NEWSLETTER

December 2020
BANDAI NAMCO Holdings Inc.

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

Interview with the President

Due to the effectiveness of BANDAI NAMCO’s
portfolio, results in the first six months of
FY2021.3 surpassed our plans.
BANDAI NAMCO Holdings has announced its results for the first six
months of FY2021.3 (April to September, 2020). In this issue of thenewsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi
discusses the results for the Group and the trends in each business.
The results for the first six months of
FY2021.3 have been announced.
Taguchi: Looking at our results in the first six
months of FY2021.3, in comparison with theplanned figures that we announced in August— ¥315.0 billion in net sales and ¥30.0 billion
in operating profit — we achieved results thatexceeded the plan, with ¥337.1 billion in net
sales and ¥45.9 billion in operating profit.
In the first six months, each of our businesses was affected in various ways by the
global spread of COVID-19. However, theinfluence of these negative factors was offset
by businesses and regional operations that
addressed demand associated with the trend
toward people staying at home. Even as they
were getting use to the new teleworking
arrangements, our employees continued towork hard, including taking steps to address
digitalization at Group companies aroundthe world.
Would you provide an overview ofthe first six months of FY2021.3 bybusiness area?
Taguchi: In the Toys and Hobby business,

Gundam plastic models and products for themature fan base, such as collectible items,
recorded favorable results as they captured
demand associated with the trend toward
people staying at home by rapidly responding
to digitalization. Moreover, in addition toestablished IP*, popularity was also recordedby new IP, such as DEMON SLAYER: Kimetsu
no Yaiba and Disney: Twisted-Wonderland,and by toy-related items, such as confectionery,
where the Charapaki series became a hit, andsundries. On the other hand, COVID-19 affectedprizes for amusement facilities, etc., principallyin the first quarter. In addition, there was also
an effect on sales of products linked with TV
programs, etc. Nonetheless, the Toys and Hobby
business achieved an overall gain in resultsin comparison with the previous year, whena record high was achieved.
In the Network Entertainment business,
DRAGON BALL Z DOKKAN BATTLE, which
is network content, was popular due in partto the effect of anniversary events overseas.
In addition, favorable results were recordedby mainstay titles in DRAGON BALL LEGENDS, THE IDOLM@STER series, etc. In
home video games, the new CAPTAIN TSUBASA title got off to a favorable start. In addition,
due to stronger digital demand, DRAGONBALL titles and repeat titles, such as in the
DARK SOULS series, surpassed the plannedlevels of unit sales. The full package download
sales ratio also exceeded plans.
In both network content and home video
games, titles are enjoying longer product lives
due to sustained communications with fans.
The development schedules that were delayed
due to COVID-19 are now being restored, but

Mitsuaki Taguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.
of amusement machines. Following the earlier
closures, amusement facilities have beenreopened. Sales at existing facilities in Japanare recovering, and were 78.3% of the previous
year’s level as of September. In this environment, to address changes in the operating
environment, we have started new initiatives,
such as the Torumo online crane game, andthese initiatives have been popular. Moving
forward, we will strengthen initiatives thatleverage the distinctive strengths of the RealEntertainment business, and we will rapidly
implement measures to build a businessconstitution that will enable the business togenerate earnings even in challenging operating environments.

we will need to move forward cautiously while
watching market trends.
In the Real Entertainment business, amusement facilities around the world were closed
due to COVID-19, and this affected not only
the amusement facility business but also sales* IP: Characters and other intellectual property

December 20201

Interview with the President

Taking on the challenge of approachingchanges in the operating environment asopportunities to create new business models
and customer value
Taguchi: In the Visual and Music Production

business, we rolled out established IP packaged product titles, such as in the Love Live!
Sunshine!! and THE IDOLM@STER series.
However, due to the influence of COVID-19,
the number of live events held in the first six
months was down significantly from the previous year, which affected our results. In
addition, the production and opening schedules
for visual and music products were also
affected, and multiple visual product openings
and packaged title launches were delayed. In
live events, we are also working on the development of a new business model that is alignedwith the changes that we face.
In the IP Creation business, events werecanceled due to COVID-19, but the effect onearnings in the first six months was limited.
In the first six months of the fiscal year, we
produced visual products that will be launchedin the third quarter and thereafter, and weworked from a variety of directions to create
buzz about IP. SOTSU CO., LTD., has joined
the IP Creation Unit from FY2021.3. As aresult, SOTSU’s earnings are added to thoseof the Unit, and amortization of goodwill has
been incurred.
Please provide an overview of theinfluence of COVID-19.
Taguchi: Looking at the influence on the entire
Group in the first six months, if we add up
the obvious factors, such as the closure ofamusement facilities and the cancellation of
events, there was a negative effect of approximately ¥34.5 billion on net sales andapproximately ¥13.5 billion on operating
profit. On the other hand, we have started to
implement new initiatives to address changes
in the environment, such as fostering demand
from people staying at home. These initiatives
include the online crane game, streaming oflive events without customers in attendanceat the physical venue, and digital initiatives.
These types of new approaches are leading

to the acquisitionof new customers. Moving
forward, we will take on the challenge ofapproaching changes in the operating environment as opportunities to create new businessmodels and customer value.
Would you discuss the full-year plan?
Taguchi: When we announced our results forthe first six months, we did not make any
revisions to the full-year plan for FY2021.3.
The circumstances regarding the global spreadof COVID-19 remain uncertain, and at thispoint it is difficult to appropriately calculate
what effect COVID-19 will have up to theend of FY2021.3. Also, from the third quarter
the Toys and Hobby business has its largest
annual selling season, and we will need toconfirm the situation, especially in Europe
and the Americas. Moreover, it is possiblethat results will be affected by the trends inhome video game development and launchschedules. We have decided to carefully examine the numbers and disclose them tostakeholders at the point when the trends
become clear.
Would you discuss the current trends
in each business? First, what are
the circumstances in the Toys andHobby business?
Taguchi: For Japan’s busy Christmas and New
Year selling season, the Toys and Hobby businesswill not only focus on established IP products,
such as KAMEN RIDER, but also enhance thelineup of DEMON SLAYER: Kimetsu no Yaiba
products. The film has become popular amonga wide range of age groups, including bothmales and females, and accordingly we havehigh expectations.
Gundam plastic models reached their 40th
anniversary this year, and in December wewill implement successive launches aroundthe world of PERFECT GRADE UNLEASHED,
the ultimate Gundam plastic model. Also, thesemodels are already popular in Asia and Japan,
and next we are aiming to expand sales of
Gundam plastic models in North America. In
this market, large retail chains have decided
to carry these products, including not only
Target and Hobby Lobby but also Walmart
and other retail chains. Moreover, in preparation for the growth of Gundam plastic model
sales overseas, we decided to expand the
BANDAI HOBBY CENTER, our manufacturing base in Japan. We have completed the
expansion and started operations. Goingforward, we will continue to implement collaboration between Gundam plastic models
and other Group businesses, and we will work
to increase sales around the world.
What is the situation in the Network
Entertainment business?
Taguchi: In the Network Entertainment business, from FY2021.3, we transitioned froman organization based on devices, such as the
network content division and the home video
game division, to an organization centeredon IP. In this way, we will aim to launchhigh-quality titles that increase IP value at thebest time, with consideration for device-specificstrategies. For new titles, we will conduct
further careful examination and strengthendata analysis, which will be reflected in
fan communications.
We have also made a Canadian development
studio into a subsidiary as one part of measures
to strengthen our development system. Currently, this studio is developing Unknown 9:
Awakening, an action adventure game. Through▲SCARLET NEXUS is in development for next-generation
game machines.
SCARLET NEXUS™ & ©BANDAI NAMCO Entertainment Inc.

2

BANDAI NAMCO NEWS▲GUNDAM FACTORY YOKOHAMA enables
visitors to experience the world of Gundam.

©創通・サンライズ

these types of initiatives, we will bolster our
portfolio with titles developed in Japan aswell as titles developed overseas. Moving
forward, we will distribute a title from anothercompany, Cyberpunk 2077, principally inEurope, and in February 2021, we will launch
Little Nightmares 2. Also, although theirlaunch dates have not yet been determined,
we are advancing development of ELDEN
RING and, for next-generation game machines,
SCARLET NEXUS.
What is the situation in the RealEntertainment business?
Taguchi: In the Real Entertainment business,
our highest priority issue is building a businessconstitution that can generate earnings evenin a challenging operating environment. We
are implementing a variety of initiatives, suchas carefully examining facility openings andclosures, reducing operating costs, streamlining

head office functions, and reevaluating the amusement machinedevelopment system.
We are also advancing collaboration between content andfacilities in ways that leverage
BANDAI NAMCO’s distinctive
assets and know-how. In addition
to offering limited availability
prizes for BANDAI NAMCO
Amusement Inc. facilities andholding IP campaigns, from August
we also started to roll out CapsuleToy Stores. We are selling a wide
range of capsule toys at the first
store, in Yokohama, where we have installed
more than 2,200 capsule toy vending machines.
This product lineup and expertise have beenhighly evaluated, and the store has been popular. Real venues are important for BANDAI
NAMCO in terms of both business andmarketing, and accordingly we will aim tostrengthen our business constitution by applying
the principles of selection and concentration
to BANDAI NAMCO’s distinctive strengths.

Aiming to be the only one for fansaround the world
Would you discuss the situation in the
Visual and Music Production and IP
Creation businesses?
Taguchi: We are implementing a variety of

initiatives in the Visual and Music Production
business. In the live event business, for example, these include fee-based streaming of live
events without customers in attendance at thephysical venue, e-commerce sales of live event
goods, and the use of streaming platforms,
as well as virtual idol production. These are
not simply responses to the operating environment in the period with COVID-19. Rather,
we think of them as frameworks that will
enable us to generate new added value thatreflects our strengths and was not available
with previous live events. Currently, we arestarting the broadcast or release of visual
products that had been delayed or suspended
due to COVID-19, such as the reopening of
the IDOLiSH7 second-stage animation, which
had been suspended. Moving forward, we
will continue working to create buzz about
IP through production initiatives that integrate
the three elements of visual, music, and live,
which are our strengths.

In the IP Creation business, in collaboration
with the Visual and Music Production business,
Love Live! Nijigasaki High School Idol Club
was launched in October and has been popular.
We also commenced the roll-out of Saikyo
Kamizmode!, an IP coordinated with DATACARDDASS from the Toys and Hobby business.
In addition, from January 2021 Aikatsu Planet!,
an IP that combines animation and live action,
will start broadcasts. Going forward, the IP
Creation business will continue to fulfill its
role as an engine for the creation of IP that iscoordinated with Group products.
The Moving Gundam Statue will soon
be unveiled.
Taguchi: On December 19, at Yamashita Futo,
Yokohama, we will open GUNDAM FACTORYYOKOHAMA, where fans will be able to see
an up-close view of the 18-meter, life-size
moving Gundam. We would like to ensurethat as many fans as possible experience theimpressive world of Gundam, which integrates
leading Japanese technologies.
Gundam is an initiative that extends acrossGroup Units around the world, and accordingly
we will aim to maximize its IP value as wework to build Gundam into a worldwide IP. In
2021, and thereafter, in addition to roll-outs of
new visual products and other products, wewill continue to take steps to create buzz about
Gundam, such as starting the Gundam China
Project, having Gundam serve as ambassadorof the Japan Pavilion at the Dubai Expo,and participating in the production of a
Hollywood film.
Finally, do you have a message
for readers?
Taguchi: We are in a new era with COVID-19,
and in this environment entertainment that
lifts people’s spirits is increasingly important.
We will move quickly to address digitalizationand other changes that are moving rapidly.
In addition, we will provide highly diverse
entertainment that brings people together
through IP, products, and services. These are
the roles of BANDAI NAMCO. We wantfans to have high expectations of BANDAI
NAMCO, and we will aim to be irreplaceable,
to be the Only One, as we strive to create a
new era in entertainment in the future. I would
like to ask our stakeholders for their continued
support of the BANDAI NAMCO Group.
December 20203

Closeup

Record high results in the
Toys and Hobby Unit in the first six months.
Aiming for further growth under
ALL BANDAI NAMCO.
In the first six months of FY2021.3, the Toys and Hobby Unit achieved record
high net sales and operating profit. Through the Unit combination that isplanned for April 2021, the Toys and Hobby Unit will combine with the Network
Entertainment Unit and aim for further growth in the years ahead. In this section of the newsletter, Masaru Kawaguchi, Executive Vice President and Directorof BANDAI NAMCO Holdings Inc. and President and CEO of BANDAI CO., LTD.,the core company in the Toys and Hobby Unit, discusses the Unit’s current situation and future outlook.
As the Executive Vice-President of
BANDAI NAMCO Holdings,
what is your analysis of thecurrent circumstances?
Kawaguchi: In June 2020, I became Executive
Vice President of BANDAI NAMCO Holdings.
I believe that my mission is to take the leadin advancing stronger collaboration among
Units. BANDAI NAMCO has grown as aGroup by rolling out business activities undera spirit of independence and autonomy foreach business.
However, looking at the current market
environment, large companies from aroundthe world are investing in IP, and there arealso new companies that are posting rapid
growth due to the strength of their promisingcontent. Competition to secure IP is becoming
more intense. To increase our competitivenessin global markets and to further strengthen
the IP axis strategy, which is the Group’s
strength, we need to further bolster the connections among Units and work under the ALL
BANDAI NAMCO concept, while leveraging

the characteristics and strengths of each Unit.
As the Executive Vice President and Director of BANDAI NAMCO Holdings Inc. andthe president of the Toys and Hobby Unit, I
believe we should strongly advance collaboration among Units.
In April 2021, the Toys and Hobby
Unit and the Network Entertainment
Unit will be combined.
Kawaguchi: One of BANDAI NAMCO’s

competitive edges is that we have both tangible
and digital businesses and we can roll-out
products and services in a wide range of business fields. Up to this point, the Toys andHobby Unit, which offers tangible products,
and the Network Entertainment Unit, which
conducts digital businesses, have each aimed
for growth in their respective fields. However,to create a growth strategy looking 5 years or
10 years into the future, we must move forwardwith the creation of new entertainment thatcombines tangible and digital elements andis aligned with changes in customer values.

Through the combination of the two Units,
we will be able to advance collaboration among
businesses and make more effective use of
the Group’s wide range of business fields.
In this way, we will strive to further increase
BANDAI NAMCO’s competitiveness inglobal markets.
Please discuss the current trends in
the Toys and Hobby business.
Kawaguchi: In FY2021.3, we have captured
demand from people staying at home due to
COVID-19, and favorable results have beenrecorded by products for the mature fan base,such as Gundam plastic models and collectible
figures. Moreover, toy-related items, suchas confectionery and sundries, have been
popular, and we moved quickly to offer new
IP products, such as DEMON SLAYER:
Kimetsu no Yaiba and Disney: Twisted-Wonderland. These initiatives have generated
significant results.
Our measures to reinforce marketing initiatives with the use of digital technologies
also supported the favorable results. In an
environment that placed limitations on theholding of live events with people in attendance at a physical venue, we took the leadin the industry with the implementation of
online meetings with business partners, andwe aggressively rolled out online events forthe public. Online events do not have geographical restrictions, and accordingly these
events have helped us to identify fans who
have previously not been able to participate
as well as new customers and dormant customers. We previously recognized that theuse of digital technologies is an issue, and I
think that we have been able to accelerate◀ENTRY GRADE 1/144 RX-78-2 GUNDAM(Currently offered through advance sales
at Gundam Base, ¥770)©創通・サンライズ▲ T AMASHII Features 2020 was a live event held in July.
(Photo shows online distribution venue.)

4

BANDAI NAMCO NEWS▲Transformation Belt DX Seiken Swordriver (¥6,980, on sale)©2020石森プロ・テレビ朝日・ADK EM・東映

the pace of reforms as we move to addressthese opportunities.
The negative influences of COVID-19
include the effect on sales of prizes, digital
cards, capsule toys, etc., as a result of theclosure of amusement facilities in Japan. In
addition, there was an effect on the coordinatedroll-out of programs and products due to theinterruption of TV animations.
Also, looking around the world, there was aneffect on sales of products due to the closureof retail stores, centered on Europe and theAmericas. I think that the Unit’s ability toachieve record high net sales and operating
profit even in this type of environment was asignificant result. I am very grateful for our
employees, who flexibly addressed work issues,even in a challenging environment; drew on
their insight; and worked hard.

Would you explain the detailsof the current situation inoverseas businesses?
Kawaguchi: Asia, including China, was able
to recover from COVID-19 at an early stage.
We are making stable progress, centered on
products for the mature fan base, and in particular Gundam plastic models are highly
popular. These models are primarily manufactured at the BANDAI HOBBY CENTER
in Shizuoku Prefecture. However, with consideration for rising demand around the world,
we are constructing a new building on the
grounds of the Center so that we will be able
to implement stable production over the
medium to long term. Through the start-upof this new building, we plan to increase
production capacity to 1.4 times the level in
FY2019.3, and we are aiming to put the newbuilding into operation in December 2020.
Masaru Kawaguchi
Executive Vice President and Director,
BANDAI NAMCO Holdings Inc.

Aiming for the number one positionin the Christmas and New Year selling season
with a diverse product lineup
What is the situation in Europe andthe Americas?
Kawaguchi: In Europe and the Americas,

where the achievement of a recovery in our
results is an urgent issue, under the current
Mid-term Plan we have implemented a variety
of initiatives, such as strengthening products
for the mature fan base. However, with the
influence of COVID-19 this year, we havebeen unable to advance our initiatives in theway we wanted, and we face ongoing issues.
Even in these circumstances, however, ourin-house e-commerce initiative, which wasplaced into full-scale operation in the U.S.
this year, appears to have gotten off to afavorable start, and I think that we can lookforward to good results in the future. Also,
another major success was the introductionof Gundam plastic models in approximately
520 stores operated by Target, one of thelargest retail chains in the U.S. Other products
for the mature fan base are also being introduced in large retail chains, and accordingly
we will work to leverage these opportunities
to steadily develop fans going forward.

The busy Christmas and New Yearselling season is almost here.
Kawaguchi: For the busy year-end and New
Year selling season, we are adding depth toour product lineup, with new IP such as
DEMON SLAYER: Kimetsu no Yaiba, which
is highly popular among elementary school
students, joining established IP products, suchas KAMEN RIDER Saber, for which broadcasts started in September, and Ultraman Z,
which is a third-generation IP with strong
popularity. KAMEN RIDER Saber and Ultraman Z are popular among preschool boys,
and we will roll out products centered on
toys. We will strive to meet the needs of all
fans with our diverse lineup of DEMONSLAYER: Kimetsu no Yaiba products, including
Kimetsu no Yaiba DX Nichirinto, Kimetsu
Tamagotchi, and Donjara. In rolling out
products for preschool and elementary school
children, the Christmas and New Year sellingseason is a major sales peak. The entire Unit
will work together so that we can secure thenumber one market share.

President and CEO,BANDAI CO., LTD.

What are your policies
toward work?
Kawaguchi: With the COVID-19 crisis, theBANDAI NAMCO Group’s corporate cultureof taking on challenges has been leveraged
to the fullest extent, such as in the introductionof new IP and in the use of digital technologies.
Through the Unit combination in April 2021,
we will join the product planning, development,
and manufacturing capabilities of the Toysand Hobby Unit with the digital domain knowhow of the Network Entertainment Unit, thereby
facilitating the roll-out of business initiatives
with even more free and open concepts. I would
like everyone to approach this as an opportunity
and to continue to take on challenges. From
my position in management, I will do myutmost to establish a framework that will enable
Group employees to realize their own ideas
to an even greater extent. Please look forward
to what the future holds for the BANDAI
NAMCO Group.

December 20205