NEWSLETTER

March 2017

BANDAI NAMCO Holdings Inc.

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

Management
Interview with the President

Respectfully Providing Inspiring Products andServices In Line with the TimesBANDAI NAMCO Holdings has announced its results for the first nine months
of FY2017.3. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the trends at each SBU, the progress with the
Mid-term Plan, and his enthusiasm about the plan’s final year.
The results for the first nine months of
the fiscal year have been announced.
Taguchi: In the first nine months of FY2017.3,
we achieved net sales of ¥459.1 billion andoperating income of ¥60.1 billion. This marks
the achievement of record high sales and profits
for the first nine months of a fiscal year. Our
performance was supported by favorable results
in a number of businesses. These included the
Network Entertainment Business, which hadstrong results with home video game software
operations in Europe and the Americas and network
content operations in Japan and overseas, as wellas the Visual and Music Production Business.
What is the outlook for full-year results?
Taguchi: For the full fiscal year, we expect to
set new records for sales and profits, with net
sales of ¥590.0 billion and operating incomeof ¥57.0 billion. Our results forecast for the
fourth quarter calls for year-on-year declines
from the same period in the previous fiscal
year due to the implementation of initiatives
targeting the next fiscal year in each businessand geographical region.
Tekken 7, a major home video game title
that had previously been expected to launch in
the fourth quarter, will be launched next fiscal
year. Due to this and other factors, there will
not be any major additions to the game title
lineup in the fourth quarter. In addition, inJapan we plan to put 12 new game application
titles into service, and accordingly we are
anticipating marketing costs, including launch
promotions, in addition to the recording ofdevelopment expenses. In conjunction withthe overseas film release for Power Rangers,which is the flagship Toys and Hobby IP in
Europe and the Americas, we will build sales

areas and implement product promotions ona large scale. Furthermore, looking at the lineupof titles in the Visual and Music Production
Business, results are expected to decline incomparison with the same period of the previous
year. These are the major factors driving
the forecast for the fourth quarter.
I believe that, with the IP* axis strategy as
an asset, the BANDAI NAMCO Group still
has opportunities for growth in Japan andoverseas. Without becoming overly cautious,
we will maintain a focus on the next fiscal year
and the medium to long term and work to
reinforce the foundation in each business. In
addition, we will plant seeds for growth andimplement initiatives to enable us to succeed
in competition. In these ways, we will takeaggressive action, including investment.
The Group has announced
a reorganization.
Taguchi: The objective of the reorganization
was to make further progress with products
for adults, centered on figures, which havehigh growth potential in Japan and overseas.
Specifically, BANPRESTO conducts planning,development, and sales of such products asprizes for amusement facilities and lotteryrelated products for convenience stores,
while production and sales of these items are
implemented by BANPRESTO SALES andBANPRESTO (H.K.). These three companies
are now a part of the Network Entertainment
Business, but from April they will be moved
to the Toys and Hobby Business. Companies
that develop products for adults will begathered in the Toys and Hobby Business,
which will enhance information sharing andcollaboration. In this way, we will more rapidly

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

implement product development and marketingthat addresses the preferences of consumers.I
think that this field offers substantial roomfor expansion, especially overseas, and accordingly we will implement aggressive initiatives
in this area.
What are the current trends in the
Toys and Hobby Business?
Taguchi: In Japan, the KAMEN RIDER Ex-Aid
transformation belt became a hit and was theNo. 1 item in Christmas sales. Overall, resultsin the year-end sales period were up year on
year. In addition, new series have been introduced for Super Sentai and PRETTY CURE!,
and accordingly we will start-up these new IP
for the next fiscal year. In North America, therelease of the Power Rangers film is scheduled
for March 24. In conjunction with the film, we
will ramp up product initiatives at sales areas.
The Power Rangers film will be released instages in 80 countries and regions around theworld. Moving forward, we will work to link
the film to further increases in the value of thePower Rangers global brand and to futurebusiness development initiatives.

* IP: Intellectual property, such as characters

March 20171

Management

Interview with the President

Incubating established IP, with a focus on
overseas markets
What is the situation in the Network
Entertainment Business?
Taguchi: In home video game software, in 2017
we will implement worldwide launches of new
Tekken and Ace Combat titles. In addition, we
will also take steps to address popular new
platforms, such as PlayStation VR and Nintendo
Switch. In game applications and other network
content, we will continue to aggressively introduce new titles in Japan and overseas. These
titles are highly anticipated by customers, andaccordingly we will work to enhance game
quality and to step up our promotional initiatives.
In the amusement business, we have started to
implement initiatives that integrate facilities
and machines and leverage BANDAI NAMCO’s
distinctive strengths. Last summer, our limited-time VR research facility became a topic
of conversation, and moving forward we will
strive to apply the knowledge gained throughthis facility as we take the next step, so pleaselook forward to these developments.
What are the conditions in the Visualand Music Production Business?
Taguchi: This business has grown from theprevious focus on packaged products to include
other content outlets, such as live events andrelated goods. Consequently, it has become
possible to develop the IP business through awider range of initiatives. In the future, we willcontinue taking steps to expand our IP lineup,such as LoveLive! Sunshine!!, for which thedecision has been made to broadcast the second
phase of the TV animation, and Space Battleship
Yamato 2202: Warriors of Love, for whichchapter one was shown in theaters in February.

Moreover, from February to March, we also
held large-scale live events for LoveLive!
Sunshine!! and IDOLM@STER. We will strive
to provide high-quality performances that only
we can achieve and to enhance the dynamic
world-settings of the IP.
It has been a year since the establishment of the IP Strategy Division.
Taguchi: The IP Strategy Division is focusing
on incubation, with an eye on overseas markets,for established IP such as Mobile Suit Gundam.
We are also making progress with initiatives
implemented by each company through products
and services, and in addition we are conducting
Groupwide measures. This collaboration
between the IP Strategy Division and eachcompany has begun to enhance the density of
our strategies. Moreover, from April, BANDAI
and BANDAI NAMCO Entertainment will
each welcome one of the other’s directors as
a part-time director. In this way, we are working
to deepen collaboration within the Group.
Moving forward, to bolster new IP creation,in addition to the existing framework, such as
Original Star IP Office, we will also consider
new frameworks.
The Group is approaching the final
year of the mid-term plan.
Taguchi: Our progress is basically in line withthe plan. In addition to new initiatives, a major
contribution is being made by IP axis strategy
measures that we implemented under the previous
mid-term plan. In FY2018.3, the final year of
the plan, we will aggressively implement initiatives
targeting sustained growth over the medium tolong term. Overall issues include frameworks
for the continual creation of new IP, innovationof established IP in line with the times, andcreation of content outlets for the purpose ofdeveloping new customers. We will strive to
make FY2018.3 a year for generating resultsfrom previous initiatives, forecasting future
developments, and linking to future success.
The specific initiatives that will be implemented under the next mid-term plan have notyet been finalized, but all of the directors andaudit & supervisory board members haveconducted deliberations regarding our vision
for the group 10 years in the future. We all
agreed that the IP axis strategy is the strengthof the BANDAI NAMCO Group and that weneed to accelerate overseas business development initiatives. We will consider specificstrategies for the next three years so that weachieve and reinforce progress in these areas.
Honorary Advisor Masaya Nakamura
has passed away.
Taguchi: Mr. Nakamura always paid carefulattention to the latest developments at theGroup. When I met him on his 90th birthday,
we discussed the cola-flavored potato chipsthat NAMCO developed as an amusement
machine prize, and he was very glad to try
them. Mr. Nakamura always stressed how
adapting to change is necessary to survive incompetition, and I believe that he was strongly
committed to supporting new products andservices. Mr. Nakamura said that our DNA
includes adapting to change, in other words,
understanding the expectations of customers,
staying one step ahead, and providing hospitalitythat delights them. I can affirm that we willcontinue to be guided by that spirit in the years
ahead, and I would like to offer our prayersthat Mr. Nakamura may rest in peace.

Directors at Principal Companies in the BANDAI NAMCO Group (planned for April 1, 2017)
BANDAI NAMCO Holdings Inc.
Chairman and Representative Director
President and Representative Director
Director
Director
Director (Part-time)
Director (Part-time)
Director (Part-time)
Director (Outside)
Director (Outside)
Director (Outside)BANDAI NAMCO Entertainment Inc.
Shukuo Ishikawa
Mitsuaki Taguchi
Shuji Ohtsu
Yuji Asako
Masaru Kawaguchi
Satoshi Oshita
Kazumi Kawashiro
Yuzuru Matsuda
Satoko Kuwabara
Mikiharu Noma

2

BANDAI NAMCO NEWS

Satoshi Oshita
Kazuya Kiyoshima
Makoto Asanuma
Hirotaka Reizei
Nao Udagawa
Kazunori Goka
Masaaki Tsuji
Kazuhiro Takenaka

BANDAI VISUAL CO., LTD.

BANDAI CO., LTD.
President and Representative Director
Executive Vice President and Representative Director
Managing Director
Director
Director
Director
Director
Director (Part-time)

President and Representative Director
Managing Director
Managing Director
Director
Director
Director
Director (Part-time)
Director (Part-time)

Masaru Kawaguchi
Yusuke Fukuda
Yoshitaka Tao
Akihiro Sato
Naomi Tobita
Kazuhiro Takenaka
Takahiro Mizuno
Kazunori Goka

President and Representative Director
Senior Managing Director
Executive Director
Director
Director (Part-time)
Director (Part-time)Kazumi Kawashiro
Akio Maeda
Satoshi Kohno
Hideyuki Kurita
Shunji Inoue
Shin Sasaki
Newly appointed

Changes have been made toshareholder benefits.
Taguchi: We have a system under which shareholders choose from multiple shareholder
benefits in accordance with points (awardedon the basis of number of shares held to shareholders holding 100 or more shares as of theend of March each year). Recently, as a new
option for shareholders holding 500 or moreshares, we added reproductions of speciallycreated illustrations of popular IP that has beenrolled out by the Visual and Music Production
Business. For further information, please see
the Company website.
Do you have a message forshareholders?
Taguchi: The pace of change in the operating
environment continues to increase, and consumer
preferences are diversifying. In this setting, themost important thing is to provide products
and services in forms that match the times andinspire customers. I encourage all employees
to maintain a focus on customers, continuallyreconfirm their needs, and provide value, andthereby turn those results into quantitative
success. I would like to ask our shareholders
for their continued support in the future.

Masaya Nakamura, the Founder of NAMCO andHonorary Advisor of the Company,
Has Passed Away
Mr. Nakamura, who was former Chairman and
Representative Director of NAMCO; Honorary
Advisor of BANDAI NAMCO Holdings; andFounder of BANDAI NAMCO Entertainment
and NAMCO, passed away on January 22, 2017.
In 1955, Mr. Nakamura established a company that was the predecessor of NAMCO.
Operations started with the installation of two
mechanical horse rides on the roof of a department
store named Matsuya in Isezakicho, Yokohama.
Under Mr. Nakamura’s leadership, NAMCO
recorded growth as an entertainment company,
and in line with the changes in society the company
expanded its business fields to include amusement
facilities, theme parks, arcade game machines,
and home video game software. These initiatives
included PAC-MAN, which was launched in 1980
and became a major worldwide hit. PAC-MAN
was recognized by Guinness World Records as
the “most successful coin-operated arcade game,”and Mr. Nakamura was highly regarded aroundthe world as the “Father of PAC-MAN.” With aphilosophy of treasuring each passing moment,
Mr. Nakamura did his utmost to lead the growthof NAMCO, and through a wide range of association activities he also worked to contribute to
the advancement of the game industry as wellas the entire amusement industry and to thedevelopment of visual-related businesses.
The creation of the BANDAI NAMCO Groupthrough the 2005 management integration of
BANDAI, and NAMCO was realized in partdue to Mr. Nakamura’s strong commitment tobuilding the company into an entertainment groupthat could gain momentum in global markets.
In the future, the BANDAI NAMCO Groupwill continue to follow the founding philosophy
of offering hospitality, providing dreams forpeople, and taking responsibility and pride inhaving “fun” as our job. We will continue striving
to provide Dreams, Fun and Inspiration to people
around the world.

<Background>December 24, 1925 Born in Tokyo Prefecture
March 1948 	Graduated from the shipbuilding department
of Yokohama Higher School of Technology(currently, Yokohama National University)
June 1955 	Founder, Representative Director, and Presidentof Nakamura Manufacturing Company
June 1977 	Company name changed to NAMCO LIMITEDMay 2002 	Chairman and Representative Director of
NAMCO LIMITED
September 2005 	Honorary Advisor of BANDAI NAMCO
Holdings Inc.
April 2006 	Chairman of BANDAI NAMCO Games Inc.
(currently, BANDAI NAMCO EntertainmentInc.), Chairman of NAMCO LIMITED
June 2006 	Founder of BANDAI NAMCO Games Inc.,
Founder of NAMCO LIMITED<Major Commendations>
April 1986

Medal of Honor (Medal with Blue Ribbon)

October 1997 	MITI Minister’s Award for Individual Contributions to the Promotion of Informatization
April 2007T he Order of the Rising Sun, Gold Rays with
RosetteJanuary 2017

Court rank: Junior fifth rank (investiture)

Obituary
Masaya Nakamura always placed a high priority on the determination of employees who thought“I want to do this,” and he gave many opportunities to young employees. His management style
was to give opportunities to highly motivated employees, even if those employees were occasionally reckless. That management DNA is a part of my own working style. He did not simply
leave things up to employees. He focused extremely closely on such product creation elements
as game play and design.
Above:
Inspection of horserides installed on theroof of a department
store at the time of
the company’s
founding
Above right:
Welcomed as the“Father of PAC-MAN”
in North America.
Right (center):
Became Honorary Advisor of
BANDAI NAMCO Holdings.

Mr. Nakamura made a significant contribution to the development of the game industry, whichtoday is one of the industries that is representative of Japan. He served for many years as an officer
of industry organizations. In these positions, he worked to address not only industry growth but also
IP-related issues, such as countermeasures for counterfeit goods. Mr. Nakamura’s success in theearly days of the game industry played a significant role in the social recognition of the industry.
As a supervisor, he set high standards, but I learned a tremendous amount from him, and I
would like to offer my prayers that Mr. Nakamura may rest in peace.
Shukuo Ishikawa
Chairman & Representative Director, BANDAI NAMCO Holdings Inc.

March 20173

Business Angle

Introduction of Group Officers

Independent Directors and Audit & Supervisory Board Members Committee
Support Corporate Governance

Aiming to increase corporate value
by promoting the exchange of opinions fromobjective viewpoints and strengthening
the oversight function of the Board of Directors
To succeed in global competition in a rapidly changing industry, the BANDAI
NAMCO Group believes that it must build a robust management foundation(corporate governance). Based on this approach, to strengthen the management
oversight function, the Group has appointed a total of 6 independent officers —3 independent outside directors and 3 independent outside audit & supervisoryboard members. In addition, with the objective of evaluating the functioning of
the Board of Directors from an objective viewpoint, the Group has establishedthe Independent Directors and Audit & Supervisory Board Members Committee,
which is composed only of independent officers.
Yuzuru Matsuda, who is the chairman of the Independent Directors and Audit& Supervisory Board Members Committee and an outside director, was asked
about his impressions of and expectations for the BANDAI NAMCO Group.
Would you describe yourbackground?
Matsuda: My specialties are fermentology andapplied microbiology. After completing adoctorate program at university, I joined
Kyowa Hakko Kogyo, where, in the research
department, I was involved for many years
in research activities looking for microorganismsthat could be seeds for pharmaceuticals. After
working as the head of the Pharmaceutical
Research Institute, I moved to the Comprehensive Planning Office, and in the following
year, 2003, I became president. As a resultof the merger with Kirin Pharma Company,
the company became Kyowa Hakko Kirin,
where I subsequently served as president
until 2012.

An offsite meeting, including Outside Directors andOutside Audit & Supervisory Board Members,
was held as a kick-off meeting for medium tolong term planning.

Dynamic discussions are held at all meetings ofthe Board of Directors.

4

BANDAI NAMCO NEWS

What is your motto as a manager?
Matsuda: “Nothing happens unless first a dream.”

These are the words of American poet Carl
Sandburg. In company management, I haveused the planning method known as backcasting,where one first clarifies the future vision andobjectives and then works backward to determine what needs to be done to achieve them.
Would you discuss the details of yourappointment as outside director at
BANDAI NAMCO?
Matsuda: When I retired as president of Kyowa
Hakko Kirin, I thought that I would like toutilize my experience at some position in thebusiness world, especially in a different industry. I spoke with Shukuo Ishikawa, who waspresident at that time (currently, chairman),and that was how the process got started.
In regard to BANDAI NAMCO, I have children
and grandchildren, so I knew about Mobile
Suit Gundam and Ultraman, but I did not haveany detailed knowledge about the entertainment
industry or about what type of business
BANDAI NAMCO was conducting. However,
the essence of management does not change.
Leveraging my experience and knowledge
as a manager, such as in overseas expansion
and M&A activities, I will strive to offer
advice and suggestions to managers from athird-party viewpoint.
After your appointment, what wasyour impression of BANDAI NAMCO’s
corporate culture?
Matsuda: The employees seemed to be naturally
enjoying their work in casual clothing, and my

impression was that the Company was notoverly focused on form or style. I also had theimpression that the General Meeting of Shareholders is not simply a formality. The Company
takes a sincere approach to meeting with stakeholders. I was pleased to see how much time
the officers took to carefully answer eachquestion. I think that this was an indication of
everyone’s awareness of the importance oftreating customers and fans well.
Meetings of the Board of Directors are
extremely positive and frank, and there has neverbeen a time when I was hesitant to say something.
I say everything that I want to. Accordingly, I
have a high evaluation of the Board of Directors’
system and method of operation.
You are working as the chairman of
the Independent Directors and Audit &Supervisory Board Members
Committee, which is composed ofindependent officers.
Matsuda: The primary role of the Independent
Directors and Audit & Supervisory Board
Members Committee is checking on the operation of the Board of Directors, which is
responsible for Group management. The
expertise of the outside directors in regard to
the Company’s business operations may notreach that of the Company insiders, but they
can offer opinions that would not be offered
by insiders and there are issues that can beseen more clearly by outsiders than by insiders,and accordingly outsiders are providing opinions from an objective viewpoint. If they haveany doubts about management, they can raise
objections. Even if they don’t have objections,the outsiders are leveraging their experience
while facilitating a broad-minded exchangeof opinions about agenda items.
I think there are three essential elements
for management — transparency, fairness,and speed. As an outside director, I am looking
at whether there is a dynamic exchange of
opinions at meetings of the Board of Directors,
and if the board is functioning and being
administered in a sound manner, from theviewpoint of these three elements. The evaluation of the Independent Directors and Audit& Supervisory Board Members Committee,
which is a third-party entity, is that the issues
addressed by the Board of Directors arehandled in a way that leads to increases incorporate value for all stakeholders. Moving
forward, I will personally strive to fulfill myrole as an outside officer and a member of theIndependent Directors and Audit & Supervisory
Board Members Committee and to contributeto the strengthening of corporate governanceand the improvement of corporate value.
Last year, an offsite meeting was heldwith the participation of outside
officers for the first time.
Matsuda: That was an excellent plan. The
Independent Directors and Audit & Supervisory
Board Members Committee felt that there wasa need to discuss the Group’s medium to longterm issues and vision as one facet of evaluating
the effectiveness of the Board of Directors. Allof the officers gathered and held an offsite
meeting to address those issues.
At the offsite meeting, we discussed important
issues, and suggestions were made regarding
the future direction for the holding company
itself. Perhaps one of the best things about theevent was the focus on deliberations. With thistype of meeting, it is frequently the case thatthe conclusions are determined in advance andduring the meeting the discussions are guided
toward the conclusion. However, this meeting
was completely different, and I heard feedback
from other outside directors that “this was agood meeting.”

Fostering dynamic meetings ofthe Board of Directors by offering suggestions
from the viewpoints of transparency,
fairness, and speed
What challenges does BANDAI
NAMCO face at this time?
Matsuda: Last year, I attended the policy
presentations for each SBU. I am glad that I
was able to see how the operating companies
and the holding company share common
values, and how everyone in the Group is
working together to maximize value. On theother hand, I also learned that the IP axis
strategy has resulted in the creation of major
IP, but that does not mean that the strategy issimply implemented in the same way by allof the SBUs. The methods of developing IP
world-settings also differ for each business.
Maximizing IP value by leveraging a large
number of content outlets is a strength of theGroup, but the Group also enhances IP value
by delegating to the front line operations in
the SBUs. In this way, another issue moving
forward will be how to achieve a balance, ina variety of settings, between the centripetal
force of the holding company and the centrifugal force of the front lines.
What issues are the Independent
Directors and Audit & Supervisory
Board Members Committee focusing on?
Matsuda: This fiscal year, the opinion of the
Independent Directors and Audit & Supervisory
Board Members Committee was that, as a
global enterprise, the Company needs to respondrapidly to the situation in each region and tofurther enhance frameworks for the allocationand leveraging of the people, things, and funds
that comprise the Company’s management
resources. The vision of the BANDAI NAMCO
Group is to become the “Leading Innovator in

Global Entertainment,” and the Group is now
at a stage where it needs to clarify its future
direction as a global entertainment company
and use the backcasting planning method todetermine what needs to be done now. Theseissues should be considered on a Groupwide
basis. In the future, there will be a need tochange gears in considering the reinforcementof overseas business development initiatives
and advances into new genres. This is a sharedunderstanding of the Board of Directors, andwe will also carefully consider the future direction of corporate governance itself. I believe
that, as an advisory committee, the Independent
Directors and Audit & Supervisory Board
Members Committee should provide suggestions
about everything from risk management to theuse of people, things, and funds and how toenhance the Board of Directors and make it
more dynamic.
Would you discuss what you expectfrom BANDAI NAMCO in the future?
Matsuda: From an outsider’s perspective, I
think that each SBU has the potential forfurther business growth. It might be necessary
to tackle challenges with an even greater senseof speed. Also, at this time younger consumers
are the main target. However, it is not justchildren and young consumers who enjoy
products and services that are inspiring, exciting, and fun. Adults do too. Moreover, thefuture will bring an aging society, and accordingly I would like to see the Company work
to address the needs of all generations and todevelop new groups of customers for entertainment products and services.

Yuzuru Matsuda
Outside Directors,
BANDAI NAMCO Holdings Inc.

Profile of Outside Directors Yuzuru Matsuda<Background>
June 25, 1948	Born in Niigata Prefecture
March 1977	Completed doctorate program at The University of Tokyo (Doctor of Agriculture)
April 1977	Joined Kyowa Hakko Kogyo Co., Ltd.
(currently Kyowa Hakko Kirin Co., Ltd.)
June 2000	Executive Officer and Head of Pharmaceutical
Research Institute of Kyowa Hakko Kogyo Co., Ltd.
June 2002	Managing Director and General Manager ofComprehensive Planning Office of Kyowa
Hakko Kogyo Co., Ltd.
June 2003	President and Representative Director of
Kyowa Hakko Kogyo Co., Ltd.
October 2008	Executive Director of the Board, President andChief Executive Officer of Kyowa Hakko Kirin
Co., Ltd.
March 2012	Advisor of Kyowa Hakko Kirin Co., Ltd.
June 2012	Head of Kato Memorial Bioscience Foundation(current position)
June 2014	Outside Director of KUBOTA Corporation(current position)
	Outside Director of BANDAI NAMCO Holdings Inc.
(current position)
June 2015	Outside Director of JSR Corporation(current position)

March 20175