NEWSLETTER

November 2021
BANDAI NAMCO Holdings Inc.

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

Interview with the President

Working together with fans around the world
to fulfill our new Purpose
Aiming to open up a new era and enhance the Group’s value
BANDAI NAMCO Holdings has announced its results for the first six months of
FY2022.3 (April to September, 2021). In this issue of the newsletter, President
Masaru Kawaguchi discusses the results, trends in each business, the Group’s
new Purpose, and other matters.
Would you provide an overview of theresults for the first half of FY2022.3?
Kawaguchi: Looking at our results in thefirst half of FY2022.3, net sales were ¥393.6
billion, operating profit was ¥61.7 billion,
recurring profit was ¥64.1 billion and profit
attributable to owners of parent was ¥39.5
billion. We achieved record highs for sales
and for profits at all levels. By business, theToys and Hobby business achieved substantial
growth and record-high results, due primarily
to favorable performances around the world
with products for the mature fan base andtoy-related items. In addition, we saw a recovery in the amusement facility and live-event
related businesses, which had been significantly affected by the spread of COVID-19
in the previous fiscal year. For the Group asa whole, the engines of our growth were thewide range of Bandai Namco’s business andIP* portfolios as well as the rapid implementation of measures and the hard work of
everyone on the front lines.
The forecasts for the full fiscal year
have been revised.
Kawaguchi: We made the revisions with consideration for the favorable results in the first
half. In addition to those results, we also considered such factors as the product andmarketing plans from the third quarter, trends
for the busy Year-end and New Year sales
period, and the market trends, which remain
unclear. As a result, we revised the full-year
forecasts that were announced at the beginningof the fiscal year, increasing the forecast fornet sales from ¥750.0 billion to ¥795.0 billion

and the forecast for operating profit from ¥75.0
billion to ¥90.0 billion.
The market segments on the Tokyo
Stock Exchange will be revised.
Kawaguchi: From April 2022, the market will
be divided into prime, standard, and growth
segments. From the Tokyo Stock Exchange,
we received the results of the initial assessmentof our compliance with the listing standards
for the new market segments. This confirmedthat the Company is in compliance with thestandards for the prime market. Accordingly,
we selected the prime market as our market
segment and filed the application with theTokyo Stock Exchange. Going forward, we
will follow the procedures prescribed by the
Tokyo Stock Exchange.
Would you discuss the circumstancesin the first half and the future trends
for each business? What is the­situation in the Digital business?
Kawaguchi: Sales of Tales of ARISE, which
was launched in September, surpassed 1 million
units in the first month. It has received a highMetascore on the Metacritic web site, whichcollects and publishes overseas reviews. Previously, development was centered on Japan, but
we are devoting resources to marketing aroundthe world, and this year we anticipate sales of 1.7
million units. Moreover, in the first half, existing
titles recorded high levels for both repeat unit
sales and the full package download sales ratio.
In network content, mainstay titles registeredstable results, and the new My Hero Academia
title got off to a solid start, but overall performance

Masaru Kawaguchi
President & Representative Director,
BANDAI NAMCO Holdings Inc.

did not reach the level seen in the previous year,
when results were favorable due to demand associated with people staying at home.
In the first half, in both home video gamesand network content, we recorded initial expenses,
such as development and marketing expenses, due
to increases in the launches of major new titles.
What is the outlook for the Digitalbusiness in the second half?
Kawaguchi: The new ELDEN RING home
video game, which is highly anticipated byfans around the world, will be launched in
February 2022. Aiming for worldwide sales of
4 million units within this fiscal year, we will
work to nurture this product into a title that is
popular for many years.
In network content, in the second half we plan
to release 11 new titles around the world, suchas a new THE iDOLM@STER SideM product.
In this way, we will aim to secure new users.
In the second half, due to the launch of a
new major home video game title and to anincrease in the number of new network content
titles, we will record initial expenses on an
upfront basis, such as development and marketing expenses. Looking at repeat sales ofhome video games, we expect to see a gradual
return to the circumstances in the period before
COVID-19.
With Tales of ARISE becoming a hit, weare seeing how fans support high-quality
titles that are developed in a manner that
carefully reflects feedback from customers.
Going forward, we will continue to focus on
creating high-quality titles and on communicating with fans to provide continued fun* IP: Characters and other intellectual property

November 2021

1

(Information in this section is as of the end of November 2021.)

Interview with the President

Reorganizing the IP Production Unit in order tobolster IP creation and production capabilities
over the long term. In addition, in the gameworld there is also an ongoing shift toward
fun that leverages the Metaverse. This holds
the possibility for the creation of entirely new
ways of enjoying entertainment and spending
time. We will also implement initiatives inthese types of new fields.
What are the trends in the Toys andHobby business?
Kawaguchi: The Toys and Hobby businesshad favorable results in the first half. Withproducts for the mature fan base, such as
Gundam plastic models, collectible figures andlottery-related products, new customers that
had originally been acquired through demandassociated with the trend toward people staying
at home have now became established fans.
Overseas, in regions that have been positioned
as key markets, such as North America andChina, the expansion of categories and sales
routes contributed to our results. In Japan,
products leveraging new IP, such as Demon
Slayer: Kimetsu no Yaiba, continued to record
favorable results. Certain toy-related items
were also popular. These included capsule toys,
which expanded to include new customers,such as women; trading-card games for overseas markets, such as DRAGON BALL andDigimon: Digital Monsters; and confectionery
products that incorporate entertainment value.

Looking ahead, what circumstances
will the Toys and Hobby business face?
Kawaguchi: In preparation for the busy Yearend and New Year sales period, the largest of
the year, in Japan we will launch establishedIP products, such as KAMEN RIDER and
PRETTY CURE!; new IP products, such as
Demon Slayer: Kimetsu no Yaiba; and buzz-­
creating products, such as Tamagotchi. In
addition, to address growing demand for
Gundam plastic models around the world, further expansion of our manufacturing system
is currently an urgent issue. We are now considering this issue from a variety of perspectives,
and we plan to take action quickly. In the Toysand Hobby business overall, we will launch
multiple IP in the second half, including Digimon: Digital Monsters, for which a new anime
has started, and we anticipate expenses as weplant seeds for the next fiscal year and thereafter. We also anticipate increased transportation
costs, etc., and expenses related to the consolidation of bases overseas.
We are aiming to expand the global toys andhobby business. To that end, it will be necessary
to implement further collaboration with the Unit’s
Digital business. The Digital business has succeeded overseas ahead of the Toys and Hobby
business, and it has a high degree of affinity withproducts for the mature fan base. In terms oforganization, as mentioned, we will move ahead
with the consolidation of companies and basesin each region. We will further strengthen

collaboration by facilitating communication
among employees. In Japan, TAMASHIINATION ONLINE 2021, an event for the mature
fan base, was held in November. It proved to bea popular event due to the content integrating
Unit-wide digital and physical elements.
What is the situation in the Visual andMusic business?
Kawaguchi: In the first half, contributions toresults were made by licensing revenues, suchas from game apps for overseas markets, andby sales of core IP packaged products. We werealso able to hold a larger number of live events
than in the previous year due to the relaxationof restrictions. In the second half, in line withthe characteristics of IP and fans, we will holdlive events combining real elements with online
distribution, e-commerce, and new technologies. The restrictions on the number of people
attending events will be relaxed, but we plan
to hold fewer events than in the first half.
Licensing revenues are expected to return tonormal in the second half.
What is the situation in theCreation business?
Kawaguchi: In the first half, product revenuesrose due to an increase in new products, suchas Mobile Suit Gundam Hathaway and the Love
Live! series. However, because the businessmodel involves recording costs upfront, thecontribution to profits was limited. Also,
Gundam commercialization-rights revenues
were favorable, but GUNDAM FACTORYYOKOHAMA, a base for communicating IP
information, was affected by COVID-19.

Reorganization of the IP Production Unit
Current

From April 2022

BANDAI NAMCO Holdings Inc.

BANDAI NAMCO Holdings Inc.

100%

100%
SUNRISE INC.

Visual business
Music business

51%

49%

BANDAI NAMCO Live
Creative Inc.

2

BANDAI NAMCO NEWS100%
SUNRISE Music INC.

100%

▲

BANDAI NAMCO Arts Inc.

100%
BANDAI NAMCO Rights
Marketing Inc.

100%

New visual products company

New music andlive events company

SUNRISE INC.

BANDAI NAMCO Arts Inc.
Music business

BANDAI NAMCO Arts Inc.
Visual business

BANDAI NAMCO
Live Creative Inc.

BANDAI NAMCO
Rights Marketing Inc.

SUNRISE Music INC.

Since October, this business has been gradually consolidating production studios, which
had been distributed over more than 20 locations, into the new office in O
­ gikubo, Tokyo.
We are aiming to enhance production capabilities by establishing an environment inwhich creators can focus on production in asafe, secure manner.
A reorganization of the IP Production
Unit has been announced.
Kawaguchi: On April 1, 2022, in the Visualbusiness, we will combine SUNRISE INC.,
the visual business operations of BANDAI
NAMCO Arts Inc., and BANDAI NAMCO
Rights Marketing Inc. Also, in the music andlive events businesses, we will combine themusic business operations of BANDAI
NAMCO Arts Inc., BANDAI NAMCO Live
Creative Inc., and SUNRISE Music INC.
Through this reorganization, we will leverage the different know-how and strengths andeffectively utilize the IP and music held bythese companies. In this way, we will further
strengthen the IP creation and production
capabilities that are the core of the IP axis
strategy. Moreover, we expect to activate
human resources within the Unit by bringing
together staff who have abundant personalconnections, and expanding points of contact
with external partners.
What is the situation in the­Amusement Facility business?
Kawaguchi: In the first half, the business
was influenced by the state of emergency
declaration, but sales at existing facilities inJapan were up 39.1% from the same periodof the previous fiscal year, due in part to theeffects of IP campaigns, such as for Tokyo
Revengers. Overseas, facilities in the U.K.,
Hong Kong, China, posted recoveries. Moreover, sales of amusement machines arefollowing a basic trend of recovery. Looking
at the business overall, there was also aneffect from the structural reform initiatives
implemented at the end of last fiscal year, andwe were able to return to profitability in thefirst half. In the second half, we will continue
working to enhance efficiency while carefully
monitoring trends around the world.
In operations, we will advance development initiatives that leverage Bandai
Namco’s distinctive strengths by combining
Group resources, such as IP, products, andservices, with the planning and operations
capabilities of amusement facilities. From
November, we have started a collaborative
campaign with Demon Slayer: Kimetsu no
Yaiba, and this campaign has gotten off to agood start. Going forward, we will work tocreate buzz for the busy Year-end and New
Year sales period while carefully watchingchanges in the operating environment.

The next Mid-term Plan will start from
April 2022.
Kawaguchi: Results in the first half werefavorable, but there are still many issues, tasks
that have not been completed, and points toaddress. Under the next Mid-term Plan, we
intend to advance initiatives based on strategies
that address these matters. We will provide
further information about detailed strategies
in the newsletter.

Bandai Namco’s Purpose:
The Most Important Concept
The Company has announced theformulation of its Purpose and theintroduction of a new corporate logo.
Kawaguchi: We are aiming for sustained
growth in global markets. Accordingly, in formulating the strategies in the next Mid-term Plan,
we held discussions from a variety of perspectives. As one part of those efforts, to enhance
our unity and comprehensive strength under the
ALL BANDAI NAMCO concept, we realizedthat it would be necessary to reconsider our
starting points as a company, asking ourselves
if we are focused on society and fans, and what
the meaning of Bandai Namco’s e­ xistence is.
Based on these considerations, from the next
Mid-term Plan, in place of the mission andvision that are our corporate philosophy, we
decided to formulate our Purpose, which is themost important concept for the Group andexpresses the meaning of our existence forsociety and the reason why we conduct business
operations and corporate activities. In addition,

the current logo was created when Bandai and
NAMCO integrated in 2005, with a theme of
the fusion of two companies. More than 15
years have now passed, and at this point weare advancing to the next stage. Accordingly,
with consideration for the connotation the word
“purpose”, we decided to introduce a new logo.
We finalized the Purpose following two
years of deliberations, based on internal andexternal corporate image research and factorsthat arose from discussions among employees
in each region. Fundamental to our Purpose is
the idea of connecting and working together
to create things. Through our entertainment,
Bandai Namco strives to forge connections
among fans around the world, to brings smiles
to people’s faces, and to foster happiness. Goingforward, with pride in the meaning of Bandai
Namco’s existence, devotion to IP, and a sincere
approach to all stakeholders, we will work
together to open up a new era. In this way, we
will strive to enhance the Group’s value.

Bandai Namco exists to share dreams,
fun and inspiration with people around the world.
Connecting people and societies in the enjoyment of
uniquely entertaining products and services,
we’re working to create a brighter future for everyone.

November 2021

3

CloseupAiming to maximize IP value by strengthening thesystems that encourage employees to take onchallenges and foster creation
BANDAI NAMCO Entertainment Inc., which is the business management­ olster­company for the Digital business in the Entertainment Unit, is working to b
the IP axis strategy while deepening integration and collaboration with theToys and Hobby business and within the Entertainment Unit, centered on the
network content business and the home video game business. In this section,
BANDAI NAMCO Entertainment President Yasuo Miyakawa discusses trends inthe Digital business, the Group’s strengths and vision, and other matters.
Would you discuss the current
circumstances?
Miyakawa: In the previous fiscal year, there
was an influence from people staying at home
due to COVID-19. Repeat sales of home video
games recorded substantial growth, centered onoverseas markets. In the first half of this fiscal
year, results remained favorable, and we madea contribution to the Group’s results. To extend
the lifespan of game titles, we have worked todevelop titles with a focus on quality and tomaintain communication with fans. I believethat our ability to generate favorable repeat sales
is a major result of those committed efforts.
What changes in the game market are
currently drawing attention?
Miyakawa: In the game market, competition
is intensifying each year, and the developmentof high-quality titles is increasingly importantin order to be the choice of users in this setting.
With consideration for this point, we will continue to take a thoroughgoing approach inproduction. Also, around the world, services
that leverage online 3D virtual environments,
known as the Metaverse, are drawing attention.
In the Metaverse, users can enjoy communicating with other users as they enter and leavevirtual spaces through their avatar, which represents them. As environments with an
exceptionally high degree of freedom, thesespaces are not simply extensions of traditional
games. They have the potential to be a newform of entertainment. We are advancing preparations to enable us to demonstrate Bandai
Namco’s unique strengths in this new field.
What are Bandai Namco’s strengths inthe market? Also, how will thosestrengths be leveraged going forward?
Miyakawa: Under the April 2021 Unit reorganization, the Digital business and the Toysand Hobby business were combined into asingle Unit, which can roll out IP from both thedigital perspective of games and the tangible
perspective of toys and hobby products. Thisability is a distinctive strength of Bandai Namco
that is not seen in other companies. Bandai
Namco’s digital business is a treasure trove of
in-house IP, such as PAC-MAN, TEKKEN, andTHE IDOLM@STER. By promoting collaboration and integration between two businesses—the Digital business and the Toys and Hobby
business—I believe that we will be able to further increase the value of this IP. Also, to further
leverage our strengths, it will be necessary tofoster active collaboration with external partners
and creators who have ideas and technologies.
As an open Bandai Namco, we will work tocollect knowledge from inside and outside theGroup in order to maximize IP value.
What are the Company’s priorities inregard to addressing changes in theoperating environment?
Miyakawa: More than anything else, it is anapproach of taking on challenges. At the Bandai
Namco Group, employees can repeatedly takeon challenges, even if a previous challenge
ended in failure. Continuing to take on challenges is essential for success. Accordingly, it
is important that we establish a framework to
support employees as they take on challenges.
Without exception, people who succeed havealso failed. It is repeatedly taking on challenges,
without fearing failure, that leads to success.
From that perspective, I believe that taking onchallenges should result in gaining points on
a personnel evaluation, not losing them.
Also, compared with the previous circumstances in this industry, the scale of gamedevelopment has expanded remarkably, including
human capital and development costs. Accordingly, we carefully consider content and focus
our resources on strictly selected titles. We will
have no choice but to streamline the number of
titles launched in a year, so there will be a decline
in the number of opportunities to take on challenges on an individual basis. I believe that weurgently need to create a system for evaluating
the extent to which challenges are taken on as agroup, rather than as individuals.

©BANDAI NAMCO Entertainment Inc. / ©2021 FromSoftware, Inc.

4

BANDAI NAMCO NEWS Floor after renovation accompanying the­introduction of ABW

each region. I believe that this example ofmarketing success in Europe and the Americas
is highly significant.

Expanding our global share with initiatives
aligned with countries and regions
A company where employees can work with pride
Would you describe initiatives toexpand operations around the world?
Miyakawa: Currently, the entire world is thetarget market for the Digital business. A major
strength of the Bandai Namco Group is that,in addition to Japan, we also have local companies in North America and Europe as well
as China and other Asian markets. Local
employees, who have the best understandingof their markets, play a central role in the formulation of marketing initiatives. This approachmakes possible the roll out of titles that areclosely linked to fans, such as Tales of ARISE.
Moreover, in addition to the development of
titles from Japan, we are also working to further
strengthen our system to facilitate the development and roll-out of products from various
regions to the global market. One example ofthat approach is Reflector Entertainment Ltd.,a production studio in Canada that develops
home video game titles, etc. In the previous
fiscal year, we made Reflector Entertainmenta subsidiary.
There are high expectations for
ELDEN RING, which will be launchedin the near future.
Miyakawa: The February 2022 launch isapproaching, and production has entered thefinal stages. At gamescom 2021, one of thelargest game events in Europe, we received
five awards in the gamescom award 2021 program, including Best of gamescon, the top prize,
and Best RPG. Going forward, we will maintain Home video game ELDEN RING

◀Home video game Tales of ARISE
Tales of Arise™ & ©BANDAI NAMCO Entertainment Inc.

Would you discuss the titles that arerecording favorable sales?
Miyakawa: The Tales of ARISE home video
game, which is the newest product in the Talesof ... series, was launched in September, andsales are solid. In past, sales were centered onJapan and Asia, but for this product sales in
Europe and the Americas are also favorable.
User preferences differ by country or region,
and accordingly we implemented detailed marketing initiatives in each region. As a result,
we were able to obtain the support of users in

an uncompromising commitment throughout
the production process so that we can complete
high-quality games that meet the expectationsof fans around the world.
What is the situation in network
content?
Miyakawa: We are devoting resources tomarketing that leverages data. Based on datathat has been collected and analyzed, each title
is developed and operated with high levels of
quality. In this way, we are successfully extending the lifespan of IP titles, such as DRAGON
BALL, ONE PIECE, and THE IDOLM@STER.
We are aiming to achieve further growth worldwide by making accurate decisions based ondata and working to expand the regions where
our products are available.
The Company is also working to introduce new working styles.
Miyakawa: In addition to advancing teleworking, we also introduced ABW* and installedsemi-private one-person booth seats, four-person box seats, cafe-type sofa seats, etc. In thisway, we have created a floor that promotes
open small talk. Employees can move to a seatthat is easier for them to work at, and they will
be able to work in a better environment.
Work can also be done at home, but creative
concepts start to arise when people meet andtalk face to face. When employees would liketo hear some ideas, they can sit in a box seatand engage in small talk while drinking tea.

Yasuo Miyakawa
President and Representative Director,
BANDAI NAMCO Entertainment Inc.

When they want to concentrate by themselves,
they can work in a one-person booth seat or athome. ABW reflects the Company’s future
working style. We expect this environment toproduce the plans and concepts that will support
the Company in the next era.
What are your policies toward work?
Miyakawa: In work, it is important to havean image of your goals. If someone is just told
to “start running,” and they do not knowwhether it will be a short distance or a long
distance, then they will not be able to pacethemselves. Accordingly, it is necessary to say“This is our goal.” If we do that, then we canwork backward in stages from the goal. We
can determine what objectives we need toachieve from our current position, and when
we need to achieve them. Subsequently, if weachieve those one at a time, we can reach ourgoal. My role is to communicate to employees,
as much as possible, specific goals. I will domy utmost to see that we are a company inwhich employees can work with pride as they
strive to reach their goals.

* ABW: A style of working in which work locations and times can be freely selected, ­without regard to whether it is inside or outside the office.

November 20215