NEWSLETTER

June 2018

BANDAI NAMCO Holdings Inc.

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

Interview with the President

Record-High Results in FY2018.3
We will continue to take on new challenges
without being satisfied with the status quo.
In FY2018.3, the BANDAI NAMCO Group’s results reached a record-highlevel. In this issue of the newsletter, BANDAI NAMCO Holdings’ President
Mitsuaki Taguchi discusses trends under the new Mid-term Plan that started
in April, the situation with each Unit, and his enthusiasm about the future.
Would you discuss FY2018.3 results
and dividends?
Taguchi: In FY2018.3, which was the final yearof the previous Mid-term Plan, employees united
and worked tenaciously. As a result, we achieved
record-high results, with net sales of ¥678.3
billion and operating income of ¥75.0 billion.
In addition, we surpassed the forecasts that
we announced in February when we presented
the third-quarter results. A number of factors
contributed to this performance. Our results
exceeded expectations in overseas sales ofhome video games as well as in multiple businesses with high profit margins, such as network
content in Japan and overseas. In addition, on
a Groupwide basis, the key IP* products andservices in each business made active contributions in line with our expectations.
Starting with the FY2018.3 year-end dividend,
we will advance the application of the basic
return policy in the new Mid-term Plan —Provide a return to shareholders that targets a
total return ratio of 50% or more based on stabledividend payments of 2% of DOE. In regard
to dividends per share for FY2018.3, on top of
the base dividend of ¥32 per share, we will add
a performance-based dividend of ¥66 per shareand a special dividend of ¥25 per share to
express our gratitude to our shareholders forour record-high results, resulting in an annual
dividend of ¥123 per share for the fiscal year.
What is the outlook for FY2019.3?
Taguchi: For FY2019.3, we are forecasting net

sales of ¥650.0 billion and operating incomeof ¥60.0 billion. Our industry is marked bydramatic change, and this forecast does notassume that we will continue to have hit products. In addition, these figures reflect consideration for the product and service lineups andthe marketing plans that we envision at thepresent time. Of course, we will aim for growth
as a company, and accordingly we will work
to extend the solid trends of FY2018.3. In
addition, we will consider the announced figures
to be objectives that we must achieve, and wewill aim higher.
What direction will the Group aim forunder the new Mid-term Plan?

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

For BANDAI NAMCO to demonstrate its
presence in the next era, and to maintain aposition of striving to meet the expectationsof fans, we must move up to a higher stage inthe entertainment industry. In formulating the
new Mid-term Plan, we received opinions andproposals from each work site indicating that
we needed to further strengthen the creationof new IP and overseas initiatives. In Japanand overseas, each region will form a unifying
ALL BANDAI NAMCO concept and work toadvance our strategies.

Taguchi: Under the previous Mid-term Plan,

we made steady achievements in both numericaland strategic aspects. However, I think thatperhaps we could have done more in the creationof new IP. Under the previous Mid-term Plan,innovation had beneficial effects for establishedIP products and services, such as the DRAGONBALL and Mobile Suit Gundam series, andsolid results were recorded. Under the new
Mid-term Plan, in addition to innovation withestablished IP, we will drive the creation of
new IP, which we will work to nurture.
In addition, the expansion of overseas
business is another issue. Under the previous
Mid-term Plan, home video games and gameapps recorded solid results overseas. Toys andHobby initiatives in Asia are solid and areshowing smooth results. However, considering
the popularity of Japanese IP around the world,
there are still opportunities for growth.

The Company is also planning strategic
investment under the IP Axis Strategy,
which is a main strategy.
Taguchi: Each Unit will strengthen the creationof new IP. In particular, the newly established
IP Creation Unit will work to create IP closely
linked with Group products and services. In
addition, BANDAI NAMCO Holdings’ IP
Strategy Division has launched projects thattranscend organizational boundaries to create
IP. In our creation initiatives, we will not only
work within the Group but also collaborate
actively with a range of external partners. The
creation of new IP will be its most important
theme. Over the next three years, on top of
normal investments, we will implement ¥25.0
billion in strategic investments and continue totake on challenges from a variety ofperspectives.

*IP: Characters and other intellectual property

June 20181

Interview with the President

Targeting sustained growth for the Group,
we will aggressively provide products andservices around the world.
What are the latest activities underthe Business Strategy?
Taguchi: We recently announced recruitment

for the BANDAI NAMCO Accelerator, which
will support startup commercialization. New
digital and networking technologies and ideas
are now being created, without regard to thescale of the parent organization. By working
together with external partners who have thesetypes of technologies and ideas, we will strive
to create new entertainment. For example,
Gundam Concierge Haro was announced lastyear under agreements with partner companies.
This product leverages the character of Haro
to implement AI concierge functions, and it
has been well received. Without limiting ourselves to ideas and development activities
within the Group, we will demonstrate the“Open BANDAI NAMCO” concept and implement a variety of initiatives.
What direction will the Group aim forunder the Region Strategy?
Taguchi: We have positioned China as a priority

region. Along with Europe, the Americas, andAsia, we have established a holding company
in China and built a system for full-blown
initiatives. Moving forward, in each region
around the world we will aggressively roll out
Japanese IP and strengthen initiatives withlocally originated IP. To achieve sustained

growth worldwide, we will strive to create anenvironment in which the employees in eachregion can work rapidly and independently to
implement initiatives.

What is the situation in the overseas
What are the initiatives under the

Toys and Hobby business?

Personnel Strategy?

Taguchi: In Europe and the Americas, the situation has been challenging over the past
several years, and we have revised our strategy.
We will work to increase our operational efficiency, including systems, and in addition wewill also reinforce our initiatives for teenagers
and the mature fan base who have expectations
and also present opportunities. The DRAGONBALL card game that has been available inEurope and the Americas enjoys a boost in
popularity when new series are launched. In
addition to Europe and North America, thisgame has also been launched in South America
and Oceania, and I look forward to its future
results. In products for the mature fan base,figures for the Pacific Rim movies are popular,
and moving forward we will aggressively work
to commercialize IP that will become popularworldwide in this way.

Taguchi: I believe that entertainment companies

need to be groups of people that provide products
and services that they themselves enjoy. To
that end, we need to establish environmentsthat are easy for employees to work in and inwhich employees can have fun while doing
their work. In addition, we will work to stepup our preparation of frameworks that support
employees as they take on challenges. BANDAI
NAMCO has a wide range of businesses,
including merchandise, content, and venues,
and employees can acquire a diverse array ofexperience and enjoy a wide range of careers.
Moving forward, we will aim to be a corporategroup in which our employees, who haveabundant individuality, can have fun whileworking energetically.
Would you discuss the situation ateach Unit? What are the recent activi-

What is the situation in the Networkties in the Toys and Hobby Unit?

Entertainment Unit?

Taguchi: To strengthen its business for the mature

Taguchi: In addition to the worldwide roll-out

fan base in Japan and overseas, the Toys andHobby Unit consolidated plastic models, collectable figures, lottery-related
products, etc., and establisheda new company, BANDAISPIRITS CO., LTD. The Unit
has announced a plastic modelthat is the first product under
the Figure-riseLABO project,which is advancing multi-color
molding technologies for plastic
models. This product has
drawn considerable attention.

of products and services, the Network Entertainment Unit is also taking on the challengeof creating new entertainment. Moving forward,
in network content the Unit will pursue stable
management of major titles and aggressively
introduce new titles that will be our next pillars,as with DRAGON BALL Legends. In addition,
we started enza, a new platform for browser
games for smartphones from BXD Inc. Popular
titles like THE IDOLM@STER have alreadybeen launched and have received a solid response.
The enza business is also collaborating withbusinesses in other Units, and moving forward
they will work to nurture new business models.
In home video games, we plan to launch
new products for SOUL CALIBUR and ACE
COMBAT, which have established track records
in Japan and overseas. We are also developing

BANDAI SPIRITS CO., LTD.,is also strongly focused onoverseas business. Centeredon a core of production technologies cultivated in Japan,

2

BANDAI NAMCO NEWS

which could be called Japanese craftsmanship,
BANDAI SPIRITS is working to establish a
global hobby brand that features exceptionallyhigh quality and high levels of detail.
On the other hand, in children’s toys, KAMENRIDER, PRETTY CURE!, and other established
IP have achieved stable popularity. In July, we
will start the new Ultraman product, thereby
steadily strengthening our IP lineup.

multiple new titles for the Nintendo Switch, so
please look forward to these. Moreover, we will
work to boost interest in e-sports. The Group
has a large number of titles that are appropriate
for e-sports. We have launched full-time teams,
and we are considering implementing initiatives

to further activate communities, issuing licenses,
and holding tournaments sponsored by theGroup. We believe that boosting interest in
e-sports will also lead to expansion in thefoundation of the game-playing population.

for TV animations, but animations are not the
only starting point for IP. We will work tocreate IP from a variety of platforms, such asnovels and theatrical products.
Do you have a message forshareholders?

We will continue to respond to the demandsof the market, always take on challenges,
and provide “Dreams, Fun and Inspiration”
to everyone.
What is the status of the Real Entertainment Unit?
Taguchi: BANDAI NAMCO Amusement Inc.,

which is the core of this Unit, combines
NAMCO LIMITED and the amusement
machine business of BANDAI NAMCOEntertainment Inc. There are a growing numberof cases in which the evolution of entertainmenttranscends the digital world and leverages
real venues as places for expression. Goingforward, the Real Entertainment Unit will
provide “venues with value” at which IP fansand game fans can share experiences and will
expand services that can only be provided by
the BANDAI NAMCO Group.
At VR ZONE SHINJUKU, in April westarted operations at DRAGON QUEST VR,
which has proved highly popular. In addition,
VS PARK, which was opened as a variety sports
facility, is also popular. Going forward, we
will leverage a value chain that integrates
machine development and venues, and provide
machines, content, and venues that draw on
the distinctive capabilities of the BANDAI
NAMCO Group.

we are aggressively implementing multi-dimensional stage productions and live events,
for which the market is expanding. There are
passionate IP fans around the world, and accordingly we will provide opportunities to experience
the IP worldviews, such as with live events.
We will also deliver products and services
while leveraging collaboration among Units.
Please discuss the latest activities at
the IP Creation Unit.
Taguchi: SUNRISE INC., which is the corecompany of the IP Creation Unit, is working
on new products for popular IP series, such as
the Mobile Suit Gundam and Love Live! series.
In addition, SUNRISE INC. is collaboratingwith other Units and advancing the developmentof multiple IPs.
In the promotion of IP brands, Gundam
made well-received appearances in Pacific
Rim: Uprising and Ready Player One, which
are Hollywood films that were launched recently.
Moving forward, we will continue to promote
Gundam and other IP brands overseas. In
addition, SUNRISE INC. has a strong reputation

Taguchi: The Ordinary General Meeting of

Shareholders will be held on June 18. I would
like to engage in dialog with shareholders andto foster a greater understanding of the Group.
BANDAI NAMCO is a corporate groupcharacterized by continually taking on challenges, both now and in the future. In theprevious fiscal year, we were able to achieve
record-high results, thanks to the support ofour shareholders. However, we must not besatisfied with the status quo. As an entertainment
group that faces expectations from fans aroundthe world, we must continually take on new
challenges. In FY2019.3, we will continue
working to develop products and services
suitable for markets that continue to undergo
dramatic change, and we will aim to create
new IP that is aligned with the times and a stepahead of customers’ expectations.
BANDAI NAMCO heralds “Dreams, Funand Inspiration,” which are necessary in every
age and in every country and region. Goingforward, we will continue to rapidly provide
appealing IP as well as products and services
in markets around the world. Targeting thefuture that lies beyond change, the BANDAI
NAMCO Group will make a new start. Pleaselook forward to great things from the BANDAI
NAMCO Group in the years ahead.

What is the situation in the Visual andMusic Production Unit?
Taguchi: BANDAI NAMCO Arts Inc., which
combines BANDAI VISUAL CO., LTD. andLantis Co., Ltd., is leveraging a system thatenables production with integrated visual
products, music, and live events. BANDAI
NAMCO Arts is working on a variety of projects, such as the launch of new IP. Throughthese initiatives, we will strive to nurture
producers who can plan and implement IP
roll-outs. Furthermore, in Japan and overseasWe plan to launch the SOUL CALIBUR VI home video gamearound the world.
SOULCALIBUR™ VI & ©BANDAI NAMCO Entertainment Inc.

 e launched figures in Japan and overseas in conjunction with theWopening of the new Pacific Rim film. ©Legendary2018.All Rights Reserved.

June 20183

Closeup

Evolving from Animation Production Company
to IP Development Building Frontiers fromThin AirSUNRISE INC. is the core company of the IP Creation Unit, which was establishedunder the new Mid-term Plan. The Mid-term Vision of the IP Creation Unit is
Evolving from an Animation Production Company to IP Development, and theUnit is advancing the Mid-term Plan in accordance with three key strategies— improving creativity, improving communication, and improving branding. In
this section, SUNRISE President Yasuo Miyakawa discusses his thoughts about theformation of the Mid-term Plan, policies regarding work, and other matters.

Building Frontiers from Thin Air is the
new company philosophy.
Miyakawa: The greatest strength of the BANDAI

NAMCO Group is the IP axis strategy, underwhich we generate strong results by developing
IP seeds into a variety of forms, such as products
and services, and increasing their value. For
many years, SUNRISE has continued to create
original IP, the core of our strategy, and wehave made a large number of products into hits,
such as Mobile Suit Gundam. To create original
products from “thin air,” we need flexible
thinking and knowledge to break through fixed
concepts, imagination, and — more than anything else — strong conviction.
Leveraging the experience that we havecultivated to date, we are Building Frontiersfrom Thin Air. We have made this our corporate
philosophy, with the idea of utilizing the strengthsof the Group to leverage those frontiers by
10 or even 100 times.
What are the strengths of SUNRISE?
Miyakawa: I think that our history of continually

maintaining our dedication to original products
is one of our strengths. SUNRISE has inheritedthat DNA, which has become the force thatdrives our creation of original new products.
A company is a living thing, and accordingly
our embedded DNA is extremely important.
SUNRISE, which has built a history of original
products, naturally attracts staff who also wantto create original products themselves. I believethat the ideas of those staff contribute directly
to the creation of new products, and that thetransmission of this DNA to future generations
is extremely important.
Would you discuss “improving creativity,” which is a key strategy under the
Mid-term Plan?
Miyakawa: The major mission of the IP Creation

Unit is the creation and nurturing of new IP.
To that end, we must evolve from an animation
production company to IP development. If wethink of ourselves as an animation production
company, then we won’t be able to create
anything but animations. Clearly, SUNRISE

grew as a company specialized in animations,but at this point it is important for the Group
that SUNRISE does not limit itself to animations
and creates IP that can be utilized on a Groupwide basis. Going forward, without limiting
our modes of expression to animations, we will
strive to create IP in all entertainment genres,
including novels, live-action movies, andillustrations.
To enhance our ability to create IP, taking
on challenges is more important than anythingelse. In baseball, victory or defeat is determinedwhen you step into the batter’s box. Sometimes
we will hit home runs and sometimes we will
strike out, but if we fear failure then we will
not be able to create IP. Also, the act of stepping
into the batter’s box is itself a type of expression.
Some projects are announced after thoroughpreparations, while others start small and aresubsequently nurtured into something large.
Sometimes, a project initially shows no signsof expansion but later records substantial growth
after several years. For example, Mobile Suit
Gundam has now become an IP that is representative of the BANDAI NAMCO Group, butwhen it was initially broadcast it continued tohave low viewership. However, we did not giveup and continued to roll-out IP, and starting inthe second year of broadcasts, Mobile Suit
Gundam became a major boom, with long linesof customers waiting at stores to purchase
Gundam plastic models. It is uncommon for
IP to become a major hit right from the beginning. When creators have a product that they
themselves believe in, I think that it is important
for them to nurture it without giving up evenwhen someone opposes that product.
What about “improving communica-

approach this expansion as an opportunity. We
will aggressively implement initiatives for
products that were created in the past.
In regard to measures to bolster our ability
to communicate the appeal of IP, Gundam
made appearances in two U.S. science fiction
films that had worldwide releases this year

If each individual employee realizes his or
her dreams, then there will be as many new
IP created as there are employees.
additional investment of ¥6.0 billion
over three years in the creation of original IP.
Miyakawa: In entertainment, I think it is importantto provide new products that are different fromanything anyone has ever seen before. To takeon that challenge, we will make aggressive
investments. For employees, a generous budget
for IP creation is reassuring, and I expect to see
free thinking lead to a variety of ambitious plans.
What is the situation regarding collaboration within the Group?
Miyakawa: Multiple projects are already underway. For example, we are working together
with BANDAI NAMCO Entertainment Inc.
on the production of original visual productsthat will utilize games as an outlet, and we arealso collaborating with BANDAI CO., LTD.,on the development of new IP for children. We
are seeing results from human resources
exchanges, which are rapidly creating bonds
among Group employees through a common
desire to do something new. I think that theGroup is increasingly drawing together.

tion” and “improving branding”?

Aikatsu Friends!
©BNP/BANDAI, DENTSU, TV TOKYO4BANDAI NAMCO NEWS

Mobile Suit Gundam NT©創通・サンライズ

Double Decker! Doug & Kirill©SUNRISE/DD PARTNERS— Ready Player One and Pacific Rim: Uprising.
Until now, Gundam had only appeared in
SUNRISE products. Going forward, we will
work to advance measures to heighten thepresence of our original IP in Japan and overseas, including this type of initiative.
The IP Creation Unit is planning

Miyakawa: In April, we held an event for Mobile

What products and IP will SUNRISE

Suit Gundam OO, which was broadcast 10 years
ago, and we could sense the fans’ high level ofenthusiasm. Uncovering existing IP and adapting
it in alignment with the times is extremely
important, and we will make the continued
implementation of these types of initiatives into
one of our strengths. Entertainment has become
established throughout society, and there has
been substantial expansion in potential targets
for entertainment products. SUNRISE has awide range of products, and accordingly wefocus on in the future?
Miyakawa: In the first half of the year, we will

focus on the extent to which we can refresh
established IP, such as Aikatsu! and Gintama.
In the second half, Mobile Suit Gundam NT,
the latest product in the Gundam series, will
open in theaters in November. In addition, we
have decided to go ahead with a theatricalrelease of Love Live! Sunshine!!. Moving
forward, we will implement a variety of initiatives. Furthermore, we will roll out DOUBLE

DECKER! Doug & Kirill, an original “buddy
series” animation that is one part of the new
Tiger & Bunny animation series project. Pleaselook for this product.
What is the situation with overseas
initiatives?
Miyakawa: As 2020 approaches, I feel that

there is growing interest around the world inJapan and in Japanese IP. At SUNRISE, we
are implementing various types of initiatives
to uncover groups of overseas fans, such as
selling programming to TV stations in countries
around the world, implementing on-line distribution, and holding events. Films are goodtools for the worldwide communication ofJapanese culture, as with the appearance of
Gundam in Hollywood films. Moving forward,
we will emphasize films as a content outlet.
Furthermore, we will also focus on China,
which is a large-scale market.

Yasuo Miyakawa
President and CEO,SUNRISE INC.

Profile of President and CEO Yasuo Miyakawa<Background>
June 8, 1956 Date of birth
April 1981 Joined BANDAI CO., LTD.
January 1996 Director of Bandai Digital Entertainment
April 2000 Joined SUNRISE INC.
April 2004 Director of SUNRISE INC.
April 2008 Managing Director of SUNRISE INC.
April 2011 Senior Managing Director of SUNRISE INC.
April 2013 Executive Vice President and Director of SUNRISE INC.
April 2014 President and CEO of SUNRISE INC. (current position)
April 2015	President and CEO of BANDAI NAMCO Pictures Inc.
(current position)
April 2018 Executive Officer of BANDAI NAMCO Holdings Inc.

their dreams, then there will be as many new
IP created as there are employees. I would like
SUNRISE to be a company in which employees
evolve in tandem with fans and which continually creates new IP. I am enthusiastic about
the future.

What are your policies regardingwork?
Miyakawa: I am a strong believer in the impor-tance of the front lines. I strive to attend events
that draw users, without regard to whether they
are held by us or other companies. By directly
experiencing the enthusiasm on the front lines,
I can enhance my sensitivity regarding products,
and accordingly I want to continue to learn
from the front lines without losing my curiosity.
Also, I am communicating to employees that
I want them to realize the dreams that they had
when they joined the company. I think that ouremployees joined the Group because they had
something that they wanted to achieve. If
everyone remembers those feelings and realizes

June 20185