NEWSLETTER December 2020 NAMCO Holdings Inc. BANDAI NAMCO Mirai-Kenkyusho 5-37-8 Shiba, Minato-ku, Tokyo 108-0014

Interview with the President

Due to the effectiveness of BANDAI NAMCO’s portfolio, results in the first six months of FY2021.3 surpassed our plans.

BANDAI NAMCO Holdings has announced its results for the first six months of FY2021.3 (April to September, 2020). In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the results for the Group and the trends in each business.

The results for the first six months of and by toy-related items, such as confectionery, FY2021.3 have been announced. where the Charapaki series became a hit, and Taguchi: Looking at our results in the first six sundries. On the other hand, COVID-19 affected months of FY2021.3, in comparison with the prizes for amusement facilities, etc., principally planned figures that we announced in August in the first quarter. In addition, there was also — ¥315.0 billion in net sales and ¥30.0 billion an effect on sales of products linked with TV Mitsuaki Taguchi in operating profit — we achieved results that programs, etc. Nonetheless, the Toys and Hobby President & Representative Director, exceeded the plan, with ¥337.1 billion in net business achieved an overall gain in results BANDAI NAMCO Holdings Inc. sales and ¥45.9 billion in operating profit. in comparison with the previous year, when In the first six months, each of our busi- a record high was achieved. of amusement machines. Following the earlier nesses was affected in various ways by the In the Network Entertainment business, closures, amusement facilities have been global spread of COVID-19. However, the DRAGON BALL Z DOKKAN BATTLE, which reopened. Sales at existing facilities in Japan influence of these negative factors was offset is network content, was popular due in part are recovering, and were 78.3% of the previous by businesses and regional operations that to the effect of anniversary events overseas. year’s level as of September. In this envi- addressed demand associated with the trend In addition, favorable results were recorded ronment, to address changes in the operating toward people staying at home. Even as they by mainstay titles in DRAGON BALL LEG- environment, we have started new initiatives, were getting use to the new teleworking ENDS, THE IDOLM@STER series, etc. In such as the Torumo online crane game, and arrangements, our employees continued to home video games, the new CAPTAIN TSUB- these initiatives have been popular. Moving work hard, including taking steps to address ASA title got off to a favorable start. In addition, forward, we will strengthen initiatives that digitalization at Group companies around due to stronger digital demand, DRAGON leverage the distinctive strengths of the Real the world. BALL titles and repeat titles, such as in the Entertainment business, and we will rapidly DARK SOULS series, surpassed the planned implement measures to build a business Would you provide an overview of levels of unit sales. The full package download constitution that will enable the business to the first six months of FY2021.3 by sales ratio also exceeded plans. generate earnings even in challenging oper- business area? In both network content and home video ating environments. Taguchi: In the Toys and Hobby business, games, titles are enjoying longer product lives Gundam plastic models and products for the due to sustained communications with fans. mature fan base, such as collectible items, The development schedules that were delayed recorded favorable results as they captured due to COVID-19 are now being restored, but demand associated with the trend toward we will need to move forward cautiously while people staying at home by rapidly responding watching market trends. to digitalization. Moreover, in addition to In the Real Entertainment business, amuse- established IP*, popularity was also recorded ment facilities around the world were closed by new IP, such as DEMON SLAYER: Kimetsu due to COVID-19, and this affected not only no Yaiba and Disney: Twisted-Wonderland, the amusement facility business but also sales

* IP: Characters and other intellectual property

December 2020 1 Interview with the President

Taking on the challenge of approaching males and females, and accordingly we have these types of initiatives, we will bolster our head office functions, and reeval- changes in the operating environment as high expectations. portfolio with titles developed in Japan as uating the amusement machine Gundam plastic models reached their 40th well as titles developed overseas. Moving development system. opportunities to create new business models anniversary this year, and in December we forward, we will distribute a title from another We are also advancing collab- and customer value will implement successive launches around company, Cyberpunk 2077, principally in oration between content and the world of PERFECT GRADE UNLEASHED, Europe, and in February 2021, we will launch facilities in ways that leverage Taguchi: In the Visual and Music Production to the acquisitionof new customers. Moving the ultimate Gundam plastic model. Also, these Little Nightmares 2. Also, although their BANDAI NAMCO’s distinctive business, we rolled out established IP pack- forward, we will take on the challenge of models are already popular in Asia and Japan, launch dates have not yet been determined, assets and know-how. In addition aged product titles, such as in the Love Live! approaching changes in the operating envi- and next we are aiming to expand sales of we are advancing development of ELDEN to offering limited availability Sunshine!! and THE IDOLM@STER series. ronment as opportunities to create new business Gundam plastic models in North America. In RING and, for next-generation game machines, prizes for BANDAI NAMCO However, due to the influence of COVID-19, models and customer value. this market, large retail chains have decided SCARLET NEXUS. Amusement Inc. facilities and the number of live events held in the first six to carry these products, including not only holding IP campaigns, from August months was down significantly from the pre- Would you discuss the full-year plan? Target and Hobby Lobby but also Walmart What is the situation in the Real we also started to roll out Capsule vious year, which affected our results. In Taguchi: When we announced our results for and other retail chains. Moreover, in prepa- Entertainment business? Toy Stores. We are selling a wide addition, the production and opening schedules the first six months, we did not make any ration for the growth of Gundam plastic model Taguchi: In the Real Entertainment business, range of capsule toys at the first for visual and music products were also revisions to the full-year plan for FY2021.3. sales overseas, we decided to expand the our highest priority issue is building a business store, in Yokohama, where we have installed marketing, and accordingly we will aim to affected, and multiple visual product openings The circumstances regarding the global spread BANDAI HOBBY CENTER, our manufac- constitution that can generate earnings even more than 2,200 capsule toy vending machines. strengthen our business constitution by applying and packaged title launches were delayed. In of COVID-19 remain uncertain, and at this turing base in Japan. We have completed the in a challenging operating environment. We This product lineup and expertise have been the principles of selection and concentration live events, we are also working on the devel- point it is difficult to appropriately calculate expansion and started operations. Going are implementing a variety of initiatives, such highly evaluated, and the store has been pop- to BANDAI NAMCO’s distinctive strengths. opment of a new business model that is aligned what effect COVID-19 will have up to the forward, we will continue to implement col- as carefully examining facility openings and ular. Real venues are important for BANDAI with the changes that we face. end of FY2021.3. Also, from the third quarter laboration between Gundam plastic models closures, reducing operating costs, streamlining NAMCO in terms of both business and In the IP Creation business, events were the Toys and Hobby business has its largest and other Group businesses, and we will work canceled due to COVID-19, but the effect on annual selling season, and we will need to to increase sales around the world. earnings in the first six months was limited. confirm the situation, especially in Europe Aiming to be the only one for fans In the first six months of the fiscal year, we and the Americas. Moreover, it is possible What is the situation in the Network around the world produced visual products that will be launched that results will be affected by the trends in Entertainment business? in the third quarter and thereafter, and we home video game development and launch Taguchi: In the Network Entertainment busi- Would you discuss the situation in the In the IP Creation business, in collaboration work to build Gundam into a worldwide IP. In worked from a variety of directions to create schedules. We have decided to carefully exam- ness, from FY2021.3, we transitioned from Visual and Music Production and IP with the Visual and Music Production business, 2021, and thereafter, in addition to roll-outs of buzz about IP. SOTSU CO., LTD., has joined ine the numbers and disclose them to an organization based on devices, such as the Creation businesses? Love Live! Nijigasaki High School Idol Club new visual products and other products, we the IP Creation Unit from FY2021.3. As a stakeholders at the point when the trends network content division and the home video Taguchi: We are implementing a variety of was launched in October and has been popular. will continue to take steps to create buzz about result, SOTSU’s earnings are added to those become clear. game division, to an organization centered initiatives in the Visual and Music Production We also commenced the roll-out of Saikyo Gundam, such as starting the Gundam China of the Unit, and amortization of goodwill has on IP. In this way, we will aim to launch business. In the live event business, for exam- Kamizmode!, an IP coordinated with DATA Project, having Gundam serve as ambassador been incurred. Would you discuss the current trends high-quality titles that increase IP value at the ple, these include fee-based streaming of live CARDDASS from the Toys and Hobby business. of the Japan Pavilion at the Dubai Expo, in each business? First, what are best time, with consideration for device-specific events without customers in attendance at the In addition, from January 2021 Aikatsu Planet!, and participating in the production of a Please provide an overview of the the circumstances in the Toys and strategies. For new titles, we will conduct physical venue, e-commerce sales of live event an IP that combines animation and live action, Hollywood film. influence of COVID-19. Hobby business? further careful examination and strengthen goods, and the use of streaming platforms, will start broadcasts. Going forward, the IP Taguchi: Looking at the influence on the entire Taguchi: For Japan’s busy Christmas and New data analysis, which will be reflected in as well as virtual idol production. These are Creation business will continue to fulfill its Finally, do you have a message Group in the first six months, if we add up Year selling season, the Toys and Hobby business fan communications. not simply responses to the operating envi- role as an engine for the creation of IP that is for readers? the obvious factors, such as the closure of will not only focus on established IP products, We have also made a Canadian development ronment in the period with COVID-19. Rather, coordinated with Group products. Taguchi: We are in a new era with COVID-19, amusement facilities and the cancellation of such as , but also enhance the studio into a subsidiary as one part of measures we think of them as frameworks that will and in this environment entertainment that events, there was a negative effect of approx- lineup of DEMON SLAYER: Kimetsu no Yaiba to strengthen our development system. Cur- enable us to generate new added value that The Moving Gundam Statue will soon lifts people’s spirits is increasingly important. imately ¥34.5 billion on net sales and products. The film has become popular among rently, this studio is developing Unknown 9: reflects our strengths and was not available be unveiled. We will move quickly to address digitalization approximately ¥13.5 billion on operating a wide range of age groups, including both Awakening, an action adventure game. Through with previous live events. Currently, we are Taguchi: On December 19, at Yamashita Futo, and other changes that are moving rapidly. profit. On the other hand, we have started to starting the broadcast or release of visual Yokohama, we will open GUNDAM FACTORY In addition, we will provide highly diverse implement new initiatives to address changes products that had been delayed or suspended YOKOHAMA, where fans will be able to see entertainment that brings people together in the environment, such as fostering demand due to COVID-19, such as the reopening of an up-close view of the 18-meter, life-size through IP, products, and services. These are from people staying at home. These initiatives the IDOLiSH7 second-stage animation, which moving Gundam. We would like to ensure the roles of BANDAI NAMCO. We want include the online crane game, streaming of had been suspended. Moving forward, we that as many fans as possible experience the fans to have high expectations of BANDAI live events without customers in attendance will continue working to create buzz about impressive world of Gundam, which integrates NAMCO, and we will aim to be irreplaceable, at the physical venue, and digital initiatives. IP through production initiatives that integrate leading Japanese technologies. to be the Only One, as we strive to create a These types of new approaches are leading the three elements of visual, music, and live, Gundam is an initiative that extends across new era in entertainment in the future. I would ▲SCARLET NEXUS is in development for next-generation ▲GUNDAM FACTORY YOKOHAMA enables which are our strengths. Group Units around the world, and accordingly like to ask our stakeholders for their continued game machines. visitors to experience the world of Gundam. SCARLET NEXUS™ & ©BANDAI NAMCO Entertainment Inc. ©創通・サンライズ we will aim to maximize its IP value as we support of the BANDAI NAMCO Group.

2 BANDAI NAMCO NEWS December 2020 3 Closeup

Record high results in the Through the combination of the two Units, the pace of reforms as we move to address Would you explain the details we will be able to advance collaboration among these opportunities. of the current situation in Toys and Hobby Unit in the first six months. businesses and make more effective use of The negative influences of COVID-19 overseas businesses? Aiming for further growth under the Group’s wide range of business fields. include the effect on sales of prizes, digital Kawaguchi: Asia, including China, was able ALL BANDAI NAMCO. In this way, we will strive to further increase cards, capsule toys, etc., as a result of the to recover from COVID-19 at an early stage. BANDAI NAMCO’s competitiveness in closure of amusement facilities in Japan. In We are making stable progress, centered on In the first six months of FY2021.3, the Toys and Hobby Unit achieved record global markets. addition, there was an effect on the coordinated products for the mature fan base, and in par- high net sales and operating profit. Through the Unit combination that is roll-out of programs and products due to the ticular Gundam plastic models are highly planned for April 2021, the Toys and Hobby Unit will combine with the Network Please discuss the current trends in interruption of TV animations. popular. These models are primarily manu- Entertainment Unit and aim for further growth in the years ahead. In this sec- the Toys and Hobby business. Also, looking around the world, there was an factured at the BANDAI HOBBY CENTER tion of the newsletter, Masaru Kawaguchi, Executive Vice President and Director Kawaguchi: In FY2021.3, we have captured effect on sales of products due to the closure in Shizuoku Prefecture. However, with con- of BANDAI NAMCO Holdings Inc. and President and CEO of BANDAI CO., LTD., demand from people staying at home due to of retail stores, centered on Europe and the sideration for rising demand around the world, the core company in the Toys and Hobby Unit, discusses the Unit’s current situa- COVID-19, and favorable results have been Americas. I think that the Unit’s ability to we are constructing a new building on the tion and future outlook. recorded by products for the mature fan base, achieve record high net sales and operating grounds of the Center so that we will be able such as Gundam plastic models and collectible profit even in this type of environment was a to implement stable production over the As the Executive Vice-President of the characteristics and strengths of each Unit. figures. Moreover, toy-related items, such significant result. I am very grateful for our medium to long term. Through the start-up BANDAI NAMCO Holdings, As the Executive Vice President and Direc- as confectionery and sundries, have been employees, who flexibly addressed work issues, of this new building, we plan to increase what is your analysis of the tor of BANDAI NAMCO Holdings Inc. and popular, and we moved quickly to offer new even in a challenging environment; drew on production capacity to 1.4 times the level in current circumstances? the president of the Toys and Hobby Unit, I IP products, such as DEMON SLAYER: their insight; and worked hard. FY2019.3, and we are aiming to put the new Kawaguchi: In June 2020, I became Executive believe we should strongly advance collab- Kimetsu no Yaiba and Disney: Twisted-Won- building into operation in December 2020. Vice President of BANDAI NAMCO Holdings. oration among Units. derland. These initiatives have generated Masaru Kawaguchi I believe that my mission is to take the lead significant results. Executive Vice President and Director, BANDAI NAMCO Holdings Inc. in advancing stronger collaboration among In April 2021, the Toys and Hobby Our measures to reinforce marketing ini- Units. BANDAI NAMCO has grown as a Unit and the Network Entertainment tiatives with the use of digital technologies President and CEO, BANDAI CO., LTD. Group by rolling out business activities under Unit will be combined. also supported the favorable results. In an Aiming for the number one position a spirit of independence and autonomy for Kawaguchi: One of BANDAI NAMCO’s environment that placed limitations on the in the Christmas and New Year selling season each business. competitive edges is that we have both tangible holding of live events with people in atten- with a diverse product lineup However, looking at the current market and digital businesses and we can roll-out dance at a physical venue, we took the lead environment, large companies from around products and services in a wide range of busi- in the industry with the implementation of What is the situation in Europe and The busy Christmas and New Year What are your policies the world are investing in IP, and there are ness fields. Up to this point, the Toys and online meetings with business partners, and the Americas? selling season is almost here. toward work? also new companies that are posting rapid Hobby Unit, which offers tangible products, we aggressively rolled out online events for Kawaguchi: In Europe and the Americas, Kawaguchi: For the busy year-end and New Kawaguchi: With the COVID-19 crisis, the growth due to the strength of their promising and the Network Entertainment Unit, which the public. Online events do not have geo- where the achievement of a recovery in our Year selling season, we are adding depth to BANDAI NAMCO Group’s corporate culture content. Competition to secure IP is becoming conducts digital businesses, have each aimed graphical restrictions, and accordingly these results is an urgent issue, under the current our product lineup, with new IP such as of taking on challenges has been leveraged more intense. To increase our competitiveness for growth in their respective fields. However, events have helped us to identify fans who Mid-term Plan we have implemented a variety DEMON SLAYER: Kimetsu no Yaiba, which to the fullest extent, such as in the introduction in global markets and to further strengthen to create a growth strategy looking 5 years or have previously not been able to participate of initiatives, such as strengthening products is highly popular among elementary school of new IP and in the use of digital technologies. the IP axis strategy, which is the Group’s 10 years into the future, we must move forward as well as new customers and dormant cus- for the mature fan base. However, with the students, joining established IP products, such Through the Unit combination in April 2021, strength, we need to further bolster the con- with the creation of new entertainment that tomers. We previously recognized that the influence of COVID-19 this year, we have as KAMEN RIDER Saber, for which broad- we will join the product planning, development, nections among Units and work under the ALL combines tangible and digital elements and use of digital technologies is an issue, and I been unable to advance our initiatives in the casts started in September, and Ultraman Z, and manufacturing capabilities of the Toys BANDAI NAMCO concept, while leveraging is aligned with changes in customer values. think that we have been able to accelerate way we wanted, and we face ongoing issues. which is a third-generation IP with strong and Hobby Unit with the digital domain know- Even in these circumstances, however, our popularity. KAMEN RIDER Saber and Ultra- how of the Network Entertainment Unit, thereby ◀ENTRY GRADE 1/144 RX-78-2 GUNDAM (Currently offered through advance sales in-house e-commerce initiative, which was man Z are popular among preschool boys, facilitating the roll-out of business initiatives at Gundam Base, ¥770) placed into full-scale operation in the U.S. and we will roll out products centered on with even more free and open concepts. I would ©創通・サンライズ this year, appears to have gotten off to a toys. We will strive to meet the needs of all like everyone to approach this as an opportunity favorable start, and I think that we can look fans with our diverse lineup of DEMON and to continue to take on challenges. From forward to good results in the future. Also, SLAYER: Kimetsu no Yaiba products, including my position in management, I will do my another major success was the introduction Kimetsu no Yaiba DX Nichirinto, Kimetsu utmost to establish a framework that will enable of Gundam plastic models in approximately Tamagotchi, and Donjara. In rolling out Group employees to realize their own ideas 520 stores operated by Target, one of the products for preschool and elementary school to an even greater extent. Please look forward largest retail chains in the U.S. Other products children, the Christmas and New Year selling to what the future holds for the BANDAI for the mature fan base are also being intro- season is a major sales peak. The entire Unit NAMCO Group. duced in large retail chains, and accordingly will work together so that we can secure the

▲TAMASHII Features 2020 was a live event held in July. ▲Transformation Belt DX Seiken Swordriver (¥6,980, on sale) we will work to leverage these opportunities number one market share. (Photo shows online distribution venue.) ©2020石森プロ・テレビ朝日・ADK EM・東映 to steadily develop fans going forward.

4 BANDAI NAMCO NEWS December 2020 5