NEWSLETTER No.69 September 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 in the first three months of
FY2023.3, when we launched the Mid-term Plan.
Bandai Namco Holdings has announced its results for the first three months of
FY2023.3 (April to June, 2022). In this issue of the newsletter, President Masaru
Kawaguchi discusses the current circumstances and other matters, with consideration for the results and the Mid-term Plan.
The results for the first quarter havebeen announced.
Kawaguchi: In the first quarter of FY2023.3,
we introduced the Purpose, which is theultimate definition of the Group, and a newcorporate logo. This period was also the first
three months of the Mid-term Plan, underwhich we are aiming for a new stage. We
achieved record highs for first-quarter sales
and profits. Net sales were ¥216.2 billion,
operating profit was ¥44.3 billion, recurring
profit was ¥51.2 billion, and profit attributableto owners of parent was ¥37.0 billion.
What was the situation in the Entertainment Unit in the first quarter?
Kawaguchi: In the Digital business, welaunched major new titles in the first quarterof the previous fiscal year. In the first quarterof this fiscal year, there were no launchesof major new titles in either network content
or home video games. Our activities werefocused on existing titles. In network content, with no releases of new titles, weachieved favorable results and year-on-year
gains with DRAGON BALL and ONE PIECE,
which are established titles, as well as withsuch titles as That Time I Got Reincarnatedas a Slime, which was launched in the previous fiscal year. This was attributable toin-game events and ongoing communication with fans. In home video games, repeat
sales of ELDEN RING made a significant
contribution to results. This major title waslaunched worldwide in the fourth quarterof the previous year. In the first quarter, unit
sales of repeat titles reached 10.90 million
units, compared with 8.13 million units inthe same period of the previous fiscal year.
The download sales ratio was at a high level,with download sales accounting for 77% offull package sales. As a result, the digitalbusiness achieved record-high first-quarter
sales and segment profits.
In the Toys and Hobby business, Gundam
plastic models and products for the mature
fan base, such as collectible figures andcharacter lottery products, continued torecord favorable results around the world.
This was attributable to reinforced productlineups and strengthened sales and marketing initiatives. Overseas, the Toys andHobby business recorded growth in sales,
especially in North America. In addition,
in Japan toy-related items were popular,
including trading card games, candy toys,and capsule toys. Factors influencing Toysand Hobby business included rising costs
due to foreign exchange rate fluctuations,increases in freight rates and other costs,
and the spread of COVID-19 in Asia. On theother hand, we carefully implemented initiatives to prepare a foundation for the
future, and we recorded growth in sales. In
this way, we were able to achieve results atthe same level as the first quarter of theprevious fiscal year, when we achieved
record-high results.
What were the circumstances in the
IP* Production Unit and the Amusement Unit?
Kawaguchi: The IP Production Unit, which
was created in April through the combination of the visual and music business andthe creation business, produced IP-related

visual products, such as for the Gundam
series and the Love Live! series; implemented package sales of visual and music
products; held and streamed live events;
and implemented other initiatives. Overall,results did not reach the level recorded in
the same period of the previous fiscal year,
when licensing revenues were favorable,
but we did make progress in line with plans.
In the Amusement Unit, there wereregions affected by the suspension of operations, etc., due to the spread of COVID-19.
Nonetheless, the facility business recoveredaround the world. For example, sales atexisting facilities in Japan were up 27.1% year
on year. In addition, amusement machinesales were favorable, centered on Europe
and North America. Consequently, theAmusement business achieved record-highfirst-quarter sales and segment profits. Withconsideration for the unclear market trends
in the Amusement business, we will continue
working to increase efficiency in order tostrengthen our operational foundation.
The Mid-term Plan has commenced. Whatis the situation inside the Company?
Kawaguchi: As I mentioned, the first quarter
was a starting point as we aim for a newstage for Bandai Namco, with the introduction of the Purpose and the new logo andthe commencement of the Mid-term Plan.
(Continued on next page)*IP: Characters and other intellectual property

September 2022 No.69

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

Management

Interview with the President

With consideration for results in the firstquarter and other factors, we made an upwardrevision to the first half results forecast.
Looking at the circumstances in a varietyof front-line settings, I believe that we arestarting to see a change in awarenesswithin the Company. With external factors
undergoing dramatic change, front-line
employees are not satisfied with past successes or with current circumstances. They
are showing a more aggressive approachto taking on challenges with a strong awareness. I think that this is probably one of thereasons for our current favorable results.
Would you discuss the results forecast
for the first half of FY2023.3?
Kawaguchi: At the beginning of the year,
we were forecasting first-half net salesof ¥400.0 billion and operating profit of¥46.0 billion. However, with consideration for such factors as the significant
advances made with results in the firstquarter and current business trends, we
increased the forecasts to net sales of¥430.0 billion and operating profit of¥72.0 billion.
By business, we revised the first-halfforecasts for the Digital, Toys and Hobby,
and Amusement businesses. In the Digital business, in network content there
will not be any new title launches in thefirst half, but we have given consideration
to such factors as the current favorable
results with DRAGON BALL and ONE PIECE.
In home video games, we expect repeat
sales to be firm. The worldview and gameplay of ELDEN RING have been highly
evaluated, and accordingly we plan todevelop ELDEN RING as a title that can beenjoyed for a long period of time and tonurture it as IP. Looking at new titles in home
video games, we are planning to launchmajor titles worldwide in the second half.
In the Toys and Hobby business, we
expect to see continued foreign exchange
rate fluctuations and increases in freightrates. We will participate in overseas anime
events, and we will implement promotions
for merchandise related to Mobile Suit
Gundam THE WITCH FROM MERCURY, a newprogram that will start in October. In thisway, we will implement aggressive promotion and marketing initiatives with both realand digital elements and aim to further
improve results.
In the Amusement business, we madea revision with consideration for such seasonal factors as summer vacation. For theGroup overall, we would like to achieve
record-high results for the first half.
What is the situation regarding theresults forecasts for the full fiscal year?
Kawaguchi: There are no revisions at thisstage. First, in the second half there will
be launches of major home video game
titles, and second, there will be the busy
Christmas/New Year sales period, whichis the largest of the year. In addition, there
are a variety of external factors, such as
the spread of COVID-19 and foreignexchange rate fluctuations. In this setting,it is difficult to make judgments aboutannual trends just from the results in thethree months of the first quarter. We will
make another announcement about the
full-year forecasts after a careful review.
Media initiatives are creating buzz
about established IP.
Kawaguchi: Among our products and services, Gundam, DRAGON BALL, and ONE
PIECE are core IP. There are media initiatives
related to these IP, such as the opening of
new films and the broadcast of a new program, and there is considerable buzz amongfans. Going forward, we will work to foster
close collaboration between these visual
products and merchandise/services. At
Anime Expo and Comic-Con International,
which were large-scale events held in North
America in July, we had booths presenting
products and services that leverage theseIP. We are strengthening our initiatives forfans overseas.
For Gundam, we are implementing
GUNDAM NEXT FUTURE, which includes
a number of large-scale events. In one ofthese events, the three life-size Gundam
statues in Japan and overseas and the lifesize moving Gundam in Yokohama arelinked in real time. Other exhibition events,
centered on a new program, are being held
in regions throughout Japan. In products
and services, we will work to create buzz incollaboration with visual products in a wide
range of categories, such as Gundam plastic
models, figures, DATA CARDDASS, andgames. Overseas, we will move forward witha balance among distribution for core users,
distribution for light users, and e-commerce
distribution, centered on North America andinland China, where Gundam plastic models
and figures are recording favorable results.
In addition, with the Gundam Metaverse

concept, we are currently advancing preparations for the launch of the phase 1
Gundam plastic model colony.
With DRAGON BALL and ONE PIECE, wewill implement worldwide launches ofhighly anticipated new home video game
titles. DRAGON BALL THE BREAKERS will
be launched in October, and ONE PIECEODYSSEY will be launched within FY2023.3.
For ONE PIECE, we worked together withpartners to implement a two-day worldwide
simultaneous streaming event, which generated considerable buzz. In addition, in
July we launched a trading card game asa new ONE PIECE product. Commercials
and various other advance promotions wereeffective, and this product got off to a favorable start. Going forward, we also plan tolaunch this product overseas, such as inEurope and North America, and we expect
to see positive progress in the future.
In advancing the IP axis strategy, we focus
not only on short-term earnings from products and services but also on the extent towhich we can maximize the value of the IP
itself over the medium to long term. Even
if we do not anticipate earnings in the shortterm, we will work with partners to sincerely
address the needs of fans by expanding theappeal and potential of the IP.

Aiming to put the Purpose into practice from avariety of perspectives under the Mid-term Plan
The Group has implemented consolidation initiatives at overseas bases.
Kawaguchi: By the previous fiscal year, we
had basically completed organizational
restructuring and office consolidation in
major overseas regions. In these regions, asa result of the consolidation of operations
into a single office, we are seeing communications among employees arisingspontaneously in ways that extend acrossbusinesses. At large-scale events held overseas, we are implementing exhibits not bybusiness but as a Group under the ALL
BANDAI NAMCO concept. We are highlighting
the breadth of our product categories, fromdigital to physical. In Japan, we opened
BANDAI NAMCO Cross Stores in Yokohama
and Hakata. On a Groupwide basis, these
ALL BANDAI NAMCO facilities bring together
under one roof IP and product brands developed by the Units. Fan reactions in thesestores will be rapidly shared, and this will
be linked to further collaboration and­initiatives among businesses.
Previously, Bandai Namco was in a phasein which our growth was based on the sumof the growth of the various individual businesses. From the current Mid-term Plan, I
think that we will also need to aim for
growth in each region through thecomprehensive strengths of the Group­working together. However, even as we unify
under the ALL BANDAI NAMCO concept, we
will step up our efforts to maintain the individual characteristics of companies, people,
and product brands.
Overseas Group companies experienced an unauthorized access incident.
Kawaguchi: On July 3, the internal systems of multiple Group companies in Asia,
excluding Japan, experienced unauthorized

Consolidated Financial Results in First Quarter of FY2023. 3
Net sales

Operating profit

Recurring Profit(million yen)
Profit Attributableto Owners of Parent©Bandai Namco Entertainment Inc. / ©2021 FromSoftware, Inc.

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

Consolidated Financial Results by
Segment in First Quarter of FY2023. 3(million yen)

216,241

44,393

51,27437,019Business segment

year-on-year changes

121.5%

164.3%

178.3%

177.0%

Digital

Net sales

We had Bandai Namco Group booths for fans in North America.

Finally, do you have a message forreaders?
Kawaguchi: Under the Mid-term Plan, which
launched in April, we are aiming to implement the Purpose, which is the ultimate
definition of the Group. An important element of the Purpose is “connecting andworking together to create things.” Thisapplies not only to the main strategies but
also to the activities of employees aiming
to implement those strategies. In accordance with the purpose, as we work toward
what Bandai Namco aims to be, we will
strive to always meet the needs of fans, awide range of business partners, Group
employees, and communities around theworld and to foster deep, broad, multifaceted connections. We will work together as
we move forward and aim to be a Group
that can meet everyone’s expectations. I
would like to ask for your continued support
in the future.

Results

Consolidated projections for the second quarter of FY2023. 3

ELDEN RING made a significant contribution to results.

access from a third party. These servers andPCs may have contained customer information, etc., related to the Toys and Hobby
business in Asia, excluding Japan. Accordingly, we are working to identify whether or
not there was an information leak, and if
there was, to ascertain its scope. We are also
working to determine the cause of this incident. We offer our sincerest apologies forcausing significant trouble and concern. We
plan to announce the results of the investigation in an appropriate manner. Currently,
we are working in collaboration with external institutions to strengthen security on aGroupwide basis, and going forward we
will step up our efforts to prevent a
recurrence.

Operating profit

Recurring Profit(million yen)

Profit Attributableto Owners of Parent

Revised projections*(as of August 2022)

430,000

72,00080,00057,000Previous projections(as of May 2022)

400,000

46,00046,50033,000Net sales

Segment profit

89,59929,411

Toys and Hobby

94,872

14,363IP Production

15,686

1,085

Amusement

23,022

2,113

Other

7,027

131

Elimination andCorporate△13,967△2,711

Consolidated Total

216,241

44,393*Forward-looking statements are based on a variety of assumptions and are not promises or guarantees thatthe stated future forecasts/measures will be realized.

September 2022 No.69

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Closeup

We are working to consolidate our knowledge
in the visual, music, and live event businesses;
to facilitate rapid business initiatives; and toleverage Group strengths as the center of the IP
axis strategy.
In April 2022, the Bandai Namco Group reorganized the IP Production Unit andcombined the companies within the Unit. In this section, Makoto Asanuma, thepresident of Bandai Namco Filmworks Inc., which is the business managementcompany for the IP Production Unit, discusses the aims of the Unit reorganization, the strategies in the Mid-term Plan, future focus IP, and other matters.
Please discuss the objectives of the reorand live event businesses working together,ganization of the IP Production Unit.
we will further strengthen our IP creation
Asanuma: IP is the core of the Bandai
and production capabilities and aim to
Namco Group’s IP axis strategy, and under
rapidly develop business operations.
this strategy the IP Production Unit has theWhat is your view of the market enviimportant mission of creating and producing
ronment in the visual business?
IP through the visual, music, and live event
Asanuma: Technical innovation is rapidly
businesses.
advancing in the market. Services offering
In the Unit’s recent internal reorganizavideo streaming over the Internet aretion, we combined SUNRISE INC., which has
expanding, and it is now possible to enjoy
its own visual product studios; the visualhigh-quality video and audio on a homebusiness operations of BANDAI NAMCO Arts
Inc., which rolls out visual products, packTV, such as with 4K high-definition television
aged products, etc., in collaboration withand Dolby Atmos*1.
outside production studios; and BANDAI
On the other hand, there are things thatwill not change no matter how much
NAMCO Rights Marketing Inc., which handles
the visual product distribution business. In­technology progresses. It is customers who
this way, we established Bandai Namco
evaluate visual products, and the mostFilmworks Inc. At the same time, we comimportant thing is to produce visual p­ roducts
bined the music business operations ofin which customers find value. In producing
BANDAI NAMCO Arts Inc. with SUNRISE Musicvisual products, the IP Production Unit works
INC., and BANDAI NAMCO Live Creative Inc.,*1 A stereophonic sound technology
which handles the live event
business. In this way, we estab<Reorganization of the IP Production Unit>lished Bandai Namco Music
Live Inc.
From April 2022
In recent years, the IP
Bandai Namco Holdings Inc
environment has changed­significantly. To address this
100%
100%
change and demonstrate ourBandai Namco
Bandai Namcofull capabilities as a Unit, we
Filmworks Inc.
Music Live Inc.
thought that it would be
Bandai Namco Arts Inc.
­necessary to step up strong
SUNRISE INC.
Music businesscollaboration within the Unit.
Bandai Namco Arts Inc.
Bandai Namco LiveAs a result of the reorganization,
Visual business
Creative Inc
we can share the companies’
Bandai Namco Rights
varied know-how, strengths,
SUNRISE Music INC.
Marketing Inc.
networks with external partners, etc. With the visual, music,

to earnestly address the needs of customers
and focuses on creating products that are
one step ahead of customer expectations.
In this way, we create value that leverages
our distinctive strengths.
In the anime industry, the number of
new entrants around the world isincreasing.
Asanuma: I think that this is a result of the
global recognition of the power of anime.
Anime products with high-quality video
have expanded their domain to a wide arrayof products and services, and there are a
growing number of cases that have resulted
in hit IP. It is a major advantage for a company to be able to produce anime productsthat become the starting point of IP, and toroll out business initiatives as the IP holder.
Japanese anime are highly regarded ona global basis. Anime events held in locations around the world are attended bylarge numbers of people, and the venues
are full of enthusiasm. These circumstances
have become known worldwide, and thismight account for the increase in newmarket entrants.
Our Unit has a wide range of knowledge
regarding the provision of value to customers through the creation of products,
including in anime and music production,
streaming, packaged product and live
event development, and the use of
in-house rights. Furthermore, we can rollout a variety of products and services incollaboration with other Group Units.

Mobile Suit Gundam THE WITCH FROM MERCURY©創通・サンライズ・MBS

XR Live©xR ARTISTS SUPER FES 2022

Leveraging these strengths, we will do ourutmost to carefully fulfill our role in theGroup’s IP axis strategy.
What issues does the Unit face as competition intensifies?
Asanuma: Large numbers of anime arebeing broadcast and released. In this setting, in order to have customers choose
our anime, an important point will be how
we can produce high-quality products. To
that end, we must have talented creative
artists. However, there is a serious shortageof creative artists in the industry. I thinkthat this is an issue that must be resolved
for the entire industry, including Bandai
Namco Filmworks.
As one part of our efforts to nurture creative artists, we have established the

SUNRISE Drawing Academy and the SUNRISE Art Academy. Under this system,
students are selected from the applicants,
and these students are provided grants andreceive training related to anime drawing
and art. The aim is for the students toacquire skills and knowledge, with working
animators, art directors, and art staff serving
as instructors. Students who pass the graduation exam are given the opportunity towork as staff members at companies in the
IP Production Unit. The graduates include
people who are working on products in the
Gundam series, Love Live! series, etc. Goingforward, we will continue to actively implement these initiatives in order to build
foundations for the industry to support thecontinued provision in the future ofhigh-quality anime products, and to develop

Makoto Asanuma,
President and Representative Director ofBandai Namco Filmworks Inc.

the human resources who will support theGroup’s future IP creation.

Working to develop human resources andto resolve structural issues in the industry.
Establishing environments in which employees havehigh levels of motivation.
What are the circumstances in the music
and live event businesses?
Asanuma: Due to the influence of COVID19, the implementation of music and live
events that leverage digital technologies
is increasing. Our Unit is also working withthese initiatives, such as new types of live
events that utilize XR*2 technology andintegrate the real and virtual worlds. XR
live events are still in the early stages, but
going forward we will making ongoing
efforts to develop events that are evenmore fun for customers.
On the other hand, it is also true that real
events have a special ability to create buzz
among the participants that cannot be
expressed with digital techniques. Goingforward, we will leverage the strengths ofboth approaches and reinforce our development of events that combine digital andreal elements while monitoring thecircumstances.
What IP products will the Unit focus on
during the current fiscal year?
Asanuma: In October, broadcasts will startfor Mobile Suit Gundam THE WITCH FROMMERCURY, which will be the first TV series
in seven years. Ahead of the broadcast, theanime original version PROLOGUE wasscreened and received high evaluations. In
collaboration with Group businesses, wewill roll out a variety of products and services, such as Gundam plastic models.
In addition, in October broadcasts will
start for Blue Lock, a popular soccer mangathat is being serialized in WEEKLY SHONEN
MAGAZINE, and Pui Pui Molcar Driving
School, a new Pui Pui Molcar series. In­addition, Theatrical Version: That Time I Got
Reincarnated as a Slime, Guren no ­Kizuna-hen
will be released in November. Please lookforward to these products.
What are your policies toward work?
Asanuma: The IP Production Unit has about
1,000 employees. With the operating environment undergoing rapid change, we can
expect to grow only if each employee on
the front lines thinks about what is best andworks accordingly. My job is to establish
management strategies that enable employees to aim in the same direction and pushforward with their work. I will strive to fulfill

my responsibilities as president so that
employees can thoroughly understand thestrategies and demonstrate high levels of
performance.
In addition, no matter how much time
we spend on formulating our plans, if we
do not actually create and market the visual
works then we will not be highly evaluatedby customers. I would like employees tostrive to rapidly give shape to the things thatthey really want to do, without fearing­failure. The accumulation of experiencethrough this approach will generally leadto confidence. If we have a corporate culture
in which, when we fail, rather than be critical
we think about how we can succeed thenext time and we share those ideas witheveryone, then employees will be able totake on future challenges with high levelsof motivation. I will do my utmost to createthat type of environment.

*2 A general term for VR (virtual reality), AR (augmented reality) and MR (mixed reality) technologies

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