NEWSLETTER No.70 December 2022

Bandai Namco miraikenkyusho
5-37-8, Shiba, Minato-ku, Tokyo, 108-0014, Japan
Management

Interview with the President

Masaru Kawaguchi
President and Representative Director, Group CEO
Bandai Namco Holdings Inc.

Record-high results inthe first half of FY2023.3
Bandai Namco Holdings Inc. has announced its results for the first six
months of FY2023.3 (April to September, 2022). In this issue of the newsletter,
President Masaru Kawaguchi discusses the results, the current circumstances, and other matters.
The results for the first half of FY2023.3
have been announced.
Kawaguchi: Looking at our results in the firstsix months of FY2023.3, net sales were ¥477.6
billion, operating profit was ¥81.6 billion,
recurring profit was ¥92.3 billion, and profit
attributable to owners of parent was ¥66.5
billion. We achieved record highs for sales andprofits. By business, the Digital, Toys andHobby, and Amusement businesses achieved
record-high results.
Please discuss the circumstances in the
Digital business in the first half.
Kawaguchi: ELDEN RING, which was launchedin the fourth quarter of the previous fiscal
year, reached cumulative worldwide sales of
17.5 million units by the end of September.
In the first six months, unit sales of repeat
titles reached 19.21 million units, comparedwith 15.2 million units in the same period of
the previous fiscal year. In addition, the ratioof download sales to full package sales was
63%. Both made a contribution to earnings.
Moreover, multiple new titles that werelaunched in the second quarter becamesmash hits.
Looking at network content, there wereno new title releases, but existing titles, suchas DRAGON BALL and ONE PIECE, had favorable results, benefiting from synergies withgrowing IP* enthusiasm that resulted fromthe opening of films.

*IP: Characters and other intellectual property

What is the situation in the Toys andHobby business?
Kawaguchi: The operating environment in the
Toys and Hobby business is changing. Thesechanges include the influence on the grossprofit margin resulting from the higher costs
accompanying the depreciation of the yen,increases in freight rates, etc. In this setting, we
exceeded the previous year’s results with astrong increase in the top line overall.
By category, favorable results wererecorded by Gundam plastic models and otherproducts for the mature fan base, such ascollectible figures and character lottery products; established IP toys; card products, suchas trading card games and digital cards; confectionary; etc. By IP, favorable results wererecorded worldwide by such established IP
as Gundam, DRAGON BALL, and ONE PIECE.
These results were attributable to timely business development activities in collaboration
with media initiatives.
Please discuss the IP Production businessand the Amusement business.
Kawaguchi: In the IP Production business, we
implemented a Unit consolidation and reorganization, and we advanced initiatives tostrengthen IP creation. In addition, centeredon mainstay IP, such as the Gundam series
and the Love Live! series, we rolled out initiatives in such areas as visual-work production,
packaged product sales, online distribution,
live events, and the licensing business. Overall,
we did not reach the level recorded in theprevious year, when licensing revenues werefavorable, but we made progress that wasbasically in line with plans. In the Amusementbusiness, certain regions were affected by the
spread of COVID-19, but in Japan favorable
results were recorded by prizes and digital
cards that are Toys and Hobby products. The
amusement facility business had favorable
results, with net sales at existing amusement
facilities up 21.6% year on year. In addition,in collaboration with Group IP and productbrands, we moved forward with the openingof amusement facilities that leverage Bandai
Namco’s distinctive strengths. Amusement
machine sales were favorable, centered on
Europe and the Americas.
What is the situation regarding the results
forecasts for the full fiscal year?
Kawaguchi: The results in the first half werefavorable, and accordingly we revised the fullyear results forecast. In comparison with theinitial forecasts of net sales of ¥880.0 billion andoperating profit of ¥100.0 billion, the new fullyear forecasts are for net sales of ¥940.0 billion
and operating profit of ¥128.0 billion, which
exceed the record-high levels in the previous
fiscal year, when we had global hit titles.
In the first half of FY2023.3, results were favorable due to such measures as strengthened
worldwide roll-outs of established IP products
and initiatives addressing the lifestyles of fans.
We were able to maintain favorable results without relying significantly on any single IP or hit
product/service. In this way, we further enhanced
our foundation for growth.
(Continued on next page)
December 2022 No.70

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(Information in this section is as of the end of November 2022.)

Management

Interview with the President

We revised the full-year results forecast withconsideration for such factors as results inthe second quarter
The operating profit forecast of ¥128.0
billion is higher than the level for the final
fiscal year of the Mid-term Plan, but theachievement of the Mid-term Plan is not thegoal of Bandai Namco. To address the expectations of fans and other stakeholders, wewill continue to aim for the achievement ofsustained growth.
Would you discuss the trends and focus
topics for each business in the second half?
Kawaguchi: In the Digital business, we thinkthat unit sales of repeat titles will decline in thesecond half, but there will be no change to ourstrategy of providing high-quality titles for both
home video games and network content thatcan be enjoyed by fans over long periods oftime. In addition to measures to see that ELDEN
RING, which has become a major hit, will beenjoyed over an extended period of time, weare taking steps to nurture the IP, such as creating Toys and Hobby products. Looking at new
titles in home video games, in October welaunched DRAGON BALL THE BREAKERS. Also,
in January 2023 we will launch ONE PIECEODYSSEY, a ONE PIECE RPG that has beenrequested by many fans. Both of these titles
will be rolled out worldwide over extended
periods of time in collaboration with IP media
initiatives. Looking at network content, in addition to stable progress with existing titles, wewill also launch new titles, such as Sword Art
Online. In this way, we will strengthen our title
lineup. In the second half, accompanying thelaunch of these new titles, we expect to record

upfront expenses, such as development, marketing, and other expenses.
Also, in regard to IP metaverse initiatives,
we will conduct a closed test of Gundam plastic
model colonies within FY2023.3. In the Digitalbusiness we will also take steps to strengthen
our development capabilities and advance newtechnology initiatives. In Japan, to bolster highend development capabilities, we establisheda new company together with development
partners. Moreover, to reinforce our development capabilities for overseas development
titles, we made a German studio a subsidiary,
where the title Park Beyond is now under development. We also established Bandai Namco
Entertainment 021 Fund, which invests in startups. This fund is advancing initiatives inconnection with a variety of partners, without
being limited to the Bandai Namco Group. One
recent example is an investment in a company
that has developed and is operating a blockchain social game.
In the second half, we expect that the Toysand Hobby business will continue to be influenced by the depreciation of the yen. Also, asa result of measures to strengthen marketingin categories with favorable results, we anticipate an increase in SG&A expenses in thesecond half in Japan and overseas.
Looking at products, those for KAMEN RIDERGEATS, which started TV broadcasting in September, got off to a favorable start. Also, theplastic model of the Gundam that plays the leadrole in Mobile Suit Gundam THE WITCH FROMMERCURY, which started TV broadcasting in

October, is recording highly favorable sales. The
range of purchasers has expanded to include
such groups as women and teenagers, and wewill implement continued initiatives to retain
new fans.
Furthermore, in the past several years significant growth has been recorded in such
categories as cards, confectionary, and capsuletoys. In cards, ONE PIECE CARD GAME waslaunched in July. It has gotten off to a favorable
start, with high evaluations for its game playand illustrations. Overseas, we plan to launcha Chinese version in November and an English
version in December. In confectionary, we are
creating hit products that have been supplemented with IP collectability features. In capsuletoys, we are expanding opportunities to fansto experience these products with the roll outof specialty stores in cooperation with theAmusement business. Going forward, in Toysand Hobby operations, in addition to toys, wewill leverage various IP touchpoints to implement wide-ranging development initiatives thatdraw on Bandai Namco’s distinctive strengths.
On the other hand, in regard to higher raw
materials prices resulting from the depreciationof the yen, we will continue to implement measures from a variety of directions, such as cost
reductions, increased efficiency, and creative
initiatives in the area of specifications.
What are the circumstances in the IP
Production Unit and the Amusement Unit?
Kawaguchi: In the IP Production business, wehave launched strategic IP products in thesecond half, such as Gundam, That Time I Got
Reincarnated as a Slime, and BLUELOCK, andwe anticipate an increase in earnings fromthese initiatives. Mobile Suit Gundam THE
WITCH FROM MERCURY, which was produced

in an in-house studio, is being broadcast inJapan and is also being distributed online
worldwide from a variety of platforms. The
visual product has also been highly evaluated.
It has become a major topic of conversation
and reached the number one position worldwide in trending topics on Twitter. In IP
Production, we will continue to focus on IP
quality. In addition, with IP as the starting
point, we will implement initiatives in packaged products, live events, and the licensing
business, and we will also implement global
roll-outs and online distribution, which havebeen recording significant growth in recent
years. In these ways, we will work to maximize
IP value.
Moreover, we changed our organizational
system from April. To further strengthen IP
creation capabilities, we are consolidatingknow-how and implementing personnel
exchanges. The combination of different
approaches, such as creation in-house andcreation through collaboration with partners,
has made it possible to create more varied IP.
Next year, we will advance the consolidationof the offices of companies within the Unit,
and we will further accelerate fusion.

In the Amusement business, in the second
half we anticipate increases in the cost of
materials procured at facilities, higher utility
costs, and increased depreciation accompanying the opening of new facilities and theintroduction of new amusement machines.
In addition, the Amusement business is susceptible to the influence of the spread of
COVID-19, and accordingly we are paying carefulattention to the operating environment.
Going forward, we will continue working
to increase efficiency. In addition, we will
actively utilize Group resources, such as prizes
and digital cards, and roll out amusement
facilities that leverage our unique know-how
in a variety of areas, from planning to operation. Examples include facilities specializing
in IP, such as Gundam Park; facilities thatgather together a variety of Group products
and IP brand shops, such as Bandai Namco
Cross Store; and sports variety facilities, suchas VS PARK. Also, for amusement machines,
in the second half we will launch a new modelin the CLENA series of highly popular prize
machines. Going forward, we will continue todevelop and roll out machines that address
market needs.

Aiming to put the Purpose into practice withour comprehensive strengths underthe ALL BANDAI NAMCO concept
Would you discuss the trends inoverseas business?
Kawaguchi: We exhibited at New York Comic
Con in October. Large-scale events can now
be held in real venues, and we are aggressively
exhibiting in a variety of regions. Previously,

Group companies had individual booths, but
now we are exhibiting by IP. This is not theresult of top-down instructions. Rather, it is
the result of employees around the world
thinking and taking action in order to maximize IP value. Under this initiative, we have

Consolidated Financial Results in First Half of FY2023. 3
Net Sales
Results

477,620

81,60792,36566,557Year-on-Year Changes

121.3%

132.2%

144.1%

168.4%



Full-year Consolidated Results Forecast for FY2023.3 and Results in Previous Year(million yen)

Net Sales

2

BANDAI NAMCO NEWS©バードスタジオ/集英社・フジテレビ・東映アニメーション©尾田栄一郎／集英社 ©尾田栄一郎／集英社・フジテレビ・東映アニメーション

 onsolidated Financial Results byC
Segment in First Half of FY2023. 3
(million yen)
Business Segment

Net Sales

Segment Profit

Digital

193,897

44,649Toys and Hobby

213,368

33,562IP Production

35,065

3,459

Amusement

48,657

4,804

Other

15,070456

940,000

128,000

139,000

95,000Elimination andCorporate(28,439)(5,324)

Results in Previous Year889,270

125,496

133,608

92,752

Consolidated
Total

477,620

81,607(April 2021 to March 2022)

ONE PIECE CARD GAME got off to a strong start.

Operating Profit

Attributable to
Recurring Profit Profit
Owners of Parent

Finally, do you have a message
for readers?
Kawaguchi: In the first half of FY2023.3, wewere able to achieve record-high levels of net
sales and profits. The engine of this achievement was our employees, who are Bandai
Namco’s greatest asset. I have personallyexperienced this while visiting various companies and events. The Group’s growth is theaccumulation of the growth of its employees,
and we will strive to promote the Group’s
growth by supporting the growth of ouremployees. First, we will aim for the achievement of the record-high results in the current
full-year forecast, and then for sustained
growth over the medium to long term. Pleaselook forward to exciting developments forBandai Namco in the years ahead.

Revised Projections*(as of November 2022)

New York Comic Con, where our booth was organized by IP.

Operating Profit(million yen)

Attributable to
Recurring Profit Profit
Owners of Parent

been able to highlight to overseas fans thecomprehensive strengths of ALL BANDAI
NAMCO and the scope of our business categories. I have been impressed by the resultsof these activities when I directly experienced
the enthusiasm of IP fans on the front lines.
Going forward, we will strive to effectively
leverage these favorable circumstances.
We have also consolidated office bases ineach region. Employees have developed a newmindset, and the process of fusion is moving
ahead. Under the ALL BANDAI NAMCO concept,
we have strengthened our commitment toaiming for both global growth and IP value
maximization, and our possibilities are
expanding. Going forward, we will further
expand our global business initiatives, centered on North America and China, which are
key markets.

* Forward-looking statements are based on a variety of assumptions and are not promises or guarantees that the stated future forecasts/
measures will be realized.

December 2022 No.70

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(Information in this section is as of the end of November 2022.)

CloseupContinuing to work together with fans toinvigorate IP and provide high-quality
products and services

word of mouth. With interest in Japanese
anime increasing in these ways, we have beenable to provide products in a timely manner,and this fact has led to the current favorable
conditions in the market for products for themature fan base.

In April 2021, Nao Udagawa, who up to that point had worked in the development of the Digital business, became the president of BANDAI SPIRITS
CO., LTD., which conducts activities in the Toys and Hobby business. Basedon the IP axis strategy, she is working to strengthen business for the mature
fan base and to bolster collaboration within the Entertainment Unit. In thissection of the newsletter, she discusses the current circumstances for
BANDAI SPIRITS around the world, the future outlook, and other matters.
It has been a year and a half since you
became president.
Udagawa: At first, I was a little bit surprisedat the difference in the business cycle between
the Digital business and the Toys and Hobby
business. However, the two businesses havethe same approach of developing operations
on an IP axis and providing high-quality products and services to customers, which isfundamental at Bandai Namco.
What results have been seen from initiatives fusing physical and digital elements?
Udagawa: One major point has been that, by
combining these operations in the same Unit,
it has become possible for executives to grasp
more-detailed information about the otherside’s businesses and numbers. Also, collaboration on an IP axis has further deepened.
For example, it is now possible to foster a cycle
in which people working in IP-related positionsin the Digital business and the Toys and Hobby
business meet together to hold discussions
under the same strategy, and to implement
measures.
On the front lines, each company had been
focusing on the point of product launch, but
now the companies can take a medium tolong term perspective in regard to IP trends
and developments. Synergies arising fromNew York Comic Con

collaboration to maximize IP value are being
generated in a variety of front-line settings.
The IP axis strategy seems to beworking well.
Udagawa: At New York Comic Con in October,IP axis corners were installed within the Bandai
Namco Group booth, such as for DRAGON BALL,ONE PIECE, etc. In one place, we exhibited the
products and services for the brands developed by each business, arranged by IP. We took
steps to make our booth fun for attendees,
such as installing a photo spot and distributing
samples. IP fans were able to directly experience products and services in a wide range ofgenres. I think that Bandai Namco has beenable to accomplish what we set out to do.
What factors are responsible for thefavorable results of BANDAI SPIRITS?
Udagawa: In particular, I think that one background factor is that there has been an
increase in opportunities for overseas customers to directly experience Japanese anime.
Over the past few years, it has become possible
to implement online visual product distribution with no time lag between Japan andoverseas. A variety of information is distributed
through SNS, etc. Also, overseas fans are promoting the appeal of Japanese anime throughGUNDAM NEXT FUTURE©尾田栄一郎／集英社 ©尾田栄一郎／集英社・フジテレビ・東映アニメーション

4

BANDAI NAMCO NEWSAs BANDAI SPIRITS targets the global
market, what is the company focusing on?
Udagawa: In addition to rapidly taking action,
I think that it is important to continue to provide fans with high-quality products. For
example, with plastic models, in addition to
the conventional sales route of specialty
stores, we have now expanded to large-scaleretailers, increasing the opportunities for customers to encounter our products. I think it
is important that, as we continue to expand
our sales routes, we simultaneously continue
to make products that not only meet but
exceed the expectations of customers who
have purchase products through those routes.
What regions are a special focus?
Udagawa: Of course Japan is also included
in our initiatives to strengthen global businessdevelopment. In the short term, we will further
strengthen our footing in the Japanese market.
At the same time, overseas we will continue
working to achieve expansion in the global
market, centered on North America andinland China.
Would you discuss countermeasures to ashortage of Gundam plastic models?
Udagawa: All of our employees want to do agood job of delivering products to large numbers of customers. Currently, we are focusing
on making progress with preparations for a
new plant at the BANDAI HOBBY CENTER. In
addition, in collaboration with related bases
within the Group, we are implementing initiatives to increase production efficiency.
Furthermore, with the cooperation of related

TAMASHII NATIONS STORE TOKYO©創通・サンライズ ©創通・サンライズ・MBS©ダイナミック企画・東映アニメーション

parties in distribution, we are advancing theestablishment of a system that facilitates
appropriate sales. Going forward, we will continue to implement a variety of initiatives.
Please discuss the future productbrand strategy.
Udagawa: There are points of focus foreach brand, and common initiatives include

enhancement of the originality
and value of all brands. There aremany issues, such as the rising
prices of raw materials, but continuing to provide customers
with things that have value is
indispensable for the growth ofindividual brands.

We would like BANDAI SPIRITS to be acompany in which the growth of individual
employees is a source of strength andmakes us indispensable around the world
What are special focus topics
and products?
Udagawa: The first would be the new Gundam
TV series, Mobile Suit Gundam THE WITCHFROM MERCURY. In preparation for the startof broadcasting, we held a variety of events
throughout Japan, such as GUNDAM NEXT
FUTURE, a large-scale event connecting fanswith the Gundam series. I believe that we wereable to enhance the enthusiasm and expectations of fans in advance.
In addition, in regard to sustainability, we
are implementing the Gunpla Recycling Project,which recycles plastic runners (part of theplastic model framework) that have beencollected through the cooperation of fans.
Through this project, we are aiming to recycle
15 tons within this fiscal year. The collectionof runners is being implemented on a Groupwide basis, and in these endeavors the Groupis leveraging the facilities of Bandai Namco
Amusement Inc. and the distribution resourcesof BANDAI LOGIPAL INC. As one part of these
initiatives, we held Gundam R Strategy 2022,
an event which included the distribution of
Eco Plastic products. This year, the event washeld in more than 45 locations around Japan,
and many people participated. Sustainability
activities implemented together with fansdraw on the distinctive characteristics ofBandai Namco, and through these types ofactivities we will enhance our connections
with fans going forward. We are very gratefulto have this opportunity.

Are there other points of focus?
Udagawa: In Akihabara, Tokyo, we held
TAMASHII NATION 2022 for the public for the
first time in 3 years. This large-scale event
featured collectible items for the mature fanbase. This was one of the largest ever real
events for products in all categories, including
first public exhibitions. In addition, we alsocollaborated with TAMASHII NATIONS STORETOKYO, a directly-managed store, and implemented online distribution. In these ways,
we were able to highlight our products to
many fans.
Also, in commemoration of the 15th anniversary of the TAMASHII NATIONS brand in
2023, we decided to hold a worldwide tour
visiting New York, Tokyo, Mexico, Shanghai,
and Paris. TAMASHII NATIONS products have
many fans not only in Japan but around theworld. We have high expectations that this tour
will be an excellent opportunity to highlightthese products worldwide.
Connections with fans around the world
are becoming stronger.
Udagawa: The Mid-term vision of the Bandai
Namco Group is “Connect with Fans.” Personally, this is also my greatest motivation. Forme, the greatest reward is the delight of customers, and I think that this also motivates
employees.

Nao Udagawa
President and Representative Director,
BANDAI SPIRITS CO., LTD.
sense of being enthusiastic together with fans,and I think that the metaverse might be one
platform that boosts that in the future.
Through the Group’s IP Metaverse Concept,
we will strive to facilitate the creation of broad,deep, and multifaceted connections with fansaround the world. In addition to connections
between Bandai Namco and fans, we will also
strive to foster connections among fans themselves and to build metaverse initiatives.
What are your policies toward work?
Udagawa: I believe that the individual growthof all employees, including me, is linked to
the growth of the company. Accordingly, my
aim is to strengthen individuals and the company through collaboration. I would like to
see everyone taking on challenges without
fearing change, and people with diverse knowhow and backgrounds working hard together
in a process of growth. I would like BANDAISPIRITS to be a company that is indispensable
to many people.

In regard to connections with fans, arethere any other specific initiatives?
Udagawa: Recently, in the communication of
information about IP and products, there is a
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