NEWSLETTER

September 2020
BANDAI NAMCO Holdings Inc.

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

Interview with the President

By competing in a new way that leverages
our distinctive strengths, we will work
together with fans around the world to open
up a new era in entertainment.
In conjunction with the announcement of its results for the first quarter of
FY2021.3 (April to June, 2020), BANDAI NAMCO Holdings has also announced achange to the start date of the next Mid-term Plan and a reorganization of theGroup. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses results trends and future strategies.
The results for the first quarter ofFY2021.3 have been announced.
Taguchi: In the first quarter of FY2021.3, werecorded net sales of ¥145.0 billion and operating profit of ¥19.9 billion. Accordingly, we
did not reach the level of results that werecorded in the same period of the previousyear, when circumstances were favorable.
Looking at the influence of the spread of theCOVID-19 infection in the first quarter, if weadd up the obvious factors, such as the cancellationof events, the closure of amusement facilities,
and product sales at closed facilities and retailstores, there was an influence of approximately¥20.0 billion on net sales and approximately ¥8.0
billion on operating profit. I think that, in thesecircumstances, our ability to recover to a level
close to our performance in the same period of
the previous year was the result of our implementation of a variety of business initiatives,
such as aggressively addressing digital demand.
Would you discuss the circumstancesin each business? First, what are
the circumstances in the Toys andHobby Unit?
Taguchi: In the first quarter, the Toys and Hobby
business strengthened digital marketing in Japan,
centered on products for the mature fan base,such as Gundam plastic models and collectible
figures. As a result, we had favorable results in
capturing demand associated with the trend
toward people staying at home. In addition,
popular products included toy-related items, suchas candy and sundries, as well as IP that is generating buzz, such as Demon Slayer: Kimetsu
no Yaiba and Disney: Twisted-Wonderland.
In Japan, COVID-19 affected sales of prizes,
digital cards, etc., as a result of the closure ofamusement facilities, and coordinated rollouts
of products and programs, which were influenced by the interruption of TV animations.
Overseas, there was an influence on sales ofproducts due to the closure of retail stores,
especially in Europe and the Americas. Dueto the closure of facilities, etc., for a certain
period of time goods for sale through retailchannels were not shipped, and as a result wethink there could be an influence on shipmentsfrom the second quarter, centered on Japan.
Currently, in conjunction with changes in
the operating environment, in a wide range ofcategories we are reinforcing marketing initiatives
that utilize digital techniques. In IP development
initiatives, we will rapidly rollout popular new
IP products, such as Demon Slayer: Kimetsu
no Yaiba, and we will work to create buzz about
the new KAMEN RIDER SABER products inthe busy year-end/New Year's sales period.
Overseas, in Asia we will work to highlightmainstay IP products, centered on China, where
the market is recovering. In North America,
where we established a company for the marketing of products for the mature fan base, westarted to introduce Gundam plastic models toapproximately 520 stores run by Target, a leading
retail company. Even in a challenging market
environment, the Toys and Hobby business has

Mitsuaki Taguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.
gotten off to a favorable start, and accordingly
going forward we will work to develop fans.
What is the situation in the Network
Entertainment Unit?
Taguchi: In network content, favorable results
were recorded by mainstay titles, including buzz
created by annual events for DRAGON BALLLEGENDS and THE IDOLM@STER SHINYCOLORS. Moving forward, we will continue tostrengthen existing mainstay titles and to nurture
carefully selected new titles into new pillars.
In home video games, accompanying theclosure of retail stores in Europe and theAmericas, digital demand has increased, andsales of repeat titles were favorable, including
DRAGON BALL Z KAKAROT and other products in the DRAGON BALL series, ONE PIECE
Pirate Warriors 4, TEKKEN7, and the DARKSOULS series. However, in consideration of
the lack of clarity in the environment, fromthe second quarter we are not expecting repeat
title sales to continue on as an extension of
the results in the first quarter. Once again, thelong-lived titles are the ones that fans consider
to be high quality. Currently, we are advancing
the development of SCARLET NEXUS andElden Ring. (The launch dates for these products have not yet been determined.) In thefuture, we will continue to focus on development that emphasizes quality.

* IP: Characters and other intellectual property

September 2020

1Interview with the President

Changing the starting fiscal year of the next
Mid-term Plan and formulating strategies witha focus on the changes of the times
Taguchi: In the first three months, the Network

Entertainment business did not have any major
negative effects on results from COVID-19,
other than the cancellation of events. The
environment on the front lines of development,
where there have been delays, is recovering,
but we think that there could be an influence
on development schedules, and that adjustmentsof launch timing could be necessary.
What is the situation
in Real Entertainment Unit?
Taguchi: In the first quarter, operations weregenerally suspended at facilities around theworld, and there were substantial declines inrevenues and profits. Fixed expenses such as
rent and labor costs at facilities that were closed
in response to requests from the national government or local governments have beenrecorded under extraordinary loss as “loss on
temporary store closures and other related to
COVID-19.” The facilities have gradually
started to reopen, but we are also implementing
measures with consideration for social distancing, and we have not yet reached a 100%
recovery. After the restart of operations, theReal Entertainment Unit has seen favorable
results with a Demon Slayer: Kimetsu no Yaiba
campaign implemented in conjunction withthe Toys and Hobby Unit, and accordingly wewill rapidly advance measures with a strengthened focus on the IP axis strategy. In amusement
machines, with consideration for the overallsituation in the industry, we will work to increasedevelopment efficiency and consider the optimallaunch timing.
Real Entertainment has been substantiallyaffected by COVID-19. However, to fulfill its
role of providing venues within the Group, theUnit will aggressively address digitalization,such as with the Torumo online crane game, andwe will work to build a structure that can generateearnings even in challenging environments.
How about Visual andMusic Production Unit?
Taguchi: In the first quarter, almost all eventswere canceled, and the launches of multiple

2BANDAI NAMCO NEWSvisual and music packaged products weredelayed. We expect the influence of event
cancellations, etc., to continue going forward.
We are in a challenging environment, but
looking ahead, we will aggressively take on
the challenge of new IP and new products. In
regard to live events, demand from fans ishigh, and accordingly, in line with the COVID19 circumstances, we will consider methodsof holding events while strictly observing
event guidelines.
In addition, we are moving forward withnew initiatives, such as the start of service forMix Box, a 24-hour streaming distribution service
for video and music; the launch of Purple
One Star, a new label; and participation in
the development of virtual spaces specialized
in live events. These initiatives hold thepotential to generate new market opportunities for visual, music, and live events, andaccordingly we will aggressively take onthese challenges.
Please discuss the IP Creation Unit.
Taguchi: The IP Creation Unit was not significantly influenced by COVID-19 in the firstquarter. However, we think there is a possibility
that future broadcast and opening schedules
will be affected. We will continue working tocreate IP, which is the Unit’s most importantmission, while minimizing these effects. Looking at established IP, in the Love Live! series
we are starting a TV animation, Nijigasaki
High School Idol Club, and a new project,
Love Live! Superstar!!. For new IP, we are

now advancing Saikyo Kamizmode, a cross-organizational project coordinated with a digital
card game.
In addition, we announced the Gundam
China Project as one part of our efforts tomake Gundam a worldwide IP. In 2021, wewill roll out products and services in conjunction with the installation of a life-size Freedom
Gundam statue in Shanghai, and moving forward we will reinforce overseas developmentof Gundam on a Groupwide basis. Nearly 1.5
million fans participated in the on-line
announcement of this project, for which they
have high expectations.
The results forecasts for the full fiscal
year have been announced.
Taguchi: In May, we had not yet determined
the forecasts because of the difficulty of calculating them as a result of the influence of
COVID-19. However, with consideration for
trends in the market environment, the influenceof COVID-19 on our business operations,
results in the first three months of the fiscal
year, and future product and service plans,
we have set the full-year forecasts for FY2021.3
at ¥650.0 billion for net sales and ¥50.0 billion
for operating profit. With consideration for
the unclear environment, we are reevaluating
nonessential costs and implementing initiatives
to strengthen our financial position. However,
we will continue to proactively consider investment linked to future growth.
The Company announced a change
regarding the starting fiscal year of
the next Mid-term Plan.
Taguchi: The next Mid-term Plan was previously scheduled to start from April 2021
(FY2022.3), but we have decided to start itfrom April 2022 (FY2023.3). Due to the influence of the spread of COVID-19 on society
overall, people’s lifestyles and values arechanging, and we expect to see a new era thatis entirely different. Accordingly, we decided
that it would be necessary for the next Midterm Plan to incorporate a new way ofcompeting in a new era. With the future uncertain and current circumstances marked by alarge number of indefinite elements, rather

than hurrying to complete the next Mid-term
Plan, we think that we should formulate itwith careful attention to the changes of thetimes. We have positioned the period fromFY2021.3 to FY2022.3 as a time for formulating the next Mid-term Plan, which will
be a new way of competing for BANDAI
NAMCO, and for implementing a variety ofpreparations and foundation enhancement
initiatives in order to implement that strategy.

Reorganizing the Units to enhance seamless,close collaboration
Please explain the reorganizationof the Units.
Taguchi: The start timing of the next Mid-term

Plan has changed, but there will be no change to
our major direction of aiming for sustained growthover the medium to long term and strengthening
the IP axis strategy on a global basis. To that end,
we will need to adapt further to the changes ofthe times and enhance our competitiveness inglobal markets. Accordingly, from April 2021
(FY2022.3), we will combine the Toys and Hobby
Unit and the Network Entertainment Unit, as
well as the Visual and Music Production Unit
and the IP Creation Unit. In this way, under theALL BANDAI NAMCO concept, we will stepup the unity of our operations around the worldand build a system for close cooperation.

What are the roles of thenew Units?
Taguchi: Through the combination of the Toysand Hobby Unit and the Network Entertainment
Unit, we will strengthen mutual collaboration
in a wide range of business fields, with theobjective of maximizing IP value. Then, wewill work to integrate tangible-goods anddigital businesses, respond to the digital transformation, and create entertainment that
addresses the new values of customers. In thisway, we will strive to further increase thecompetitiveness of BANDAI NAMCO inglobal markets.
Also, through the combination of the Visualand Music Production Unit and the IP Creation
Unit, we will consolidate production studios

BANDAI NAMCO Group Organization
From April 2021

New Unit
Toys and Hobby Unit

Network Entertainment Unit

Actual or expected influence of COVID-19 on businesses in FY2021.3
Real Entertainment Unit

Influence on consumption due to store closures, etc.
 vent postponement and cancellation, and accompanying influence onEpromotions, etc.
Influence on product development schedules
Influence on production schedules, etc., at in-house plants and cooperating plants
Influence on development schedules and operational systems for home video
games and network content

BANDAI NAMCO
Holdings Inc.

New Unit

and production functions and work tocreate even higher quality IP. In addition tocollaboration within the Units, we will also
aggressively advance alliances with other Units
and with external partners. In this way, wewill aim to be an IP creation organizationthat addresses production from a variety ofapproaches. Furthermore, we will also strive
to establish a new content outlet strategy inaddition to live events and on-line distribution.
We will implement this reorganization ofthe Units in advance of the start of the next
Mid-term Plan, and accordingly the next Midterm Plan will be considered on the basis of
the new structure. We will strive to formulatestrategies and measures that are more realizable.
Furthermore, we expect that the combinationof different Units will activate the exchange
of know-how and personnel, and foster powerful synergies. I would like employees toapproach this change in the organization as
an opportunity for growth and to make full,mutual use of their respective know-how.
Finally, do you have a message
for readers?
Taguchi: Since the beginning of 2020, market
environments around the world have undergone
dramatic change. The digital transformationis accelerating, and people’s lifestyles, values,
and working styles are changing significantly.
It has been said that even after the end of
COVID-19, society and lifestyles will not
return to the way they were before, and wethink that is true. However, even in thesechallenging circumstances, people will not
lose their need for Dreams, Fun and Inspiration.
Rather, we will likely see the creation of new
types of fun and entertainment, in new anddifferent forms, with people and entertainment
drawing even closer together. Our future lies
beyond change. We will approach this as anopportunity, and compete in a new way thatleverages our distinctive strengths. In this way,
we will work together with fans around theworld to open up a new era in entertainment.

Visual and Music Production Unit

IP Creation Unit

Influence due to closure of amusement facilities, etc.
Influence on schedules for visual production, visual product openings, andpackage sales

Affiliated Business Companies

September 20203