANDAI NAMCO Pictures INC., which was established last year,
and the future outlook.

Sunrise has been known for its robot
animations, but the company has
also created a number of otherpopular products.
Miyakawa: I think we are having good resultswith our approach of “taking on any challenges that have interesting potential.” Previously,
we certainly had an image as a robot animationcompany, but Sunrise has developed a cultureof taking on interesting challenges, and thisfree and open atmosphere has resulted in thecreation of multiple products. In addition to theanimation of the underlying work, we have a
tradition of nurturing our business, with acommitment to original products. One of thereasons why the Love Live! series is enjoying
such success is that Sunrise has a culture ofnurturing original products.
Being a member of the BANDAI
NAMCO Group is also key strength.
Miyakawa: I think that the Group has an amazing collaborative power. In conjunction withanimations, Group companies are working
together, not only in toys and games but also
in such areas as music and live events. Group
companies do not take a scattered approachto commercialization. Rather, activities arecarefully controlled on a Groupwide basiswith an IP-centered approach. These com­prehensive strengths are important, and I
believe that they are unique to the BANDAI
NAMCO Group.
What do you think about the huge
success of the Love Live! Series?
Miyakawa: In producing animations, we do
our utmost to carefully create the products.
The director, scriptwriter, and staff were

4

BANDAI NAMCO NEWSstrongly committed to this project, and we
focused on quality above all else. That led tothe careful creation of the animations, and tocoordinated initiatives including animations,music, and live events.
What led to the mix of video, music,
and live events?
Miyakawa: I think the start can be traced to
the Mobile Suit Gundam SEED FESTIVAL, a
full-fledged live event integrating video andmusic that was held in 2003. Subsequently,
in 2006 Lantis Co., Ltd. joined the Group, andin 2010 BANDAI NAMCO Live Creative Inc.
was established. In this way, we developed
the ability to conduct full-scale music and live
event business activities that we can control
ourselves. With the entire Group working
together on video, music, and live events, wedeveloped the ability to create stage presentations that reproduce the IP world-setting inan extremely high-fidelity manner that satisfies customers. This marked a significant step
forward for us, and the result can be seen in
the Love Live! series.

Mobile Suit Gundam: Iron-Blooded
Orphans©創通・サンライズ・MBS

What role does Gundam playfor Sunrise?
Miyakawa: The Gundam content comprises
three basic elements. These are robots, a wartime setting, and a group of youths. Based onthese elements, we have created a wide variety of products by working freely in line withthe times. As a result, Gundam has maintained
its popularity for 37 years. In addition, I also
think an important role was played by thedevelopment of the product world-setting,with important roles played both by bothproducts, such as Gundam plastic models, andby animations.
This could be said not just about Gundam
but about all products. The creation of a product starts from the strong determination of asingle employee who says “I want to makethis.” The hit products that we have createdto date include many that were originally
opposed by nine out of ten people at theplanning stage because the originality of the
products was not understood. Projects that aresupported by nine out of ten people tend to be
simple extensions of something that was donein the past. My priority in planning meetings
is to focus on what the producers believe inand are committed to. I have confidence inthe strong commitment of the company’s
producers and I trust them to do a great job.
Multiple new programs are being
broadcast.
Miyakawa: In the fall, broadcasts were started
for the second season of Mobile Suit Gundam:
Iron-Blooded Orphans, Dream Festival!,
Magic-Kyun! Renaissance, ClassicaLoid, andHeybot!. The Heybot! IP has invigorated theGroup through collaborations with toys andgames for elementary school boys. Dream
Festival! and Magic-Kyun! Renaissance areLove Live! Sunshine!!
©2016 プロジェクトラブライブ！サンシャイン!!

Heybot!
©BNP/BANDAI,HEYBOT!PROJECT

targeted at women, where there is a market
but we have not yet captured a sufficient share.
Furthermore, ClassicaLoid is an entirely
new product that aims for integration withclassical music. We are taking on new challenges for each of these products, so pleaselook for new developments.

Continuing to create IP and products thatreflect a commitment to the original work
What is your view of the current
situation for IP?
Miyakawa: Currently, I am working as a member of the government’s Cool Japan Promotion
Council. The communication of Japan’s culturearound the world will be a positive development
for the industry, and I will strive to help advance
this initiative in a forward-looking mannerfrom the viewpoint of IP. The closing c­ eremony
for the Rio Olympics changed the world’s viewof and interest in Japanese IP, and this will
also be a tailwind for the industry. Furthermore,
I am working as a member of the Intellectual
Property Strategy Promotion Bureau. It has
been said that those who control intellectual
property control industrialized countries. The
government is also focused efforts on IP, whichis extremely important for our industry. Ourcompetitor are located around the world, so
we need to move beyond the domestic approachthat we have followed in the past and takeon challenges with strong determination. We
need to carefully consider not only how tocreate hit products but also how to protect
our IP.
A year has passed since theestablishment of BANDAI NAMCO
Pictures.
Miyakawa: BANDAI NAMCO Pictures wasestablished in April 2015 through the separation of a portion of the production department
at Sunrise. The company’s aim is create animations, especially animations for children
and families. BANDAI NAMCO Pictures has
just gotten started, but moving forward thecompany will focus its efforts on continued
initiatives to create the products that will
follow Aikatsu! and BattleSpirits. In productdevelopment, BANDAI NAMCO Pictures
will continue to focus on products for elementary school children and other children. Also,
considering the trend in Japan toward fewer
children, in the future we must create productsthat are popular not only in Japan but aroundthe world.
What are your policies toward work?
Miyakawa: My personal policy is “let’s have

fun doing this.” Next, I believe in working toachieve the things that you want to do. For
example, one of the reasons why we establisheda live events company is that I personally likelive events. Everyone has occupations thatfascinated them when they were young, andthings that they want to do. I think it is a goodthing for those interests to be utilized andachieved on the company “stage.” That process
generates creativity and enthusiasm for workand leads to dynamic business activities.
From the company’s viewpoint, we willcontinue working to create original products
while placing a high priority on the underlying
work. On the other hand, in creating visual
products there has to be a period for “development.” Moving forward, I would like us toachieve a good balance between products thatare the focus of front-line initiatives and products that are in development.

Yasuo Miyakawa
President & Representative Director
Sunrise Inc.

■ Profile of President Yasuo Miyakawa<Background>
April 1981
Joined BANDAI CO., LTD.
January 1996 Director of Bandai Digital Entertainment
April 2000
Joined Sunrise Inc.
April 2001
Network Development Manager
April 2004
Director
April 2008
Managing Director
April 2011
Senior Managing Director
April 2013
Vice-President & Director
April 2014	President & Representative Director(current position)
April 2015	President & Representative Director of
BANDAI NAMCO Pictures INC.
(current position)

What type of company would you
like to see Sunrise become in theyears ahead?
Miyakawa: I would like to see Sunrise become
a company that rapidly creates IP and original
products. Also, right now the company needs
to improve in the area of consistently creating
new video products each year. I would like toachieve this goal. Initially, this will entail
initiatives on a small scale and may require
some time. However, I would like Sunrise to
be a company that can work together with newpartners and talent, build relationships, andcontinue to create high-quality video products.

December 20165