NEWSLETTER

September 2017

BANDAI NAMCO Holdings Inc.

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

Management
Interview with the President

Strengthening the IP Axis Strategy andExpanding Global Initiatives will Continue
to be Important Themes Under the Next
Mid-term Plan.
The Group has started the final year of the Mid-term Plan, and our consolidated results for the first quarter of FY2018.3 show solid performances incore products and services in comparison with our initial plans. In this issue ofthe newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi
discusses the steps leading up to the next Mid-term Plan and the situation
with each of the Group’s businesses.
How were the results in the firstquarter?
Taguchi: In the first quarter of FY2018.3, due
to product lineups and launch timing differences, we did not reach the level of results
achieved in the same period of the previous
fiscal year, when highly profitable products,
such as the DARK SOULS III home video
game, became major hits and we registereda record-high level of results. On the other
hand, in comparison with our plans, each SBU
recorded solid results for core IP* products
and services, including continued solid resultsin domestic and overseas network content.
As a result, our net sales were ¥144.0 billion,
and operating profit was ¥15.6 billion. For
the Group overall, we recorded good resultsin the first quarter.
Would you discuss the results forecasts for the first half and the full
fiscal year?
Taguchi: Network content and other core IP
products and services continue to record
favorable results. We have carefully examined
our plans for the second quarter and thereafter,
and as a result we now expect our results forthe first half and the full fiscal year to exceed
our initial forecasts. Consequently, in conjunction with our results in the first quarter,
we revised our first half forecasts to net salesof ¥295.0 billion and operating profit of¥27.0 billion and our full-year forecast to
net sales of ¥620.0 billion. With the operating

environment in the entertainment industry
undergoing dramatic change, we face many
uncertain elements, but we will strive toachieve our target figures.
What challenges remain in the final
year of the Mid-term Plan?
Taguchi: When we started the current Mid-term
Plan, the numerical targets called for net salesof ¥600.0 billion and operating profit of ¥60.0
billion in FY2018.3, but we were able toachieve these targets one year ahead of schedule. In addition, we are moving forward withthe establishment of a foundation as a Group
that can continue to generate, in a stablemanner, net sales of ¥500.0 billion and operating profit of ¥50.0 billion, without regard
to whether or not we have hit products at thattime. However, our goal is not simply theachievement of this Mid-term Plan. Rather,
the Mid-term Plan is simply a transit point as
we move toward continued growth over the
next 10 years or 20 years, and accordingly
we still have many things to do and face many
challenges.
For example, we need to further expand
our IP portfolio so that our results are notsignificantly influenced by a single IP’s launchtiming or results. Moreover, in the creationand nurturing of new IP, we need to further
activate our initiatives and increase our speed.
This strengthening of the IP axis strategy willremain an important theme under the next
Mid-term Plan.

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

Furthermore, under the current Mid-term
Plan we are working to expand global
initiatives, and the overseas sales ratio isincreasing in such categories as home video
games, network content, and Gundam
plastic models. Nonetheless, there are still
categories and regions in which we needto implement further initiatives. I also
believe that we must continue working toachieve our aim of Groupwide growth inglobal markets.
How much progress has been madewith the formulation of the next
Mid-term Plan?
Taguchi: Currently, we are conducting a variety
of discussions and refining our strategies andmeasures. In formulating the plan, we first
redefined where we want the Group and each
SBU to be in 10 years, and then we considered
what has to be done in the next three years inorder to move in that direction.
For the BANDAI NAMCO Group, there
will be no change in our efforts to advancethe IP axis strategy on a worldwide basis, tointeract sincerely with IP fans, and to drawout the maximum appeal of IP through products
and services.

* IP: Intellectual property, such as characters

September 20171

Management

Interview with the President

Expanding DRAGON BALL Product andService Initiatives Overseas
Taguchi: In addition, we must also consider

the frameworks for continually creating
and nurturing IP, as well as the developmentof the human resources for those initiatives.
I believe that our ability to build on more
open thinking and to adapt our organizational
design to circumstances that change withthe times is a distinctive feature of the
BANDAI NAMCO Group as well as oneof our strong points. Moving forward, we
will continue to take on the challenge ofinnovation in our business models, and wewill strive to foster collaboration among
Group businesses and further cooperation
with external partners.
Would you discuss the circumstancesin the Toys and Hobby SBU?
Taguchi: Established IP products enjoy continued popularity in Japan. For pre-schoolboys, the new Super Sentai series and KAMENRIDER series are enjoying favorable results,
with both posting year-on-year gains. In July,
the new ULTRAMAN GEED program wasstarted, and related products have recorded
solid results. Moreover, KAMEN RIDER
Build, a new KAMEN RIDER series, waslaunched in September, and we expect it tobenefit from the solid trend in the pre-schoolboys category.
For girls, the PRETTY CURE! series continues to be popular. Also, in July we launched
Remin & Solan, a doll that can be enjoyed

together with an original picture book from
Disney. It has been well received by two
generations — parents and children — andwe will work to develop this into a new category for girls.
In addition, DRAGON BALL continues
to record solid results, centered on DATACARDDASS, and Gundam maintains stable
popularity, including overseas. For Gundam, as we move forward we will implement worldwide initiatives to provide
information about Gundam and Gundam
plastic models, starting with the comprehensive facility for Gundam plastic models
that opened in August and the life-sized
Unicorn Gundam statue that was set-up
in late September. Moreover, for adultcustomers, BANPRESTO CO, LTD., which
specializes in prizes for adult customers,
has joined the Toys and Hobby SBU from
FY2018.3, and accordingly we will further
strengthen our initiatives for adult customers and expand our portfolio.
Overseas, in Europe and the Americas, inaddition to the established IP Power Rangers,
we started full-scale roll-outs of Toys andHobby products for DRAGON BALL, which
is highly popular in the fields of home video
games and game applications. In North America, we launched a card game in July. This
strategic product was launched after thoroughpreparations, and we have high expectations
for future initiatives.

What is the status of the Network
Entertainment SBU?
Taguchi: In network content, we are seeing
continued good results for DRAGON BALLZ DOKKAN BATTLE and ONE PIECE Treasure
Cruise, which are being rolled out worldwide,and for NARUTO titles and other products in
Asia. Of these, DRAGON BALL Z DOKKAN
BATTLE was ranked No. 1 in store sales
rankings in 16 countries and regions in July.
It has become a major title with a cumulative
total of more than 200 million downloads. In
Japan, IDOLM@STER titles are doing extremely well. THE IDOLM@STER MILLION LIVE!
Theater Days, which was launched at the endof June, got off to a good start, with 3.90
million downloads in less than one monthafter its launch. In the future, we will continue
to roll out products, centered on core titles ineach region, and we will also aggressively
launch new titles.
In home video games, TEKKEN 7 is recording sales in line with our expectations. Furthermore, targeting the worldwide market, weare preparing new titles in the ACE COMBATand PROJECT CARS series, so please lookforward to these launches. In addition, we are
introducing a number of software titles for
the Nintendo Switch, such as ONE PIECE
and DRAGON BALL.
BXD Inc. has been established.
Taguchi: Recently, BANDAI NAMCO Entertainment Inc., through a joint investment with
Drecom Co., Ltd., established BXD Inc. as a
new company that distributes and operates aplatform for smartphone browser games.

DRAGON BALL Z DOKKAN BATTLE has
surpassed 200 million worldwide downloads.

In North America, sales of DRAGON BALL SUPER CARD GAME began in July.

©バードスタジオ／集英社・東映アニメーション ©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.

2

BANDAI NAMCO NEWS

Plans call for the distribution of new titles
to commence from next spring. BXD Inc. will
provide high-quality titles that are easy toenjoy, and, through collaboration involving
Group products and services, will strive toprovide a wide range of entertainment thattranscends the game framework.

In the network field, we are also working
aggressively to bolster our operations throughinitiatives with partners, such as a capitaltie-up with a game data analysis company.

Rather than simply “respond” to thechanges of the times, we want to be acompany that stays one step ahead bypositively “adapting”
What is the situation with VR ZONESHINJUKU, which opened in July?
Taguchi: We opened this large-scale VR facility
in Shinjuku, Tokyo, and it has been very wellreceived. VR is highly compatible with IP,
which is the foundation of our strategy. Accordingly, through this facility we will learn about
the expectations of our customers in regard
to the future direction of our IP. Moving
forward, we will continue to introduce newactivities on a regular basis, and we willleverage this facility as a venue to take on
new challenges.
In addition, favorable evaluations havebeen earned by facilities that incorporate newforms of entertainment, such as facilities thatutilize IP and augmented reality (AR). Also,
we have introduced trampolines and wall
climbing at SPACE ATHLETIC TONDEMI,
an indoor athletic facility recently opened in
AEON MALL Makuhari New City in Chiba
City. This facility has become popular, especially with families and young customers.
What is the situation in the Visualand Music Production SBU?
Taguchi: In Visual and Music Production, ourplan calls for roll outs of new visual products
for core IP to be concentrated in the second
half of the fiscal year. Accordingly, in the firsthalf we are aggressively working to draw
attention to these IP assets through events andother means.
In the future, we plan to launch a numberof new offerings of popular core IP. MOBILESUIT GUNDAM: THE ORIGIN, Clash at
Loum were shown in September, and thesecond phase of the TV animation Love Live!
Sunshine!! will be broadcast from October.

Also, the launch of the first stage of GIRLS
und PANZER: The Final Chapter is planned
for December. We will work to deliver thelatest versions of these popular IP assets tofans, and we will strive to create and nurture
new IP by devoting resources to the development of new high-quality products. In
addition, through such multidimensional
initiatives as live events and stage shows,
we are taking steps to make the most of theworlds of IP and expand the base of fans.
Moreover, targeting future global initiatives,
we are instituting measures aimed at expanding
the number of animation song fans in overseas
markets. These initiatives include launchingan animation song distribution service andholding overseas animation song events. I
believe that the positive effects of these
initiatives will extend not only to the Visualand Music Production business but to theentire Group.
Animation festivals have been sponsored in Europe and the Americas.
What has been the response from fans?
Taguchi: In early July, ANIME EXPO, oneof the largest anime conventions in North
America, was held in Los Angeles in the U.S.,
and Japan Expo, which introduced Japaneseculture, centered on manga and games, washeld in Paris, France. Both expos attracted
large numbers of visitors. At ANIME EXPO,Group companies have exhibited at individual
booths in previous years. This year, we also
had a BANDAI NAMCO Group booth, which
had a special focus on DRAGON BALL products
and services.
In addition, the Anisong World Matsuri,a large animation song event, was held ata site adjoining the ANIME EXPO. Top
artists, such as Aqours from Love Live!
Sunshine!!, produced a tremendous reaction
among the attendees.
Do you have a message for shareholders?
Taguchi: At the shareholders’ meeting in June,
we received many questions, and I think that
this meeting proved to be a venue for smoothcommunication with shareholders. Moving
forward, we will continue to place a highvalue on these types of opportunities.
We have used the phrase “respond to thechanges of the times,” but as we move forward
I think it will be more appropriate to use theword “adapt” rather than “respond.”
The word “respond” includes the nuanceof reacting after something has happened,
but “adapt” has a sense of moving to embracechange and taking an approach of staying
one step ahead. As Darwin is reported tohave said, survivors are the ones that are themost adaptable to change. I believe that weneed to lead the way into a new era by positively embracing change rather than fearing
it, and in this way to continue to take onchallenges. I would like to ask for yourcontinued support.

September 20173

Business Angle

Introduction of Group Officers

BANDAI NAMCO Entertainment Inc.’s Amusement Business

The Group’s competitive advantages in theamusement market includes advanced
technical capabilities, “places” in the form of
more than 250 facilities, and IP
The Group recently opened VR ZONE SHINJUKU, one of Japan’s largest VR
entertainment facilities, in Shinjuku, Tokyo. It is thronged with customers
who want an immersive experience and new astonishment. In this section,
Makoto Asanuma, Managing Director of BANDAI NAMCO Entertainment Inc.,
which is in charge of the Group’s amusement business, discusses market
trends, the potential of VR, and future initiatives.
Would you discuss your current
responsibilities?
Asanuma: I am responsible for advancing realentertainment; for the AM Business Unit,
which handles arcade games, etc., installedin amusement facilities; and for SP Project
for the pachinko and pachislot business. In
contrast to entertainment centered on digitalelements, such as smartphone game applications and home video games, real entertainment
leverages locations at which people can actuallygather and enjoy the entertainment. My role
is to expand this field.
Was the recently opened VR ZONESHINJUKU the first initiative in thisarea?
Asanuma: That’s right. This project leverages
the knowledge and know-how that we cultivatedat VR ZONE Project i Can, a facility that we
opened on a limited-time basis in Odaiba, Tokyo.
VR ZONE SHINJUKU is one of the largest VR
facilities in Japan, and with a space of 3,500
square meters, it enables visitors to experience
16 types of activities, centered on VR.
Over the past few years, conditions in theamusement market have continued to bedifficult. To overcome these challenges, wewill need to decisively change our thinking
in ways that are different from a simple
extension of existing approaches to business.
In producing VR ZONE SHINJUKU, we
wanted to build an entirely new entertainment
facility that has never been seen before. We
went through a process of trial and error as
the opening approached, and thanks to everyone’s hard work, visitor satisfaction is highand the reviews have been even better than
expected. Moving forward, we will strive tofurther increase recognition of this facility
and to offer this experience to as many customers as possible.

4

BANDAI NAMCO NEWSDid collaboration among Group companies play a role?
Asanuma: The provision of services at VR
ZONE SHINJUKU resulted from our efforts
to focus the comprehensive strengths of the
Network Entertainment SBU. BANDAI
NAMCO Entertainment Inc. and BANDAI
NAMCO Studio Inc. worked on VR equipment
planning and development, while NAMCO
LIMITED is handling facility operation. In
addition, we have received many proposals
from within the Group, such as inquiries about
the potential of developing certain types of
products for sale at the facility’s shop fromcompanies in the Toys and Hobby SBU. In
this way, I believe that the strengths of theGroup include our diverse know-how and ourability to propose ideas. There may be a strong
clash of opinions, but it is encouraging that
there are colleagues who can engage in discussions with passion from a variety of different
angles, while everyone is working in the same
direction. In the future, we will continue toleverage the Group’s internal knowledge andwork to further ramp up enthusiasm for VR
ZONE SHINJUKU.
What is the competitive advantageof the BANDAI NAMCO Group in the
VR market?
Asanuma: The Group has developed knowhow through research into sensory-feedback
machines conducted over many years, andNAMCO LIMITED has cultivated operational
know-how through more than 250 amusement
facilities in Japan and overseas. By combining
this know-how and VR technologies, I believe
we will be able to provide entertainment thatleverages the strengths of BANDAI NAMCO.
And our greatest strength of all is IP.
At VR ZONE SHINJUKU, visitors canenter the worlds of a variety of IP, such as
Evangelion, DRAGON BALL, and Mario
Kart. The introduction of activities that utilize
IP facilitates the creation of images for VR
content and motivates customers to experience
VR. Also, the use of VR to offer concrete
versions of images held by customers leads
to further demand for the VR experience. IP
has the wonderful power to forge strong
connections between our customers and ourideas, and my appreciation of that power has
been reinforced.
What is the future of the VR business?
Asanuma: With VR ZONE SHINJUKU positioned as our flagship facility, we will takeon a variety of challenges. With that content,
we will aim to roll out more than 20 small to

VR ZONE SHINJUKU
Address: Kabukicho 1-29-1, Shinjuku Ward, Tokyo
(7 minutes walk from the east exit of JR Shinjuku Station / 2 minutes walk from Seibu Shinjuku Station)
Hours of operation: 10:00 - 22:00 (last entry at 21:00)
Days of operation: Open 365 days a year
Method of use: Advance reservation system
Fee: Entrance fee - ¥800; children - (6 to 12) ¥500; 5 andyounger - free 1-day 4-ticket set: ¥4,400 (set of 4 entrance tickets and activity tickets)* VR activities are for customers aged 13 and over.
* For further information of the reservation method, etc., please refer to the website: http://vrzone-pic.com

medium sized stores in Japan and overseas
under the name VR ZONE Portal. Customers
can understand the fun of VR if they experience
it for themselves. We will pursue the potentialof the VR business by launching touchpoints
that enable customers to readily experience
VR in locations around the world.
The company has started to develop
gaming machines as a new initiative?
Asanuma: In September 2016, in cooperation
with Ainsworth Game Technology Limited,a leading developer of gaming machines thatis based in Australia, we began joint development of gaming machines for casinos. As
the first step, we developed a slot machine
themed on PAC-MAN, which has been placed
into operation in Las Vegas and other North
American locations. PAC-MAN is extremely
popular in North America, and the PAC-MAN
gaming machine is highly regarded. As with
our VR initiatives, this product demonstrates
the strength of IP. Moving forward, we plan
to implement area expansion and enhance our
IP lineup.

We want to offer new forms of surprise inaccordance with the key phrase “I have neverseen or experienced this before”
What is the situation with arcade
games in existing facilities?
Asanuma: Conditions were extremely challenging in the first year of the current Mid-term
Plan. In this setting, we reevaluated our productlineup and organizational system and took
steps to increase efficiency, and as a result wewere able to make a restart. A distinctive
feature of the arcade games at existing amusement facilities is the “entirely free platform.”
For example, a large number of matters are
up to the discretion of the manufacturer, suchas the specifications and sizes of the machines
as well as the content of the play. Anythingthat the manufacturer thinks of can be added,
and accordingly it can be extremely difficult
to make the decision that “this is good enough.”
However, in consideration of the challenging
environment, we also changed the directionof our machine development. I think that weneed to reconfirm our understanding of thesituation, identify our strengths and what weneed to do, and implement development witha sense of speed. Moving forward, we willcontinue to refine our activities and work todevelop and provide high-quality machinesthat meet the needs of the age.
What is your emphasis in the development of human resources?
Asanuma: Without the development of humanresources, there can be no business. Entertainment is an industry in which the pace ofchange is extremely fast, but I believe that if
a company nurtures its human resources andleverages its strengths, it can overcome difficulties no matter how much the market
environment changes. To that end, supervisors
must know more about their subordinates.
What are their strengths? What are their interests? In what areas can they best apply theirstrengths? Supervisors need to know theanswers to these questions, raise motivationon the front lines, and establish environments
conducive to effective work. I believe this is
the mission of management.
What strategies are being considered
for the next Mid-term Plan?
Asanuma: Leveraging the experience gained
under the current Mid-term Plan, we willcontinue to take on the challenge of creating
new things and generating high-impact entertainment in line with the key phrases “I havenever seen this before” and “I have neverexperienced this before.”
The pace of progress in technology has
been dramatic, and over the past three years
the change has been remarkable. Over theperiod of the next Mid-term Plan, I believe
there will be multiple new technologies that
we cannot even imagine at this point. We
should approach these changes as opportunities
and rapidly launch measures to stay one stepahead of the expectations of our customers.

Makoto Asanuma
Managing Director,
BANDAI NAMCO Entertainment Inc.

The PAC-MAN VIDEO SLOT WILD EDITION
gaming machine is being rolled out in North America

PAC-MAN R VIDEO SLOT WILD EDITION&© 2017 BANDAI NAMCO Entertainment Inc.

September 20175