NEWSLETTER

September 2019
BANDAI NAMCO Holdings Inc.

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

Interview with the President

First Quarter of FY2020.3 — Off to a Good
Start Groupwide Effort to Achieve theFull-Year Forecast
The BANDAI NAMCO Group’s mid-term plan will soon reach the halfway point.
In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki
Taguchi discusses the results in the first quarter of FY2020.3 (April to June, 2019)
and the trends in each business.
The results for the first quarter havebeen announced.
Taguchi: In the first three months of FY2020.3,
we achieved net sales of ¥159.2 billion andoperating profit of ¥22.8 billion. This marks
the achievement of a new record high for firstquarter sales. In operations, favorable results
were recorded by the Toys and Hobby business.
Products for the mature fan base generated solid
results in Japan and overseas, and toys andtoy-related items registered firm results in Japan.
The Network Entertainment business recorded
solid sales of network content in Japan andoverseas and favorable repeat sales of home
video games.
The forecasts for the first six monthsof the fiscal year have been revised.
Taguchi: With consideration for our resultsin the first quarter, for the lineup of products

and services planned for the second quarter,and for our marketing plans, we revised the
profit forecast for the first six months of the
fiscal year. The forecast for net sales in thefirst half is ¥340.0 billion, unchanged fromthe initial forecast, while the forecast for
operating profit has been changed from ¥31.0
billion to ¥40.0 billion. Looking at the firsthalf operating profit forecasts by business,
the forecast for the Toys and Hobby businesshas been changed from ¥10.0 billion to ¥14.0
billion, and the forecast for the Network
Entertainment business has been changed
from ¥16.0 billion to ¥21.0 billion.

As for operating profit in the Network
Entertainment business, the forecast for thesecond quarter is lower than the results in thefirst quarter, but this is not because we anticipate difficult business conditions. In network
content, we launched one new title in Japanand overseas in the first quarter, but we plan
to launch nine titles in the second quarter.
Also, in home video games, we did not launch
any major titles in the first quarter, but in late
September we plan a worldwide launch of a
new title, CODE VEIN. As a result, in both
network content and home video games, wewill incur development expenses as well as
advertising and other marketing-related
expenses, and accordingly we are planningfor upfront expenses in the second quarter.
What is the outlook for the full
fiscal year?
Taguchi: In regard to the full-year forecast
for FY2020.3, we have not revised the initial
forecasts for net sales of ¥720.0 billion andoperating profit of ¥70.0 billion. Businesses
are currently making favorable progress, but
the operating environment is undergoing
dramatic change on a worldwide scale, andin these circumstances, I think we will needto carefully monitor market and customer
trends. In addition, we plan to launch multiple
new major home video game titles in the fourth
quarter. Also, targeting growth over the medium
to long term, we will continue to aggressively
implement investment in such areas as IP

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

development and technical research. Moving
forward, the entire Group will continue working, without relaxing our efforts, in order toachieve the current full-year plan.
The Group is actively participating inlarge-scale overseas events.
Taguchi: The BANDAI NAMCO Group andrights holders launched DRAGON BALL WORLDADVENTURE, a jointly sponsored tour eventthat visited eight cities around the world. Startingin San Diego in July, the tour then visited Shanghai, Mexico City, Hong Kong, and Cologne, fora total of five cities by August. In each of thesecities, we highlighted the appeal of DRAGONBALL products and services. At the Anime Expo
2019, which was held in North America in June,
Group members from Japan and overseas worked
together under the ALL BANDAI NAMCO
concept. We had an exhibit that centered on
Mobile Suit Gundam and held a live event forLove Live! Sunshine!! Moving forward, we willleverage these types of opportunities, directly
highlight the appeal of IP to fans around theworld, and use the feedback received to enhance
future business development initiatives.

*IP: Characters and other intellectual property

September 20191

Interview with the President

Working together under the ALL BANDAI NAMCO
concept to implement initiatives in China, which
we have positioned as a key region
What are the market trends in China?
Taguchi: China is positioned as a key region in

the current Mid-term Plan. Under our holding
company in Shanghai, we have established fourbusiness companies in China, and we are aiming
to foster collaboration in the Chinese market
under the ALL BANDAI NAMCO concept.
The employees of the five companies work inthe same office, and under this system they cancommunicate with each other in a natural manner.
Gundam plastic models, Ultraman toys, smartphone game apps, and other products are
currently popular, and sales are increasing. In
addition, as a new initiative, in October BANDAI
NAMCO Holdings Inc. and SHUEISHA Inc.
plan to establish a joint venture company inShanghai. The new company, which will bepart of the Toys and Hobby business, will develop
products based on manga for which SHUEISHA
owns the copyright and sell them on e-commercesites. We will strive to deliver products thatmeet the preferences of local IP fans and reflect
a dedication to quality.
Would you discuss the trends in eachbusiness?
Taguchi: In the Toys and Hobby business, Gundam

plastic models will reach their 40th anniversary
in 2020, and accordingly we are working toincrease sales of Gundam plastic models in Japanand overseas. From July, we began distributionof SD Gundam World Sangoku Soketsuden, a

new animation that will eventually be available
in 23 countries and regions outside of Japan.
This visual product reflects a strong awarenessof China and other Asian regions, such as thetheme of the History of the Three Kingdoms(Sangokushi). In addition to the distribution ofthis product, we will also work to further increase
sales of Gundam plastic models.
Moreover, we will strengthen our production
system to address demand, which is expected
to increase due to expanding overseas salesof Gundam plastic models. Up to this point,
we have manufactured these products at theBandai Hobby Center manufacturing base in
Shizuoka and at Group companies in Japan.
We have also commissioned cooperating plants
in China to make certain products. Moving
forward, we will expand the floorspace andaugment the production facilities at the Bandai
Hobby Center. The new building that willhouse the additional floorspace is expected
to start operation in fall 2020. In this way, weplan to expand the production capacity of the
Bandai Hobby Center to about 1.4 times thecurrent level.
Furthermore, we have started distributionof ZENONZARD, a digital card game thatleverages AI. This is the first project from the
BANDAI NAMCO Content Fund, whichinvests in IP creation from a medium to longterm viewpoint. We will nurture ZENONZARD
not only as a new genre but also as IP.

What is the situation in Network
Entertainment?
Taguchi: In Network Entertainment, following

CODE VEIN, we plan to launch additional
worldwide home video game titles in 2020 —DRAGON BALL Z KAKAROT and ONE PIECE
Pirate Warriors 4. In addition, although thetiming has not yet been decided, we haveannounced the launch of ELDEN RING, anaction RPG game developed jointly by BANDAI
NAMCO Entertainment Inc. and FromSoftware
Inc. This title has generated considerable buzz
as a new product from the two companies thatjointly produced the DARK SOULS series, which
is a major worldwide hit.
In home video games and in network content,
we are focusing on development that reflects
a dedication to quality. By continuing to implement measures that appeal to customers, suchas launching high-quality titles, offering download content sales, and holding events, we will
aim to roll out products that can be enjoyedfor long periods of time.
In addition, in game-related industries, thelaunch of a variety of new platforms has beenannounced. BANDAI NAMCO’s basic policies
are to consider everything from a c­ustomercentric viewpoint and to take into accountmultiple platforms in line with customer needs.
Moving forward, we will thoroughly consider
what types of approaches are feasible and whatcustomers expect.
What is the situation in RealEntertainment?
Taguchi: In Real Entertainment, existing facilities
in Japan are recording favorable performances,

due in part to solid results with prize machines.
Also, we are now stepping up the roll out of
new formats that provide venues for customers
to enjoy experiences that draw on BANDAI
NAMCO’s distinctive strengths, such as the
TONDEMI sports athletic facility. As one partof those initiatives, in July we opened MAZARIA,a large-scale facility that leverages the knowhow and technical capabilities of BANDAI
NAMCO to reproduce the worldview of IP.
MAZARIA enables customers to experience

Continuing to aim at becoming the Leading
Innovator in Global Entertainment throughour products and services
What is the situation in the Visual andMusic Production business?
Taguchi: In Visual and Music Production, weare creating, nurturing, and producing IP
through the integration of the three elementsof visual, music, and live. Examples of theeffectiveness of this approach to production
include IDOLiSH7 and the Love Live! series.
At an IDOLiSH7 live event held for two daysin July, which included a live viewing, thenumber of attendees reached 160,000, andsales of goods were favorable. The Love Live!
series has reached its ninth anniversary. In
addition to sales of packaged software andgoods, in January 2020 we plan to hold a Love
Live! festival with the participation of four
school idol group cast members who appear
in the series. This event will be held in Japanat Saitama Super Arena. In these ways, we areworking to create buzz about the IP through avariety of initiatives. Moving forward, we will
work to roll out initiatives in line with IP characteristics and to aggressively produce new IP.
Please discuss the IP Creation Unit.
Taguchi: In IP Creation, we will provide a variety
of types of Gundam visual products in con-

DRAGON BALL Z KAKAROT©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.

IDOLiSH7 2nd LIVE “REUNION” live event©BNOI/アイナナ製作委員会

the sensation of entering the worlds of animations and games. Making the most of the location
in Ikebukuro, Tokyo, we will work to capture
demand from a wide range of fans, including
inbound demand. In the August and September
sales period, we held a large-scale campaign
linked with the ONE PIECE film. Leveraging
synergies with the film, we took steps to create
buzz about IP and facilities, such as launching
multiple figure prizes available only at ourfacilities.

junction with the Gundam 40th Anniversary.
These initiatives will not only address the needsof current fans but also help us to make progresswith new regions and new fans. Following SD
Gundam World Sangoku Soketsuden, we plan
to start distribution of the latest visual productin the Gundam Build Series from October, andthen to release Gundam Reconguista in G

Theatrical Movie and Mobile Suit Gundam
Hathaway.
In addition, we are also working aggressively
in the creation of new IP. At the Anime Expo
held in the U.S. in July, we announced the
production of ORBITALE RA, a new science
fiction feature-length animation from director
Katsuhiro Otomo, as well as the new AKIRA
animation project, and these projects generated
buzz around the world. In IP Creation, we willcontinue working to create new topics ofconservation.
How was the General Meetings ofShareholders?
Taguchi: We received a range of opinions andquestions at the General Meeting of Shareholders held on June 24. Through communication
with shareholders, I reaffirmed my understanding of how we are receiving support from awide range of people, including not only investors but also fans of our products and services
as well as fans of BANDAI NAMCO itself.
In addition, BANDAI NAMCO Holdings Inc.
was recently selected as a component issue
for the Nikkei 225. Our selection as one of the
225 companies that represent listed companies
in Japan is expected to enhance the presenceof BANDAI NAMCO around the world. To
maintain the trust and support of stakeholders
around the world over the long term, we willcontinue working to be the leading innovatorin global entertainment, offering “Dreams, Funand Inspiration” through our products andservices.

The Group is approaching the halfway
point of the mid-term plan.
Taguchi: We are entering an age in which theappeal of Japanese IP is increasingly recognizedaround the world and its popularity is growing,
while on the other hand previous ways ofthinking and business models will, by themselves, no longer be effective. To continue toearn the support of customers in the next era,
BANDAI NAMCO will actively implement
measures to ensure that new products andservices meet the needs of the new age andaggressively invest in planting seeds for the
future. As indicated by the vision in the current
Mid-term Plan, CHANGE for the NEXT —Empower, Gain Momentum, Accelerate
Evolution, we will move forward to the nextstage without fearing change.

SD Gundam World Sangoku Soketsuden©創通・サンライズ

2

BANDAI NAMCO NEWS

September 20193

Closeup

Addressing changes in customer needs byproviding new forms of fun and leveraging
individuality
The Real Entertainment Unit’s mid-term vision is “We Create Entertainment Experience Only Here and Now Worldwide.” The Unit is working to operate amusement facilities and develop amusement machines that leverage the distinctive
strengths of the BANDAI NAMCO Group. In this section, Hitoshi Hagiwara, thepresident of BANDAI NAMCO Amusement Inc., the core company of the RealEntertainment Unit, discusses the market environment in Japan and overseas,
facilities and amusement machines that are recording favorable results, and theUnit’s strategies and vision for the future.
Would you discuss the environment in
the Japanese amusement market?
Hagiwara: The biggest changes in the amusement
market environment are in customer needs. The

widespread use of smartphones has enabledcustomers to obtain vast amounts of informationon their own, and there is growing demand forthings that are different from what everyone
else is doing. In this age, we cannot achievecustomer satisfaction without addressing needs
for so-called “intangible consumption,” in which
consumers act with clear purpose based on
information that they have obtained themselves.
Our Unit is not limited to the tangible goods
business, in which we make and sell products.
We are also aggressively developing the intangible experience business, where we provide
inspiration that leverages the distinctive strengthsof the BANDAI NAMCO Group. In these ways,
we are addressing changing needs.
What are the BANDAI NAMCO Group’s
key points of competitive advantage
and differentiation?
Hagiwara: The biggest strength of the BANDAI

NAMCO Group is the IP axis strategy, which
is being implemented on Groupwide basis. In

MAZARIA

addition to our strengths in the ability to utilize
diverse IP, the Group also has a range of businessformats and extensive know-how, and accordingly we can develop a variety of types of fun
based on different approaches. Last year, theamusement machine planning and development
functions were separated from BANDAI
NAMCO Studio Inc., a game content development studio, to establish BANDAI NAMCO
Amusement Lab Inc. This step was taken withthe objective of creating new fun for amusement
facilities. Accordingly, I believe it will becomea major strength in the development of attractions
and activities that utilize new technologies.
In our pursuit of new types of fun, one turning
point was the installation in 2016 of the Indoor
Seaside Kid’s Beach at Asobi Park Plus, anindoor playground. Indoor Seaside Kid’s Beach
uses the latest computer graphics and 3D audio
effect technologies to reproduce the environmentof the seaside in the tropics. It enables customers
to experience the sensation of running barefootin the waves that wash up on the beach. By
providing new types of entertainment that were
not available with businesses operated under
the traditional game center model, we have beensuccessful at leveraging original characteristics©ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights
Reserved. ©カラー ©サンライズ ©創通・サンライズ
TM & © TOHO CO., LTD. ©BANDAI NAMCO Entertainment Inc.
©BANDAI NAMCO Amusement Inc.

4

BANDAI NAMCO NEWSONE PIECE STAMPEDE Theatrical Version, World
Collectible Figures - SPECIAL - vol. 1, vol. 2(Prizes limited to NAMCO facilities)©尾田栄一郎／集英社・フジテレビ・東映アニメーション©尾田栄一郎／ 2019「ワンピース」製作委員会

and drawing customers who are acting withpurpose. To develop the Indoor Seaside Kid’s
Beach content, we leveraged the know-how of
the BANDAI NAMCO Group. We are working
to provide new types of fun by drawing on the
Unit’s strengths in being able to develop machinesand content, operate the venues that provide
them, and deliver services to customers througha single value chain.
Specifically, what types of venues arebeing created?
Hagiwara: Favorable results are being recorded

at VS PARK, an entertainment-related sports
facility. The number of fitness gyms is increasingin each region in Japan in line with the growing
health orientation throughout society, but there
are hardly any sports-themed facilities that
customers can enjoy casually. At VS PARK, we
also offer digital activities, such as Nigekiru,
the world’s first game that enables participants
to compete with all their might over a shortdistance as they try to outrun fierce animals
that are projected on the wall. These facilities
enable customers to move their bodies while
enjoying cheerful, boisterous fun with friends.
In addition, in July 2019, we opened
MAZARIA, which is based on the concept of a“place to enter the worlds of animations andgames.” MAZARIA is located in Ikebukuro,
Tokyo, which is known as a symbolically important area in Japan for animations. This facility
offers a variety of VR activities, and customers
can enjoy an immersive experience that seems
as if they are entering animations and games.
This applies not only to the games but to theentire space, including the furnishings and BGM.
Furthermore, the same building also houses
NamjaTown, which was rolled out previously
by our Unit. After enjoying leading-edge activities
at MAZARIA, customers can experience an entirely

JoJo’s Bizarre Adventure: Last Survivor©荒木飛呂彦&LUCKY LAND COMMUNICATIONS/集英社･ジョジョの奇妙な冒険SC製作委員会©LUCKY LAND COMMUNICATIONS/集英社･ジョジョの奇妙な冒険DU製作委員会©LUCKY LAND COMMUNICATIONS/集英社･ジョジョの奇妙な冒険GW製作委員会©BANDAI NAMCO Amusement Inc.

different retro atmosphere at NamjaTown. In thisway customers can spend an entire day enjoying
themselves at BANDAI NAMCO facilities.
In addition to rolling out these types of new
formats, we are also taking on the challenge of
implementing new initiatives at game centersand other existing amusement facilities. Oneof those initiatives was the BANNAM Banpaku,
which opened in August in conjunction withthe release of ONE PIECE STAMPEDE, the
new ONE PIECE film. With the cooperationof rights holders, this project was conducted on
a Groupwide basis, centered on BANDAI
NAMCO Amusement Inc. We implemented arange of initiatives, such as offering film-related
figures (a total of eight varieties) as prizes available only at NAMCO facilities. We have a large
number of facilities in large-scale shopping
centers that also house movie theaters, andaccordingly the exhibition of the film has a major
influence on sales at our facilities. The entire
Group is working to create further buzz for the
ONE PIECE film, which is highly popular amonga wide range of customers, and as a result we
expect sales at our facilities to benefit fromsynergy effects.

Aiming for growth and evolution for theentire Unit by taking on the challenge of
new initiatives while valuing individuality
What is the situation in amusement
machines?
Hagiwara: In FY2019.3, Mobile Suit Gundam

Extreme Vs. 2, a new amusement machine,
recorded favorable results. Following SwordArt Online Arcade: Deep Explorer, which
has been in operation since March, this fiscal
year we will roll out titles that aggressively
leverage the IP that is the Group’s strength.
These will include JoJo’s Bizarre Adventure:
Last Survivor, which is scheduled to belaunched this winter.
What kind of progress is being madewith overseas initiatives?
Hagiwara: In March 2019, we established
BANDAI NAMCO Amusement (SHANGHAI)
CO., LTD., which handles planning and man-agement of amusement facilities in China.
Moving forward, we will start to implement
full-blown initiatives, and we will advancebusiness development measures in the Chinese
market with a sense of urgency, with local
operations taking the lead.
In the North America market, the environment remains challenging, but there is no
doubt that the U.S. is a promising market,
and therefore we will need to move forward
in a resolute, strategic manner. Furthermore,
we will continue to take on challenges in India,
where we have already started to roll out

facilities. Middle-class incomes are increasingin India, and in 10 years India is expected tohave the world’s third largest economy, after
China and the U.S. As a market with considerable growth potential, we will implement
initiatives with a focus on the future.
Would you discuss the activities atother companies?
Hagiwara: Each of the Unit’s business com-panies has its own individual character. For
example, Asakusa Hanayashiki, which isoperated by Hanayashiki Co., Ltd., has built
a brand as the oldest amusement park in Japan.
We recently opened Asakusa Kagekijo, amultipurpose hall, at Asakusa Hanayashiki.
At this facility, in addition to Hanayashiki
Professional Wrestling, which has been in
operation for many years, such as HANAFURISODE NO MAI. In this way, we willtake on the challenge of new initiatives whilevaluing the brand image cultivated by eachcompany, and we will aim for growth andevolution for the entire Unit.

Hitoshi Hagiwara
President and Representative Director,
BANDAI NAMCO Amusement Inc.

than 6,000 employees. For customers, however,an employee’s unit or position does not matter.
I have stressed that I want all of our staff
members to share the same goal of delighting
customers, and to work together on that basis.
No matter how much progress is made bydigitalization, the importance of the value
created through human interaction will neverchange. In work related to amusement facilities,
including amusement machines, it goes without
saying that the content that we provide isimportant. In addition, we will also continue
working to address the needs of customers
while emphasizing the added value createdby human interaction.

What are your policies toward work?
Hagiwara: I strive to talk to employees as

individuals, rather than as members of a particular organizational unit or people in a certain
position. Including partner employees andpart-time workers, the Unit has a total of more

September 20195