NEWSLETTER

June 2021
BANDAI NAMCO Holdings Inc.

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

Interview with the President

Achievement of Record-High Results in FY2021.3
Making FY2022.3 a Year With Value for
the Future of BANDAI NAMCO
BANDAI NAMCO Holdings Inc. has announced its results for FY2021.3 and its
future forecasts. In this issue of the newsletter, Masaru Kawaguchi, who became
President and Representative Director in April, discusses the results for theGroup and the trends in each business.
You became president of BANDAI
NAMCO Holdings in April.
Kawaguchi: As the new president, my mission
will be to further accelerate integration andcollaboration in order to foster global growth
as the Group works together under the ALL
BANDAI NAMCO concept. Entertainment
companies tend to go into a decline at themoment when they start to focus on stability
and the maintenance of the status quo. Moving
forward, the members of the Group will work
together as we continue to take on challenges
at all times, without limiting ourselves toprevious methods of doing things. In this way,
we will aim to build a solid foundation for
future growth over the medium to long term.

range of businesses, was able to leverage theportfolio effect.

The results for FY2021.3 have beenannounced.
Kawaguchi: For FY2021.3, which was the
final year of the previous Mid-term Plan, weachieved record high net sales and operating
profit, with net sales of ¥740.9 billion andoperating profit of ¥84.6 billion. The Grouphas businesses that were negatively affectedby the spread of COVID-19, such as amusement
facilities and live events. On the other hand,
we were able to do a good job in addressing
demand associated with people staying at home,such as with Gundam plastic models and otherproducts for the mature fan base as well as
repeat sales of home video games. As a result,
we achieved record high results in the Toysand Hobby business and the Network Entertainment business. People working on the front
lines in each business responded rapidly tothe changes in the COVID-19 situation, andconsequently the Group, which has a diverse

Would you discuss the results
forecast for FY2022.3?
Kawaguchi: For FY2022.3, we are forecasting
net sales of ¥750.0 billion, operating profitof ¥75.0 billion, and profit attributable toowners of parent of ¥52.0 billion. The previousyear, FY2021.3, included special factors, suchas growing demand around the world associatedwith the trend toward people staying at home.
Going forward, we believe that these special
factors will gradually decrease. With consideration for the lineup of products and services
that we are currently planning, we will aim
to achieve the original objectives for the final
year of the previous Mid-term Plan, whichwere established at the time that plan waslaunched. This will demonstrate our true
strength in a manner that is not significantly
affected by the influence of special factors.
The market environment continues to change
at a rapid pace, and accordingly we will work

* IP: Characters and other intellectual property

Would you discuss the dividend for
FY2021.3?
Kawaguchi: Our basic policy for providing
a return to shareholders is to target a total
return ratio of 50% or more based on DOE(dividend on equity) ratio of 2%. In accordancewith this policy, we are planning a year-end
dividend to be ¥91 per share, including abase dividend of ¥21 per share and a performance-based dividend of ¥70 per share.
Including the interim dividend, the annual
cash dividend for the fiscal year will be ¥112
per share (total payout ratio of 50.3%).

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

to rapidly implement flexible measures while
carefully watching the circumstances.
In the Entertainment Unit’s digital business,year on year, we expect an increase in thenumber of new title launches, leading to higherdevelopment costs and marketing expenses.
Also, for home video games we anticipate achange in the earnings structure, which will
be centered on new titles in FY2022.3. This
is in contrast to FY2021.3, when repeat titles
played the central role. We will also continue
to make investments to address new technologies and changes in the times. In the Toysand Hobby business, we will aim for the samelevel of results as in FY2021.3, in which we
set new records. We will focus on expanding
business for the mature fan base and, in Japan,
stabilizing established IP products and launching new IP products.We are not assumingthat the special circumstances in the previous
fiscal year, when we captured demand frompeople staying at home and had hit products
in each category, will continue. Looking atexpenses, we expect an increase as a resultof costs related to expanding business in the
global market, such as advertising and organizational strengthening measures.
In the IP Production Unit’s Visual and Musicbusiness, we intend to enhance our lineup of
packaged products through catch-up initiatives
for products that had delayed production orreleases in FY2021.3, as well as through anincrease in the number of new IP launches.
In addition, we will leverage the experiencein digital initiatives that we have acquired
as a result of COVID-19, and we anticipate
an increase in the number of live events that
we will hold.
June 2021

1

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

Interview with the President

In the Creation business, there will be
an increase in new product releases, andas a result we anticipate a gain in royalty
revenues from other companies under outlicensing agreements. In expenses, we expect
an increase in production costs.
In the Amusement Unit, we anticipate ayear on year gain of 15% in sales at existing
facilities in Japan, and we plan to launch new
arcade games, such as Mobile Suit Gundam:
Senjo no Kizuna II. In addition, we also expect
to see results from the structural reform expenses
that were recorded at the end of FY2021.3 andfrom steps taken to strengthen our operations,such as measures to increase efficiency.
We will aim to make a significant jump
forward under the next Mid-term Plan, which
will start from April 2022. Accordingly, wewill strive to make FY2022.3 into a periodof forward progress under a new organizational system, and on that basis we willaddress issues, finalize our strategies, andreinforce our foundation.
Would you discuss the situation ateach Unit, and the initiatives that are
being implemented to address
issues? What is the situation in theEntertainment Unit?
Kawaguchi: The Entertainment Unit is implementing multiple cross-sectional projects. In
addition to deepening mutual understanding
within the Unit, the objectives of these projects
also include maximizing strategic IP value
through the use of diverse outlets, strengthening collaboration around the world, andcreating new entertainment that integrates
physical and digital elements. In addition,
the Unit has introduced a framework enabling
all Unit employees to voice their opinions
about issues. In this way, we are working toenhance the sense of unity.
In the Digital business, the production andmanagement of high-quality content that canbe played for extended periods of time is an
important issue. In both network content andhome video games, the business model is basedon products and services being enjoyed forextended periods of time, in units of severalyears. With this business model, it is essentialthat we strengthen our development capabilities
and enhance quality. On the other hand, accompanying advances in technology, development
expenses are rising, and there is a need forthe establishment of an efficient, flexible

2BANDAI NAMCO NEWSsystem. Furthermore, we will also strive toenhance our capabilities in marketing, which
involves communications with fans over long
periods of time.
In development, we are working to strengthen
in-house development studios and to nurture
producers. In addition, to expand businessaround the world we are taking steps to broaden
our partnerships, such as acquiring leading
studios. Moreover, we are bolstering our development management system for the rapid
identification and resolution of issues in development. In operations, we leveraged data
analysis in making the new version of DRAGONBALL LEGENDS, which achieved record highsales in January. In these ways, we will continue
to advance the analysis and utilization of data,and in addition we will reinforce the marketing
staff at bases around the world, who have adeep understanding of the fans in each region.
In network content, in FY2022.3 we planto launch 17 titles around the world, including
My Hero Academia and THE iDOLM@STER
SideM. In home video games, we plan to launch
multiple major new titles, such as for SCARLET
NEXUS and Tales of Arise in the first half andTHE IDOLM@STER thereafter.

Advancing Unit integration and collaboration
through cross-sectional projects
What is the situation in the Toys andHobby business?
Kawaguchi: The Toys and Hobby business isworking to expand business for the mature fanbase around the world and to implement stableroll-outs of established IP products in Japan.
Looking around the world, we have positioned
China and North America as important regions.
In China, Gundam, Ultraman, and KAMENRIDER products are generating solid results,
and we will take steps to enhance our systemin this market. In January 2022, in conjunction
with the integration of the Digital businesscompany and the Toys and Hobby businesscompany, we will consolidate the sales function in Shanghai. In Shanghai, in conjunction
with the opening of the life-sized FreedomGundam statue, we opened the second Gundam
flagship store in China. We are also taking
steps to strengthen Gundam promotions onT-mall, a leading e-commerce site in China.
In North America, we got off to a good startwith the roll-out of products for the mature
fan base through the mass market distribution
channel. In April 2022, we will combine theNorth American companies that handle themass market distribution channel and thespecialty store distribution channel. The aimof this initiative is to offer a balanced arrayof products aligned with the characteristics
of each distribution channel, such as coredistribution, mass market distribution, ande-commerce, and thereby to steadily increasefans through attentive marketing. In this way,
we will work to establish these categories.

In Japan, established IP products foryounger customers were affected by the haltof broadcasting in FY2021.3 due to COVID19. However, looking at new products inFY2022.3, we are implementing initiatives
to expand our touchpoints, such as promotions
using not only TV but also the Internet. Moreover, we will take steps to streamline thelead items in line with the characteristics ofthe IP. For example, for PRETTY CURE! wewill expand the target age groups for theroll-out of cosmetics items. Digimon products,
which originated from a toy, are enjoying
reignited popularity around the world, including with younger customers. This IP is highly
suitable for the digital field, and moving
forward we will continue working to generatebuzz, activate the fan community, andstrengthen cross-sectional product roll-outs.
Moreover, looking at DEMON SLAYER:
Kimetsu no Yaiba products, in conjunction
with the broadcast of the second season ofthe anime, we will launch products for a wide
range of customers, from younger customers
to the mature fan base.

Second Gundam plastic model flagship shop in Shanhai

Please discuss the IP Production Unit.
Kawaguchi: The mission of the IP Production
Unit is the further strengthening of IP creation.
Also, in the live event business and other businesses, the Unit is advancing initiatives that
address changes during the COVID-19 crisis.
As a result of the Unit combination, theIP Producion Unit has not only in-housestudios with more than 20 lines but also production know-how from working with morethan 30 studios of other companies. We havestudios with a range of strengths, and accordingly we will be able to make wide-ranging
IP creation proposals. The Unit could be calleda department store of production studios thatcan create a wide variety of unique, diverse
IP. Going forward, we will foster sharing ofknow-how among studios and strengthen
investment in the nurturing of producers andin equipment that is compatible with digitalization initiatives. The Unit is also advancing
multiple cross-sectional IP projects. InFY2022.3, we expect to have a diverse lineupof launches and to increase the number ofproducts launched, such as series for established IP as well as new IP, with products
for casual users and core users. This will
include products that had their launches
delayed in FY2021.3.
In addition, the live-action Gundam film,
which is a joint production with Legendary,
will be directed by Jordan Vogt-Roberts.
Netflix will distribute the film in all markets
worldwide outside of China, while Legendary
will handle distribution in China. Goingforward, we will work to create buzz bybuilding Gundam into a worldwide IP, withboth visual products and the Group’s otherproducts and services,
Looking at live events, we will hold events
while continuing to strictly observe infection-prevention guidelines. We are acquiringexperience and know-how in such areas as
online distribution and events that are hybridsof real and online elements. In April, we established a department specifically to handle thexR business, and we will integrate our knowhow in areas that we have been stepping up,
such as content from virtual artists and live
event management. In these ways, we will
work in the field of new digital entertainment
through xR. These initiatives will include
entertainment business in virtual spaces andsupport for the development of virtual artists.

What is the situation in theAmusement Unit?
Kawaguchi: The Amusement Unit’s facilities
are customer touchpoints, which are are an
important part of the IP axis strategy, and arevenues for the roll-out of the Group’s products
and services. Accordingly, the Unit’s business
operations are essential for the BANDAI
NAMCO Group. Moving forward, the Unit
will increase its use of Group IP and resources
and work to solidly rebuild its operations forthe next Mid-term Plan.
In amusement facilities, in FY2021.3,
expenses from structural reforms were recorded
as extraordinary losses, and we withdrew fromthe North American market, where we had
not been able to leverage the strengths of theIP axis strategy. Going forward, we will establish more-rigorous standards for opening andclosing facilities, and we will continue toimplement measures to increase efficiency.
In addition, we will move forward with initiatives that leverage our strengths. These willinclude venues that utilize Group products,
such as Capsule Toy Stores and ichinbankuji
shops; venues for the creation of buzz about
IP and the collection of information, such as
Hugood!, which was opened in Ikebukuro;
and popular new-format facilities, such as VS
PARK. In amusement machines, we are about
to launch Mobile Suit Gundam: Senjo noKizuna II. With consideration for the market
environment, the Unit will address the trend
toward digitalization, work to increase development efficiency, and streamline strategic
products. In addition, we will take steps tosupport flexible payment methods, such as
usage-based rates and rentals.

Working together with fans to contribute to therealization of a sustainable society through IP
The Group has announced its
Sustainability Policy.
Kawaguchi: The strength of the BANDAI
NAMCO Group is the IP axis strategy, underwhich we aim to maximize IP value by providing the optimal products and services in
the optimal regions at the optimal times.
We want to utilize an IP axis not only to
implement our business activities but also
to address social issues and to meet theexpectations of fans. One example is theGundam Recycling Project, through which
we work together with fans to implement
recycling. We formulated the “BANDAI
NAMCO Group Sustainability Policy” inaccordance with this type of approach, where
we cooperate with fans to address all issues
by leveraging an IP axis. In addition to identifying material issues for our sustainability
activities, to address issues with the naturalenvironment, we established numerical targets
and steps to taken in the period up to 2050
in order to support decarbonization throughreductions in energy-related emissions ofCO2. Moving forward, we will work together
with fans to advance activities through IP.
In this way, we will fulfill our responsibility
to support the realization of a sustainablesociety.

Do you have a message for readers?
Kawaguchi: We achieved record high levelsof sales and operating profit in FY2021.3,
but we are not satisfied. Even in regard tonew IP creation and strengthening roll-outs
around the world, we believe that “We could
have done more” and “We still have issues
that need to be addressed.” Considering thedramatic alterations in the business environment and substantial changes in customer
lifestyles, we have a strong sense of urgency
based on the idea that we cannot survive asa company unless we stay one step aheadof these changes. The next decade for
BANDAI NAMCO will be influenced bywhether or not we can make the this year
into a period of value as we approach thisMid-term Plan. Without limiting ourselvesto the pattern of our past successes, we will
return to our starting point and continue totake on challenges. I would like to ask foreveryone’s continued support of the Groupas we move forward.

©創通・サンライズ

June 20213