NEWSLETTER

June 2017

BANDAI NAMCO Holdings Inc.

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

Management

Interview with the President

Record High Sales and Profits in FY2017.3
Mid-term Plan Numerical Targets Achieveda Year Ahead of Schedule
In FY2017.3, the BANDAI NAMCO Group achieved record high sales and p­ rofits
on a consolidated basis. In this issue of the newsletter, BANDAI NAMCO Holdings’
President Mitsuaki Taguchi discusses the results trends, the situation in each business, the progress with the Mid-term Plan, and his enthusiasm about the future.
How were results in FY2017.3?
Taguchi: We got off to a good start in the firsthalf of FY2017.3, and we achieved net sales of¥620.0 and operating profit of ¥63.2 billion.
Each of these figures represents a record high.
The three-year Mid-term Plan was launched in
April 2015, and the numerical targets for the
final year of the plan called for net sales of¥600.0 billion and operating profit of ¥60.0
billion. Thanks to everyone’s hard work, wewere able to achieve these targets one year aheadof schedule. In operations, contributions to results
were made by a number of businesses, especially
the Network Entertainment Business, which
had strong results with network content andhome video games in Europe and the Americas,
and the Visual and Music Production Business,
which continued to register favorable results.
Would you discuss FY2017.3 dividends?
Taguchi: Our fundamental policy is to implement
shareholder return with the objectives of maintaining a base level of stable annual dividend
payments of ¥24 per share and a consolidated
dividend payout ratio of 30%. In accordancewith this approach, the Company will add a
performance-based dividend of ¥38 per shareand a special dividend of ¥20 per share to thestable dividend of ¥24 per share, resulting inan annual dividend of ¥82 per share for the
fiscal year.
The special dividend incorporates our
gratitude for shareholders in regard to ourrecord-high results and our achievement of
the Mid-term Plan’s numerical targets one year
ahead of schedule.

* IP: Intellectual property, such as characters

What is the situation with the
FY2018.3 plan?
Taguchi: In FY2018.3, the operating environment
will be marked by dramatic change, and wecannot take an overly optimistic outlook that
depends on the continuation of current hit products. In addition, we have also taken into consideration such factors as the product and title
lineups in each business as well as launch timing
differences. As a result, the plan calls for net salesof ¥600.0 billion and operating profit of ¥57.0
billion. Also, in FY2018.3, in addition to theoriginal strategic investment plan, we also intend
to increase strategic investment related to IP.
The Group has entered the third yearof the Mid-term Plan and is making
good progress.
Taguchi: We have been able to start the final
year of the plan in a good position that exceeds
our expectations. We are recording good
progress. In particular, I believe that we arestarting to see results from strategies targetingstrengthened innovation with established IP,
expansion of global initiatives, and growthof new IP outlets. On the other hand, I also
think that we could have achieved an evengreater range of new things. For the BANDAI
NAMCO Group to realize sustained growth,
not only for this year and the next Mid-term
Plan but also for the next 10 years or 20 years,
we must implement a variety of initiatives.
The Group has invested aggressively in IP.
Taguchi: Aiming to further strengthen the IP
axis strategy, in April 2016, we established the
IP Strategy Divisions within BANDAI NAMCO
Holdings. Currently, the divisions is advancing

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

a variety of initiatives, including a project tofurther strengthen established IP, such as Mobile
Suit Gundam and DRAGON BALL, in Japanand overseas and a project aiming to expand
targeted customer groups. In addition, to strengthen the IP axis strategy on a Groupwide basis,over the past two years we have invested about¥10.0 billion in such areas as creating new IP
and strengthening overseas business initiatives.
Moving forward, I believe that, while addressingchanges in the market environment, we must
continue to aggressively implement investment
and other initiatives as seeds that will lead tothe next stage of growth.
What is the situation in the Toys andHobby Business?
Taguchi: Established IP products, such as
Mobile Suit Gundam, KAMEN RIDER, Super
Sentai, and PRETTY CURE!, are all recording
favorable performances. A new ULTRAMAN
program, ULTRAMAN GEED, and a new
Yo-kai Watch chapter will be launched in thesummer, and accordingly we plan to introduce
products in line with the programs. For DRAGON
BALL, development initiatives will center on
the highly popular DATA CARDDASS. Also
the prize/lottery business was added in the
Toys and Hobby Business, and I would liketo further speed up our measures to reinforce
products for adults, such as figures.
June 20171

Management

Interview with the President

Comprehensive facility for Gundam plastic
models, actual-size Gundam statue, and­large-scale VR facility
How is the Toys and Hobby B­ usinessdoing overseas?
Taguchi: In Asia, Gundam plastic models are
popular, and collectible products for adultcustomers are also recording solid results.
Moving forward, in accordance with the strategy
of simultaneously conducting business activities
in Japan and Asia, we will aim to expand IP
and areas and to implement detailed initiatives.
In the U.S., the Power Rangers theatrical version
was released at the end of March, and in thefirst week of its release it recorded the second
highest level of box office revenues. The releaseof the theatrical version is expanding to Europe
and Asia. Furthermore, in home video gamesand network content in Europe and the Americas,
DRAGON BALL has proved to be highly popularin local markets, and we also plan to release
Toys and Hobby products, such as card games
and figures.

In these ways, we will transmit information
about Gundam, including not only Gundam
plastic models but also the Gundam IP itself,in Japan and overseas.
What is the status of the Network
Entertainment Business?
Taguchi: In network content, DRAGON BALLZ DOKKAN BATTLE has recorded more than
150 million worldwide downloads and remains
highly popular. In addition, favorable results
are being recorded by titles utilizing ONE
PIECE Treasure Cruise, which are also beingrolled out worldwide, and by titles utilizing
NARUTO, which are available in Asia. In Japan,
THE IDOLM@STER CINDERELLA GIRLS
is highly popular. In each region, core titles
have earned stable popularity. In particular, I
believe that there is a potential for further
growth overseas, and accordingly in FY2018.3,
we will continue to aggressively take on thechallenge of launching strategic titles andexpanding the areas for popular titles.

has recorded cumulative worldwide shipments
of more than 2 million units. In FY2018.3, wehave high expectations for Tekken7, which
was launched in June. This title has been
eagerly awaited by fans around the world, andwe will do our best to meet their expectations.
Furthermore, we also plan to launch ACE
COMBAT 7 SKIES UNKNOWN, the latest
title in the ACE COMBAT series. Drawing on
the latest technologies, each of these titles
offers superb expression and world-settings,
including VR compatibility, and I am confident
that customers will get great enjoyment fromthem. In addition, we will also aggressively
launch titles for new platforms, such as the
PSVR and Nintendo Switch.

What is the situation in the­Amusement business?
Taguchi: In amusement machines, which faceddifficult conditions in FY2016.3, we were able
to return to profitability in FY2017.3 due to awide range of initiatives, including steady rollouts of popular series and increases in efficiency.
Also, as one of our new ventures, we are developing machines for casinos in cooperation withan overseas gaming product development comThis summer, the Group will open apany. The first product will be a PAC-MAN
comprehensive facility for Gundam
video slot machine, and we will subsequently
plastic models.
move forward with the development of theWhat is the situation with home
Taguchi: At DiverCity Tokyo Plaza, a multi-use
video games?
second and third products while tracking market
facility in a waterfront area, we will open THE
Taguchi:In
FY2017.3,
extremely
strongresults
trends.
GUNDAM BASE TOKYO, a comprehensive
were registered by DARK SOULS III, which
In amusement facilities, we will not simply
facility that will bring together Gundam plastic
was launched in April 2016 and has reachedcontinue to develop the same type of facility.
models in a single venue for the first time incumulative worldwide shipments of 4.8 million
Rather, I think we should draw on the Group’s
Japan. Also, this fall, in the same location, weunits,andby
DRAGONBALLXENOVERSE
wide-ranging know-how to take on the challenge
plan to exhibit an actual-size Unicorn Gundam
2, which was launched in November 2016 andof new business formats. We recently opened
statue, which has been eagerly awaited by fans.
TONDEMI, a next-­generationindoor athletic center, atResults under Current Mid-term Plan* FY2018.3 = Plan as of May 2017
the AEON MALL Makuhari
New City. Interest in sports is
Net Sales
Operating Profit
increasing in Japan, and thisTargets as of April 2015    Results / Plan (¥ billion)
Targets as of April 2015    Results / Plan(¥ billion)
initiative is a test case for plans
63.2
620.0
600.0
60.0
for a new facility. In facilities
600.0 600.0*
60.0
575.5
560.0
57.0*
and other areas, the IP axis
530.0
­strategy is not limited to the
500.0
50.0
49.6
50.0
simple commercialization of IP.
45.0­Accordingly, we will strive to
400.0
40.0
meet expectations for the proposal of new entertainment
300.0
30.0
possibilities and new entertainment environments.
200.0
20.0
100.0

0

2

10.0

FY2016.3

FY2017.3

BANDAI NAMCO NEWSFY2018.3

0FY2016.3

FY2017.3

FY2018.3

The Group plans to open a large-scale
VR facility in Shinjuku, Tokyo.
Taguchi: This summer, we will open one of thecountry’s largest VR comprehensive entertainment facilities, which will have a total floor
space of approximately 3,630 square meters.
This facility will offer more than the type of
VR in which customers wear goggles to enjoy
the VR functionality. We also plan to offer awide range of other activities as well as eating
and drinking. I believe that this project willleverage the Group’s entertainment know-how
and become an entirely new type of facility.
Moving forward, the Network Entertainment
Business will work to create new businesses
and develop new customers, without limiting
its efforts to existing businesses. In addition toVR, these initiatives will include new services
drawing on artificial intelligence technologies
and new services integrating the real world andnetworks.

To provide dreams, fun, and inspiration topeople around the world, we will continue totake on the challenges of the times
What are the conditions in the Visualand Music Production Business?
Taguchi: The Love Live! series continues torecord favorable results. In FY2017.3, Love
Live! School idol project was extended withthe launch of Love Live! Sunshine. In addition
to previous fans, the series is also earning support
from new fans, and has been highly evaluated.
Furthermore, the theatrical version of GIRLS
und PANZER, which was released in November
2015, became a long-running hit that was intheaters for more than a year. This IP remains
highly popular. Also, in the past year we took
steps to lay the foundation for the continued
success of Mobile Suit Gundam by launching
titles for each target customer group.
In FY2018.3, we plan to implement new
initiatives, such as the second phase animationof Love Live! Sunshine and the OVA final
chapter for GIRLS und PANZER. As we strive
to continually foster innovation in key IP, wewill take steps to build a balanced IP portfolio,
including the Space Battleship Yamato 2202
series and an animation based on IDOLiSH7,
which originated from an in-house gameapplication.
The Group is also focusing on IP
production.
Taguchi: We are also strengthening live eventsand fan club sites, which enable us to communicate the worlds of IP directly to fans. To build
a foundation for further expanding live events,

we are also devoting resources to sponsoring
live events and holding live viewings overseas.
In addition, we have moved forward withoverseas initiatives in the area of global distribution of Japan’s animation songs. To that end,
a number of companies involved with animation
songs, including Group companies Lantis Co.,
Ltd. and SUNRISE Music Publishing Co., Ltd.
as well as such other companies as FlyingDog,
Inc. and KADOKAWA CORPORATION, haveestablished a new company, ANiUTA Co.,Ltd.,
which has already commenced flat-rate streaming services for animation songs. Moving
forward, we will strive to communicate theappeal of animation songs and to nurture fansin Japan and overseas.
What are the Group’s ambitions forthis fiscal year?
Taguchi: FY2018.3 will be the final year of the
Mid-term Plan, and I think that as we approach
the start of the next Mid-term Plan, we needto ensure that the IP axis strategy is linked tosustainable business. In addition, we haveidentified issues where we need to step up ourefforts, such as creating new IP with highfrequency and ensuring the sustainability ofoverseas businesses. As we formulate the next
Mid-term Plan, we need to securely reinforce
our footing.
For the next Mid-term Plan, we have discussed our vision for the BANDAI NAMCO
Group in 10 years. These discussions reached

the conclusion that even in 10 years, there will
be no change to our stance as a company that
centers its operations on the IP axis strategy
and provides “Dreams, Fun and Inspiration”
to people around the world. Targeting therealization of this long-term vision, what do
we need to do over the next three years? Howshould we arrange our IP strategy and outlet
strategy in response to the changing times?
These are the fundamental questions that wewill need to address in formulating the next
Mid-term Plan.
Do you have a message forshareholders?
Taguchi: In FY2017.3, we were able to record
good results thanks to everyone’s hard work.
However, we still face challenges. That is why
our employees are not content with the statusquo and continue working to create a corporate
culture that encourages everyone to continuallytake on challenges with a sense of urgency. I
believe that we must be the type of company
that continually takes on challenges. This refers
not to the challenges posed by others, but rather
to taking on the challenges of the times. We
need to become the type of company that can
respond to the ideas of fans, children, and otherpeople around the world by leveraging thetrends of the times to rapidly create new entertainment. I would like to ask for your continued
support in the future.

June 20173

Business Angle

Introduction of Group Officers

Future Outlook for the Network Entertainment SBU

Aiming to strengthen the IP axis strategy,
our ­biggest asset, and build a new businessin Japan and overseas
The Network Entertainment SBU, which is rolling out a variety of outlets for
IP, is recording favorable results in Japan and overseas with network content
and home video games. In this issue of the newsletter, BANDAI NAMCO­Entertainment Inc.’s President Satoshi Oshita discusses the situation in the
final year of the Mid-term Plan as well as future ambitions.

Would you discuss the situation in the
Network Content business, which isrecording favoratble results?
Oshita: In FY2017.3, core titles demonstrated
their strong market positions in Japan andoverseas, including DRAGON BALL Z DOKKAN
BATTLE, for which worldwide downloads surpassed 150 million, and THE IDOLM@STER
CINDERELLA GIRLS STARLIGHT STAGE.
In FY2018.3, we will continue to carefully
develop core titles, with game play and operationthat leverage abundant lineups of IP assets andtheir world-settings. In network content,
accompanying rapid market expansion, we
still have considerable potential for growth,
especially overseas. At the same time, ourmarkets undergo rapid change, and accordingly
we must always work with a sense of urgency
and speed. In China, where we have been
implementing full-scale business development
initiatives since FY2016.3, our business operations are making favorable progress. Moving
forward, we will continue working to achieve
further business growth, not only in Japan but
also overseas.
Home video games are showing
good results.
Oshita: In FY2017.3, titles such as DARKSOULS III and DRAGON BALL XENOVERSE

2 recorded especially strong results in Europe
and the Americas and made a contribution to
our performance. One of the BANDAI NAMCO
Group’s strengths is the fact that we sell thesetypes of titles backed by strong IP as well as
popular titles from other companies that haveentrusted us with sales due to our strong overseas
distribution network.
In FY2018.3, we will implement worldwide
roll-outs of major titles based on in-house IP— Tekken 7 (on sale from June) and Ace Combat
7 (planned to be launched in 2018). We haveleveraged our technical development capabilities
so that both of these products feature clear
graphics and high degrees of realism, so pleaselook forward to their launch.
Despite the fact that they are played on
different devices, home video games and network
content are similar in the sense that they areboth purchased by game fans. Moving forward,
I would like us to work to expand our overseas
business as we address the expectations of fansaround the world who are eagerly awaiting
games from BANDAI NAMCO. On the other
hand, the term “overseas” encompasses a wide
range of countries and regions with differencesin preferences regarding devices, IP, and games.
Accordingly, I think we need to carefully consider
the distinctive characteristics of each region
and focus our initiatives.

What is the situation in the­Amusement Facility business?
Oshita: In arcade game machines, conditions
were difficult in FY2016.3, and this businessrecorded a loss, but we have reevaluated oursystems and product lineups. In FY2017.3, we
got off to a new start with a streamlined system
and increased efficiency. As a result, the business
was able to return to profitability.
From this year, in addition to conventional
arcade game machines, we will utilize VR andwill commence full-scale initiatives in gaming
machines for casinos. I am confident that weare already an industry leader in terms of
VR-related know-how. This summer we plan
to open VR ZONE SHINJUKU, an entertainment
facility using VR technologies, in Shinjuku,
Tokyo. From April to October 2016, in Odaiba,
Tokyo, we opened the VR ZONE Project i Can
on a ­limited-time basis. Leveraging the knowhow cultivated through that initiative, BANDAI
NAMCO Entertainment Inc., BANDAI NAMCO
Studio Inc., and NAMCO LIMITED are now
working together with preparations to offer an
unrivaled VR experience at the new facility.
Please look forward to this opening.
In regard to gaming machines, we will start
to introduce products this summer, centeredon North America and starting with Las Vegas.
First, we plan to roll out PAC-MAN VIDEOSLOT WILD EDITION, which is gaming
content that we developed jointly with
Ainsworth Game ­Technology Limited, a leading
developer of gaming machines that is basedon Australia. In addition, in arcade gamemachines, in cooperation with NAMCO, we
will move forward with proposals of new
products that leverage new approaches.

VR ZONE SHINJUKU,a VR entertainment facility
DRAGON BALL Z DOKKAN BATTLE,a smartphone game application

4

BANDAI NAMCO NEWS

Tekken 7 home video game

©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.
©CAPCOM U.S.A., INC. ALL RIGHTS RESERVED.
TEKKEN™7 & ©BANDAI NAMCO Entertainment Inc.

In April, the BANDAI NAMCOEntertainment e­ stablished the LE
Business Unit.
Oshita: We created this independent unit tohandle live event planning and sales of goods.
It was split off from the Content Licensing
Unit, which handles ­licensing operations.

Centered on the IDOLM@STER and Tales of... series of original IP, which originated with
games, the new office will bolster our operations
in such areas as live events and other events
as well as sales of goods. Moving forward, we
will expand the worlds of our IP.

The next Mid-term Plan will mark a step
toward being a global company
Continuing to take on challenges with a spiritof autonomy and independence
What types of strategies areunder consideration for the next
­Mid-term Plan?
Oshita: The key phrase is “Taking the next stepto grow from a Japanese company into a global
company.” In this phrase, “step” refers to thenext stage. We cannot make a jump directly tothe next stage, so we will take the next step inthat direction. Moving forward, we will work
to steadily expand our business around theworld. In the true sense of the word, a “global”
company has a complementary business structureso that, for example, weaker results in Japan
can be offset by stronger results in Europe andthe Americas. We have made progress with the­establishment of bases in overseas regions aroundthe world and with the delegation of authority,
and accordingly we will aim to establish a system
in which each region earns more than half of its
sales through independent operations.
What challenges are you confronting?
Oshita: The IP axis strategy that we are advancing
is our largest point of differentiation from ourcompetitors. As a result, we are making favorable
progress with bolstering our overseas businesses,
which is one of our growth strategies. In addition, in creating new businesses, which isanother one of our growth strategies, we arestill in the stage of planting seeds, and those
seeds have not yet been sufficiently nurtured.
This is an issue. In particular, the establishmentof new businesses overseas is an urgent task.
In addition to the creation and acquisition of
IP originating overseas, we must also step up
our efforts to take on the challenge of creating
new business models that originate in overseas

bases, which have the best grasp of local­conditions. The increasing speed of the Internet
will support the ongoing creation of new­businesses in the future. While maintaining a
sense of urgency and speed, we will need tocontinue to leverage business models that draw
on the distinctive strengths of the BANDAI
NAMCO Group.

Satoshi Oshita
President and Representative Director,
BANDAI NAMCO Entertainment Inc.

 rofile of President andP
Representative Director Satoshi Oshita<Background>

Human resources development is also
important.
Oshita: The extent to which human resources
can be nurtured becomes an issue in full-scale
overseas business initiatives. Of course, theIP axis strategy is an asset, but it is importantto have human resources to implement thestrategy. We are implementing initiatives witha focus on overseas development. For example,
in network content, we are reinforcing collaboration with people responsible for networks
at overseas bases and working to nurture
human resources through personnel exchanges
with Japan.
As the president of BANDAI NAMCOEntertainment, what expectations do
you have of employees?
Oshita: I want everyone to remember that allof the work that we are doing now is linked tothe mission and vision of the BANDAI NAMCO
Group, which aims to become the world’s mostinspiring entertainment group through theprovision of “Dreams, Fun and Inspiration”.
FY2018.3 will be an important year for­preparations for the next Mid-term Plan. In
conjunction with the start of that plan, we havedetermined the new values that employees ofJuly 3, 1953

Born in Yamaguchi Prefecture

April 1976

Entered BANDAI CO., LTD.

June 2002	President and Representative Director ofBandai Networks Co., Ltd.
April 2009:	Managing Director of BANDAI NAMCO Games Inc.
(currently, BANDAI NAMCO Entertainment Inc.)
April 2010	President and Representative Director of
BANDAI VISUAL CO., LTD.
April 2012	President & Representative Director of BANDAI NAMCO
Games Inc. (current position)
June 2012	Director of BANDAI NAMCO Holdings Inc. ­(part-time,current position)
January 2015	CEO of BANDAI NAMCO (SHANGHAI) CO., LTD.
October 2016	Chairman and Representative Director of
BANDAI NAMCO Studios Inc.
April 2017	Chairman and Representative Director of
BANDAI NAMCO Technica Inc.
(part-time, current position)­BANDAI NAMCO ­Entertainment shouldemphasize. These values have five components— First, have fun first; Take the next step;
Expand your mind; Push your limits; and Show
your appreciation. I have told our employeesthat I would like them to emphasize thesevalues, and I would also like everyone to work
to build a corporate culture in which eachindividual continues to Empower, Gain Momentum, and Accelerate Evolution with feelingsof gratitude and politeness.

June 20175