BANDAI NAMCO GROUP
Strategic Presentation Session
September 13, 2005

Group Corporate Philosophy
Mission Statement“Dreams, Fun and Inspiration”
BANDAI NAMCO will continue to provide
Dreams, Fun and Inspiration to people around theworld through entertainment based on creativity andboundless enthusiasm

1Group Corporate Philosophy
BeliefBasic Ethos“Dreams, Fun and Inspiration”
are the Key to Happiness
The meaning of Dreams, Fun and Inspiration
will essentially change over the time,
but BANDAI NAMCO holds one unshakablebelief: that Dreams, Fun and Inspiration
will always hold the key to happiness

More Passion,More Innovation
More perceptive
・Unparalleled curiosity and boundlessenthusiasm
・Abundant creativity unrestrained by thestatus quo
・Open to people’s needs and satisfaction
from giving inspiration

Group Corporate Philosophy
VisionTo become the world’s mostinspiring entertainment group
The BANDAI NAMCO Group will constantly strive to
be a pioneer, aiming to deepen and widen theappeal of entertainment and winning the heartsof people worldwide who enjoy having fun.
Our ultimate goal is to become the world’s mostinspiring entertainment group2Slogan

Cross-Entertainment!!
By integrating the various entertainment businesses,
Bandai Namco Group will not only make aquantum leap in evolution – it will also create
value with various partners and develop new formsof entertainment

Group Symbol

Concept
Fusion and Evolution

3

Reorganization Schedule
The basic reorganization will be implemented by April 2006
Reorganization schedule

Details

Sep.
Sep. 29,
29,
2005
2005

z

Establishment of holding
company through share-forshare exchangezEstablishment of NAMCO BANDAI
Holdings Inc.

Dec.
Dec. 1,1,
2005
2005

z

Reorganization of domestic
operating companieszPortion of affiliated company share
management operations to betransferred to holding company

Jan.
Jan. 1,1,2006
2006

z

Reorganization in North
Americaz

Establishment of North American
holding company
Consolidation of North American
game companies

Apr.
Apr. 1,1,
2006
2006

zz

z

Consolidation of domestic
game companies

Establishment of NAMCO BANDAI
Games America Inc.

Strategic Business Unit
Operations will be consolidated into strategic business units,
through which the group will be managed

NAMCO BANDAI Holdings Inc.

Other Business

Affiliated Business

Visual and Music

Network

Game Contents

Amusement Facility

Toys & Hobby

Strategic Business Unit

4Business Portfolio
The strengths of both companies will be combined, leading to dramatic growth in operations

BANDAI NAMCO

BandaiToys &VisualNetworks

Hobby

Character

Amusement

Toys & Hobby
Visual andMusic

Life-styleLife-style

Video Game

ApparelSoftwareCharacterTechnology
Location

NetworkFusion

Namco
Home
Videogame
SoftwareCoin-operated

Facility
OperationsGame Machines

New
Business

Game Contents
Amusement
Facility

Technology
Location
Amusement

Snack Food

Spa Resort
Welfare service etc.

Financial Projections
Billions of yen
FY06.3(Projection)

Sales
Operating Income
ＲＯＡ
ＲＯＥ

FY07.3(Projection)

475
44.2
11.0%
10.0%

Sales

FY08.3(Projection)

500
50.0
12.0%
10.5%

550
55.0
12.5%
11.0%

Operating Income

500

50

12.0%

ROA

10.0%

ROE

8.0%
00%

006.3

07.3

08.3

06.3

07.3

08.3

06.3

07.3

08.3

5

Strategic Business Unit
Basic Strategy

Toys & Hobby Strategic Business Unit
Basic
Basic Strategy
Strategy① Strengthen management
systems for major characters② Establish development systemfrom consumers’ viewpoint

Numerical
Numerical Plan
PlanSales¥ billion

Operating income¥ billion

250
200

25
195.0
177.5

17.0

205.0

20

17.5

15.2
150

15③ Streamline production
logistics

10010④ Strengthen overseas sales

50

5⑤ Strengthen apparel business(including M&A)00FY2006.3

FY2007.3

FY2008.36

Amusement Facility Strategic Business Unit
Basic
Basic Strategy
Strategy① Improve facility value byutilizing characters and othermeans

Numerical
Numerical PlanPlanSales¥ billion

120

1210080④ Pursue low-cost operations

93.0

87.3

100.0 10.0
9.0

1087.2② Create new facility formats③ Establish an earnings model in
Europe and the Americas

Operating income¥ billion

60

640

420

20
FY2006.3

FY2007.3

FY2008.30

Game Contents Strategic Business Unit
BasicBasic Strategy
Strategy① Introduce development
systems and methods with anemphasis on development
efficiency

Numerical
Numerical Plan
PlanSales¥ billion

Operating income¥ billion

40200

180.0
155.0

146.3
15027.030

24.0
21.5

② Expand and strengthen multiuse of content

100

20

③ Develop business models fornetwork games

50

10④ Strengthen development andmarketing capabilities in
Europe and the Americas

00
FY2006.3

FY2007.3

FY2008.3

7

Network Strategic Business Unit
Basic
Basic Strategy
Strategy① Secure rich content and attract
customers② Expand mobile related
businesses③ Expand system solutions
business

Numerical
Numerical Plan
PlanSales¥ billion

Operating income¥ billion25420.0

203
2.5

15.0

152.0

12.0 2.0210150
FY2006.3

FY2007.3

FY2008.30Visual and Music Strategic Business Unit
Basic
Basic Strategy
Strategy① Create original contents② Maximize content value throughmultiple use③ Rebuild overseas businessdevelopment model④ Expand business domain for
publishing, music, and otherareas

Numerical
Numerical Plan
PlanSales¥ billion

5010

46.5

4030

Operating income¥ billion

40.0

37.0
6.3

6.4

8
6.5
6204

10200
FY2006.3

FY2007.3

FY2008.3

8Business Synergy Effects

Game Contents
Character Merchandising◆Global Expansion

Game Contents Synergies“Significant increase in development efficiency”
through flexible allocation of development staff and joint use of technologies

Policy ① Flexible allocation of development staff
Consolidation of creators, creation of units, effective development resource allocation
Current

Planning
Production
Unit 1

Organized into operational fields

Unit 2Other

NAMCO CX

NAMCO AM

Banpresto

NAMCO CT

Bandai

Organization

Planning

Mobileuse

CoinoperateduseHome use

Other

Mobile use

CoinoperateduseHome use

OperationalField

Afterintegrationof game
operations

Planning
Production ・ ・ ・Unit 3

Consolidate and reorganize into units＋Policy ② Application of development environment and technologies

9Game Contents Synergies
Provide appealing content to all customer groups by drawing on
the strengths of both Bandai and NAMCO
High

Field C(30s)Game strengths
Technical capabilities（NAMCO）

×Character appeal(Bandai)Age Group

NAMCO
Field A

BandaiField A content development(teens)Expanded customer base
Field B

LowBalance

Gameemphasis

Toward Field B, Field C content development
Characteremphasis

Game Contents Synergies
Strong collaboration in prize game machines (hardware) and prizes (software)→ Expand profits in the prize related field by drawing on each company’s strengths
CurrentlyHardware

WeaknessStrength

ConveneCatcher ２

Sweet Land
CLENA-FREX

BANDAI NAMCO GroupNew Product Development
Minor Changes to Existing Products

Draw on mutual appeal
SoftwarePrizesStrength

Weakness

Large volumeof character
prizes compatible
with almost
all hardware

Certain characters
centered on
stuffed toys
（low transactionvolume）

New Prize Development
Minor Changes to Existing Prizes

Operating Company

NAMCO

Higher Income

Prize Game
Machines

BandaiAfter Integration10

Game Contents Synergies (New Product)
Bandai’s No.1 merchandising character:“Mobile suit Gundam”

New type of NAMCO game machine for coin-operated use

New Product “Mobile Suit Gundam Senjo no Kizuna”©Sotsu Agency・Sunrise

Business Synergy Effects

Game Contents
Character Merchandising◆Global Expansion

11

Character Merchandising Synergies
Realize wide-ranging synergies from content creation, the starting point of character
merchandising, to content use and merchandisingContent Creation Fields
NAMCO
NAMCO
GamesGames

Bandai
Bandai
Characters
Characters

Content
Content creation
creationsynergies
synergies

Mutual use and joint development ofgames and animation

Content Use Fields
Amusement facility

Content distribution

operations

operations

Synergies
Synergies fromfrommultiple
multiple use
use
Manufacturing
operations

Character Merchandising Synergies
Deepen the character world settings of the BANDAI NAMCO Group overallthrough merchandising of NAMCO game characters
NAMCO game world settings

Progress toward
diverse value added

Pac-Man

Animation content
Action figures

The Idle Master

Bandai’s character

Cards

merchandisingknow-how
Ridge Racer

Vending machine capsule toys
Development of stories,
merchandising,products…

Apparel・・・©NAMCO LTD., ALL RIGHTS RESERVED.
©Kubooka Toshiyuki, ©2003 NAMCO LTD., ALL RIGHTS RESERVED.
©2004 NAMCO LTD.,ALL RIGHTS RESERVED.

Comic books, magazines

12

Character Merchandising Synergies
Bandai’s virtual character worlds will be combined with Namco’s real locations
to provide entirely new entertainment to customers

Bandai’sBandai’s Character
Character WorldWorld

Namco’s
Namco’s Real
Real Locations
LocationsTamagotchi newamusement park
Fusion“Unazukin” and“Riraku no Mori”
Fusion©BANDAI・ＷiＺ 2004
©rainbow spice!

Business Synergy Effects

Game Contents
Character Merchandising◆Global Expansion

13

Overseas Development Synergies
Building an organization that will realize the integration of characters, locations, and technologies
Reorganization as ofJanuary 1, 2006

NAMCO BANDAI Holdings Inc.
(holding company)
NAMCO BANDAI Holdings (USA) Inc.
(regional holding company)

Bandai America Inc.
(toys)

NAMCO AMERICA Inc.
(Coin-operated use gamemachine sales)

NAMCO BANDAI Games
America Inc.
(home use game software)

NAMCO
CYBERTAINMENT Inc.
(facilities operation)
Bandai Entertainment Inc.
(visual)

NAMCO MOBILE Inc.
(provisional)(mobile operations)

Maximize
Maximizesynergies
synergiesamong
amongoperational
operationalfields,
fields,which
whichwere
wereexpanded
expandedthroughestablishment
ofholdingcompany
through establishment of holding company
Realize
allocationof
ofresources
resourcesandandincrease
increasefunctional
functionalefficiency
efficiency
Realizeoptimal
optimalallocation

Overseas Development Synergies
In overseas operations, expectations include synergies within each strategic
business unit as well as cross-functional synergies
Strategic business unit
Synergies

Synergies

ToysToys && Hobby
Hobby
->

Develop card, vending
machine operations in
NAMCO amusement facilities->

Develop NAMCO gamecharacters that are very popularin North America into resources
for Toys & Hobby->

Achieve synergies and reduce
costs by unifying gamedevelopment->

Develop NAMCO gamecharacters that are very popularin North America into visualcontent

Amusement
Amusement Facility
Facility->

Advance into network
operations based on NAMCO’s
mobile game content

Game
Game Contents
Contents

NetworkNetwork

VisualVisual andand MusicMusic14

Direction of Our Business Expansion（Entertainment Hub）

Our Business Model: Entertainment Hub!!!

!!!

!!!

!!!

!!!

!!!
!!!

!!!

!!!

!!!

!!!

Toys & Hobby
VisualApparelBroadband
GameContents!!!
MobileAmusement
Facility

15

Plan for Entertainment Hub Expansion
Players who can be linked through entertainment hub
Markets in Asia
Markets in Europe and theAmericas
In JapanCompetitor manufacturers

GlobalGlobal Collaboration
Collaboration

Competitor network
companies
Manufacturers in other industries

Competitor manufacturers
Distribution/
wholesale

Expanding
Expanding network
network(medium-term(medium-term viewpoint)
viewpoint)
Competition
Competition ⇒⇒ Cooperation
Cooperation

Tie-uppartners
Licensors

Customers
Amusement
facilities

Overseas
Overseas network
network(medium-term(medium-term viewpoint)
viewpoint)

Retail shops

Service companies in otherindustries

CoreCore Network
Network (short-term(short-term viewpoint)
viewpoint)
Raise
Raise value
value ofof overall
overall valuevalue chain
chain

16

Supplementary Information

Financial Projection
Billions of yen
FY2006.3(Projection)
475.0

FY2007.3(Projection)
500.0

FY2008.3(Projection)
550.0

177.5
87.3
146.3
12.0
46.5
18.5
△ 13.1

195.0
93.0
155.0
15.0
37.0
19.0
△ 14.0

205.0
100.0
180.0
20.0
40.0
20.0
△ 15.0Operating Income

44.2

50.0

55.0

Toys & Hobby
Amusement Facility
Game Contents
Network
Visual and Music
Affiliated BusinessElimination and Corporate

15.2
7.2
21.5
2.0
6.3
△ 0.7
△ 7.3

17.0
9.0
24.0
2.0
6.4
△ 0.2
△ 8.2

17.5
10.0
27.02.56.50△ 8.5SalesToys & Hobby
Amusement Facility
Game Contents
NetworkVisual and Music
Affiliated BusinessElimination or Corporate

17Company Organized by Strategic Business Unit
Toys & Hobby Strategic Business Unit
Visual andMusic

Toys & Hobby
Life-style

Network

CharactersTechnologies
Locations

GameContents

Bandai Co., Ltd., Megahouse Corporation, Popy Co., Ltd., Seika Co., Ltd., Seeds Co., Ltd.,
Plex Co., Ltd., Sunlink co., Ltd., Tohato Inc., People Co., Ltd., BANDAI AMERICA INC.,
BANDAI S.A., BANDAI U.K.LTD, BANDAI ESPANA S.A., BANDAI(H.K.)CO.,LTD.,BHK TRADING LTD., BANDAI INDUSTRIAL CO.,LTD., BANDAI KOREA CO.,LTD.

Amusement Facility Strategic Business Unit
NAMCO LIMITED, Pleasure Cast Co., Ltd., Hanayashiki Co., Ltd., St. Tropez Ltd.,NAMCO CYBERTAINMENT INC., NAMCO OPERATIONS EUROPE LTD.,NAMCO OPERATIONS SPAIN S.L.NAMCO ENTERPRISES ASIA LTD.,SHANGHAI NAMCO LTD.*

AmusementFacility

Game Contents Strategic Business Unit
Bandai Co., Ltd., NAMCO LIMITED, Banpresto Co.,Ltd., Bec Co., Ltd., Banpresoft Co., Ltd.,Banpresto Sales Co., Ltd., Monolith Software Inc., NAMCO TALES STUDIO Ltd.,BANDAI GAMES INC., BANPRESTO (H.K.) LTD., NAMCO AMERICA INC.,
NAMCO HOMETEK INC., NAMCO EUROPE LTD.

Network Strategic Business Unit
Affiliated Business(Shared Services Center)

Bandai Networks Co., Ltd., VIBE Inc.

Visual and Music Strategic Business Unit
Bandai Visual Co., Ltd., Sunrise Inc., Bandai Channel Co., Ltd.,BANDAI ENTERTAINMENT INC.

Affiliated Business Group
Bandai Logipal Inc., Banalex Corporation, Artpresto Co., Ltd., Happinet Corporation*,
Sotsu Agency Co., Ltd.*, NAMCO ECOLOTECH LTD., NAMCO SUPPORTERS LTD.,
NAMCO TRADING LTD., Italian Tomato Ltd.*
Underline: strategic business unit core company, *equity method affiliate

Note concerning “Forward-looking statements”
This document contains forward-looking statements that are based on the information currently available tomanagement, and estimates involving uncertain factors thought likely to have an effect on future results. As
such, they include various risks and uncertainties. Actual results may differ materially from theseprojections for a variety of reasons, including changes in business environments, market trends andexchange rate fluctuations relevant to the business of BANDAI NAMCO Group.

18