NEWSLETTER June 2018

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

Interview with the President

Record-High Results in FY2018.3 We will continue to take on new challenges without being satisfied with the status quo.

In FY2018.3, the BANDAI NAMCO Group’s results reached a record-high level. In this issue of the newsletter, ’ President Mitsuaki Taguchi discusses trends under the new Mid-term Plan that started in April, the situation with each Unit, and his enthusiasm about the future.

Would you discuss FY2018.3 results of ¥60.0 billion. Our industry is marked by Mitsuaki Taguchi and dividends? dramatic change, and this forecast does not President & Representative Director, Taguchi: In FY2018.3, which was the final year assume that we will continue to have hit prod- BANDAI NAMCO Holdings Inc. of the previous Mid-term Plan, employees united ucts. In addition, these figures reflect consid- For BANDAI NAMCO to demonstrate its and worked tenaciously. As a result, we achieved eration for the product and service lineups and presence in the next era, and to maintain a record-high results, with net sales of ¥678.3 the marketing plans that we envision at the position of striving to meet the expectations billion and operating income of ¥75.0 billion. present time. Of course, we will aim for growth of fans, we must move up to a higher stage in In addition, we surpassed the forecasts that as a company, and accordingly we will work the entertainment industry. In formulating the we announced in February when we presented to extend the solid trends of FY2018.3. In new Mid-term Plan, we received opinions and the third-quarter results. A number of factors addition, we will consider the announced figures proposals from each work site indicating that contributed to this performance. Our results to be objectives that we must achieve, and we we needed to further strengthen the creation exceeded expectations in overseas sales of will aim higher. of new IP and overseas initiatives. In Japan home video games as well as in multiple busi- and overseas, each region will form a unifying nesses with high profit margins, such as network What direction will the Group aim for ALL BANDAI NAMCO concept and work to content in Japan and overseas. In addition, on under the new Mid-term Plan? advance our strategies. a Groupwide basis, the key IP* products and Taguchi: Under the previous Mid-term Plan, services in each business made active contri- we made steady achievements in both numerical The Company is also planning strategic butions in line with our expectations. and strategic aspects. However, I think that investment under the IP Axis Strategy, Starting with the FY2018.3 year-end dividend, perhaps we could have done more in the creation which is a main strategy. we will advance the application of the basic of new IP. Under the previous Mid-term Plan, Taguchi: Each Unit will strengthen the creation return policy in the new Mid-term Plan — innovation had beneficial effects for established of new IP. In particular, the newly established Provide a return to shareholders that targets a IP products and services, such as the DRAGON IP Creation Unit will work to create IP closely total return ratio of 50% or more based on stable BALL and Mobile Suit series, and linked with Group products and services. In dividend payments of 2% of DOE. In regard solid results were recorded. Under the new addition, BANDAI NAMCO Holdings’ IP to dividends per share for FY2018.3, on top of Mid-term Plan, in addition to innovation with Strategy Division has launched projects that the base dividend of ¥32 per share, we will add established IP, we will drive the creation of transcend organizational boundaries to create a performance-based dividend of ¥66 per share new IP, which we will work to nurture. IP. In our creation initiatives, we will not only and a special dividend of ¥25 per share to In addition, the expansion of overseas work within the Group but also collaborate express our gratitude to our shareholders for business is another issue. Under the previous actively with a range of external partners. The our record-high results, resulting in an annual Mid-term Plan, home video games and game creation of new IP will be its most important dividend of ¥123 per share for the fiscal year. apps recorded solid results overseas. Toys and theme. Over the next three years, on top of Hobby initiatives in Asia are solid and are normal investments, we will implement ¥25.0 What is the outlook for FY2019.3? showing smooth results. However, considering billion in strategic investments and continue to Taguchi: For FY2019.3, we are forecasting net the popularity of Japanese IP around the world, take on challenges from a variety of sales of ¥650.0 billion and operating income there are still opportunities for growth. perspectives. *IP: Characters and other intellectual property

June 2018 1 Interview with the President

which could be called Japanese craftsmanship, multiple new titles for the Nintendo Switch, so to further activate communities, issuing licenses, for TV animations, but animations are not the Targeting sustained growth for the Group, BANDAI SPIRITS is working to establish a please look forward to these. Moreover, we will and holding tournaments sponsored by the only starting point for IP. We will work to we will aggressively provide products and global hobby brand that features exceptionally work to boost interest in e-sports. The Group Group. We believe that boosting interest in create IP from a variety of platforms, such as services around the world. high quality and high levels of detail. has a large number of titles that are appropriate e-sports will also lead to expansion in the novels and theatrical products. On the other hand, in children’s toys, KAMEN for e-sports. We have launched full-time teams, foundation of the game-playing population. RIDER, PRETTY CURE!, and other established and we are considering implementing initiatives Do you have a message for What are the latest activities under growth worldwide, we will strive to create an IP have achieved stable popularity. In July, we shareholders? the Business Strategy? environment in which the employees in each will start the new product, thereby Taguchi: The Ordinary General Meeting of Taguchi: We recently announced recruitment region can work rapidly and independently to steadily strengthening our IP lineup. We will continue to respond to the demands Shareholders will be held on June 18. I would for the BANDAI NAMCO Accelerator, which implement initiatives. of the market, always take on challenges, like to engage in dialog with shareholders and will support startup commercialization. New What is the situation in the overseas to foster a greater understanding of the Group. digital and networking technologies and ideas What are the initiatives under the Toys and Hobby business? and provide “Dreams, Fun and Inspiration” BANDAI NAMCO is a corporate group are now being created, without regard to the Personnel Strategy? Taguchi: In Europe and the Americas, the sit- to everyone. characterized by continually taking on chal- scale of the parent organization. By working Taguchi: I believe that entertainment companies uation has been challenging over the past lenges, both now and in the future. In the together with external partners who have these need to be groups of people that provide products several years, and we have revised our strategy. previous fiscal year, we were able to achieve types of technologies and ideas, we will strive and services that they themselves enjoy. To We will work to increase our operational effi- What is the status of the Real Entertain- we are aggressively implementing multi-di- record-high results, thanks to the support of to create new entertainment. For example, that end, we need to establish environments ciency, including systems, and in addition we ment Unit? mensional stage productions and live events, our shareholders. However, we must not be Gundam Concierge Haro was announced last that are easy for employees to work in and in will also reinforce our initiatives for teenagers Taguchi: BANDAI NAMCO Amusement Inc., for which the market is expanding. There are satisfied with the status quo. As an entertainment year under agreements with partner companies. which employees can have fun while doing and the mature fan base who have expectations which is the core of this Unit, combines passionate IP fans around the world, and accord- group that faces expectations from fans around This product leverages the character of Haro their work. In addition, we will work to step and also present opportunities. The DRAGON NAMCO LIMITED and the amusement ingly we will provide opportunities to experience the world, we must continually take on new to implement AI concierge functions, and it up our preparation of frameworks that support BALL card game that has been available in machine business of BANDAI NAMCO the IP worldviews, such as with live events. challenges. In FY2019.3, we will continue has been well received. Without limiting our- employees as they take on challenges. BANDAI Europe and the Americas enjoys a boost in Entertainment Inc. There are a growing number We will also deliver products and services working to develop products and services selves to ideas and development activities NAMCO has a wide range of businesses, popularity when new series are launched. In of cases in which the evolution of entertainment while leveraging collaboration among Units. suitable for markets that continue to undergo within the Group, we will demonstrate the including merchandise, content, and venues, addition to Europe and North America, this transcends the digital world and leverages dramatic change, and we will aim to create “Open BANDAI NAMCO” concept and imple- and employees can acquire a diverse array of game has also been launched in South America real venues as places for expression. Going Please discuss the latest activities at new IP that is aligned with the times and a step ment a variety of initiatives. experience and enjoy a wide range of careers. and Oceania, and I look forward to its future forward, the Real Entertainment Unit will the IP Creation Unit. ahead of customers’ expectations. Moving forward, we will aim to be a corporate results. In products for the mature fan base, provide “venues with value” at which IP fans Taguchi: INC., which is the core BANDAI NAMCO heralds “Dreams, Fun What direction will the Group aim for group in which our employees, who have figures for the Pacific Rim movies are popular, and game fans can share experiences and will company of the IP Creation Unit, is working and Inspiration,” which are necessary in every under the Region Strategy? abundant individuality, can have fun while and moving forward we will aggressively work expand services that can only be provided by on new products for popular IP series, such as age and in every country and region. Going Taguchi: We have positioned China as a priority working energetically. to commercialize IP that will become popular the BANDAI NAMCO Group. the and Love Live! series. forward, we will continue to rapidly provide region. Along with Europe, the Americas, and worldwide in this way. At VR ZONE SHINJUKU, in April we In addition, SUNRISE INC. is collaborating appealing IP as well as products and services Asia, we have established a holding company Would you discuss the situation at started operations at DRAGON QUEST VR, with other Units and advancing the development in markets around the world. Targeting the in China and built a system for full-blown each Unit? What are the recent activi- What is the situation in the Network which has proved highly popular. In addition, of multiple IPs. future that lies beyond change, the BANDAI initiatives. Moving forward, in each region ties in the Toys and Hobby Unit? Entertainment Unit? VS PARK, which was opened as a variety sports In the promotion of IP brands, Gundam NAMCO Group will make a new start. Please around the world we will aggressively roll out Taguchi: To strengthen its business for the mature Taguchi: In addition to the worldwide roll-out facility, is also popular. Going forward, we made well-received appearances in Pacific look forward to great things from the BANDAI Japanese IP and strengthen initiatives with fan base in Japan and overseas, the Toys and of products and services, the Network Enter- will leverage a value chain that integrates Rim: Uprising and Ready Player One, which NAMCO Group in the years ahead. locally originated IP. To achieve sustained Hobby Unit consolidated plastic models, col- tainment Unit is also taking on the challenge machine development and venues, and provide are Hollywood films that were launched recently. lectable figures, lottery-related of creating new entertainment. Moving forward, machines, content, and venues that draw on Moving forward, we will continue to promote products, etc., and established in network content the Unit will pursue stable the distinctive capabilities of the BANDAI Gundam and other IP brands overseas. In a new company, BANDAI management of major titles and aggressively NAMCO Group. addition, SUNRISE INC. has a strong reputation SPIRITS CO., LTD. The Unit introduce new titles that will be our next pillars, has announced a plastic model as with DRAGON BALL Legends. In addition, What is the situation in the Visual and that is the first product under we started enza, a new platform for browser Music Production Unit? the Figure-riseLABO project, games for smartphones from BXD Inc. Popular Taguchi: Inc., which which is advancing multi-color titles like THE IDOLM@STER have already combines CO., LTD. and molding technologies for plastic been launched and have received a solid response. Lantis Co., Ltd., is leveraging a system that models. This product has The enza business is also collaborating with enables production with integrated visual drawn considerable attention. businesses in other Units, and moving forward products, music, and live events. BANDAI BANDAI SPIRITS CO., LTD., they will work to nurture new business models. NAMCO Arts is working on a variety of proj- is also strongly focused on In home video games, we plan to launch ects, such as the launch of new IP. Through We plan to launch the SOUL CALIBUR VI home video game overseas business. Centered new products for SOUL CALIBUR and ACE these initiatives, we will strive to nurture around the world. SOULCALIBUR™ VI & ©BANDAI NAMCO Entertainment Inc. on a core of production tech- COMBAT, which have established track records producers who can plan and implement IP nologies cultivated in Japan, We launched figures in Japan and overseas in conjunction with the in Japan and overseas. We are also developing roll-outs. Furthermore, in Japan and overseas opening of the new Pacific Rim film. ©Legendary2018.All Rights Reserved.

2 BANDAI NAMCO NEWS June 2018 3 Closeup

approach this expansion as an opportunity. We — Ready Player One and Pacific Rim: Uprising. Evolving from Animation Production Company grew as a company specialized in animations, will aggressively implement initiatives for Until now, Gundam had only appeared in but at this point it is important for the Group products that were created in the past. SUNRISE products. Going forward, we will to IP Development Building Frontiers from that SUNRISE does not limit itself to animations In regard to measures to bolster our ability work to advance measures to heighten the Thin Air and creates IP that can be utilized on a Group- to communicate the appeal of IP, Gundam presence of our original IP in Japan and over- wide basis. Going forward, without limiting SUNRISE INC. is the core company of the IP Creation Unit, which was established made appearances in two U.S. science fiction seas, including this type of initiative. our modes of expression to animations, we will under the new Mid-term Plan. The Mid-term Vision of the IP Creation Unit is films that had worldwide releases this year The IP Creation Unit is planning strive to create IP in all entertainment genres, Evolving from an Animation Production Company to IP Development, and the including novels, live-action movies, and Unit is advancing the Mid-term Plan in accordance with three key strategies illustrations. — improving creativity, improving communication, and improving branding. In If each individual employee realizes his or To enhance our ability to create IP, taking this section, SUNRISE President Yasuo Miyakawa discusses his thoughts about the on challenges is more important than anything her dreams, then there will be as many new formation of the Mid-term Plan, policies regarding work, and other matters. else. In baseball, victory or defeat is determined IP created as there are employees. when you step into the batter’s box. Sometimes

we will hit home runs and sometimes we will Yasuo Miyakawa Building Frontiers from Thin Air is the maintaining our dedication to original products strike out, but if we fear failure then we will additional investment of ¥6.0 billion DECKER! Doug & Kirill, an original “buddy President and CEO, SUNRISE INC. new company philosophy. is one of our strengths. SUNRISE has inherited not be able to create IP. Also, the act of stepping over three years in the creation of orig- series” animation that is one part of the new Miyakawa: The greatest strength of the BANDAI that DNA, which has become the force that into the batter’s box is itself a type of expression. inal IP. Tiger & Bunny animation series project. Please Profile of President and CEO Yasuo Miyakawa

Miyakawa: In entertainment, I think it is important NAMCO Group is the IP axis strategy, under drives our creation of original new products. Some projects are announced after thorough look for this product. which we generate strong results by developing A company is a living thing, and accordingly preparations, while others start small and are to provide new products that are different from June 8, 1956 Date of birth anything anyone has ever seen before. To take April 1981 Joined BANDAI CO., LTD. IP seeds into a variety of forms, such as products our embedded DNA is extremely important. subsequently nurtured into something large. What is the situation with overseas January 1996 Director of Bandai Digital Entertainment and services, and increasing their value. For SUNRISE, which has built a history of original Sometimes, a project initially shows no signs on that challenge, we will make aggressive initiatives? April 2000 Joined SUNRISE INC. investments. For employees, a generous budget April 2004 Director of SUNRISE INC. many years, SUNRISE has continued to create products, naturally attracts staff who also want of expansion but later records substantial growth Miyakawa: As 2020 approaches, I feel that April 2008 Managing Director of SUNRISE INC. original IP, the core of our strategy, and we to create original products themselves. I believe after several years. For example, Mobile Suit for IP creation is reassuring, and I expect to see there is growing interest around the world in April 2011 Senior Managing Director of SUNRISE INC. free thinking lead to a variety of ambitious plans. April 2013 Executive Vice President and Director of SUNRISE INC. have made a large number of products into hits, that the ideas of those staff contribute directly Gundam has now become an IP that is repre- Japan and in Japanese IP. At SUNRISE, we April 2014 President and CEO of SUNRISE INC. (current position) such as Mobile Suit Gundam. To create original to the creation of new products, and that the sentative of the BANDAI NAMCO Group, but are implementing various types of initiatives April 2015 President and CEO of BANDAI NAMCO Pictures Inc. What is the situation regarding collab- (current position) products from “thin air,” we need flexible transmission of this DNA to future generations when it was initially broadcast it continued to to uncover groups of overseas fans, such as April 2018 Executive Officer of BANDAI NAMCO Holdings Inc. thinking and knowledge to break through fixed is extremely important. have low viewership. However, we did not give oration within the Group? selling programming to TV stations in countries concepts, imagination, and — more than any- up and continued to roll-out IP, and starting in Miyakawa: Multiple projects are already under around the world, implementing on-line dis- thing else — strong conviction. Would you discuss “improving creativ- the second year of broadcasts, Mobile Suit way. For example, we are working together tribution, and holding events. Films are good Leveraging the experience that we have ity,” which is a key strategy under the Gundam became a major boom, with long lines with BANDAI NAMCO Entertainment Inc. tools for the worldwide communication of their dreams, then there will be as many new cultivated to date, we are Building Frontiers Mid-term Plan? of customers waiting at stores to purchase on the production of original visual products Japanese culture, as with the appearance of IP created as there are employees. I would like from Thin Air. We have made this our corporate Miyakawa: The major mission of the IP Creation Gundam plastic models. It is uncommon for that will utilize games as an outlet, and we are Gundam in Hollywood films. Moving forward, SUNRISE to be a company in which employees philosophy, with the idea of utilizing the strengths Unit is the creation and nurturing of new IP. IP to become a major hit right from the begin- also collaborating with BANDAI CO., LTD., we will emphasize films as a content outlet. evolve in tandem with fans and which contin- of the Group to leverage those frontiers by To that end, we must evolve from an animation ning. When creators have a product that they on the development of new IP for children. We Furthermore, we will also focus on China, ually creates new IP. I am enthusiastic about 10 or even 100 times. production company to IP development. If we themselves believe in, I think that it is important are seeing results from human resources which is a large-scale market. the future. think of ourselves as an animation production for them to nurture it without giving up even exchanges, which are rapidly creating bonds What are the strengths of SUNRISE? company, then we won’t be able to create when someone opposes that product. among Group employees through a common What are your policies regarding Miyakawa: I think that our history of continually anything but animations. Clearly, SUNRISE desire to do something new. I think that the work? What about “improving communica- Group is increasingly drawing together. Miyakawa: I am a strong believer in the impor- tion” and “improving branding”? tance of the front lines. I strive to attend events Miyakawa: In April, we held an event for Mobile What products and IP will SUNRISE that draw users, without regard to whether they Suit Gundam OO, which was broadcast 10 years focus on in the future? are held by us or other companies. By directly ago, and we could sense the fans’ high level of Miyakawa: In the first half of the year, we will experiencing the enthusiasm on the front lines, enthusiasm. Uncovering existing IP and adapting focus on the extent to which we can refresh I can enhance my sensitivity regarding products, it in alignment with the times is extremely established IP, such as Aikatsu! and . and accordingly I want to continue to learn important, and we will make the continued In the second half, Mobile Suit Gundam NT, from the front lines without losing my curiosity. implementation of these types of initiatives into the latest product in the Gundam series, will Also, I am communicating to employees that one of our strengths. Entertainment has become open in theaters in November. In addition, we I want them to realize the dreams that they had established throughout society, and there has have decided to go ahead with a theatrical when they joined the company. I think that our been substantial expansion in potential targets release of Love Live! Sunshine!!. Moving employees joined the Group because they had Aikatsu Friends! Mobile Suit Gundam NT Double Decker! Doug & Kirill ©BNP/BANDAI, DENTSU, TV TOKYO ©創通・サンライズ ©SUNRISE/DD PARTNERS for entertainment products. SUNRISE has a forward, we will implement a variety of ini- something that they wanted to achieve. If wide range of products, and accordingly we tiatives. Furthermore, we will roll out DOUBLE everyone remembers those feelings and realizes

4 BANDAI NAMCO NEWS June 2018 5