NEWS LETTER December 2016
BANDAI NAMCO Mirai-Kenkyusho BANDAI NAMCO Holdings Inc. 5-37-8 Shiba, Minato-ku, Tokyo 108-0014
Management Interview with the President
Taking On a Range of Challenges, Including Investing to Achieve Sustained Growth and Expand Corporate Value We have passed the half-way point of the Mid-term Plan ending FY2018.3. BANDAI NAMCO Holdings’ consolidated results in the first half of FY2017.3 recorded favorable progress. For example, we reached new record highs in both sales and profits. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the progress with the Mid-term Plan and the situation with each of the Group’s businesses.
Would you provide an overview of NAMCO Group. In the second half of the the first half of the fiscal year? fiscal year, we will continue striving to achieve Mitsuaki Taguchi Taguchi: In August 2016, we made an upward our projections while taking on the challenge President & Representative Director, revision to the results forecast for the first half of implementing a variety of initiatives, includ- BANDAI NAMCO Holdings Inc. of the fiscal year. We ended up surpassing the ing investment for sustained growth. revised figures and achieved record highs for to achieve our objectives for the final year of both sales and profits. In the Toys and Hobby The Mid-term Plan is making the plan — net sales of ¥600.0 billion and Business, favorable results were recorded by favorable progress. operating income of ¥60.0 billion. In addition, established IP* products in each region, such Taguchi: The goals of the Mid-term Plan com- these objectives do not represent a one-time as Mobile Suit Gundam in Asia and Japan and prise further strengthening the IP axis strate- achievement of a certain level of performance. Power Rangers in Europe and the Americas. gy and expanding our overseas business. We We must approach them as a transit point on In general, results were in line with initial are already starting to see results from our the way to sustained growth in the future. plans. Also, in the Network Entertainment initiatives, and we will further reinforce these Accordingly, we will take on the challenge of Business, DARK SOULS III home video game trends. In this way, our first task will be to implementing initiatives to further strengthen software became a major hit, and smartphone build a platform that can generate net sales of our foundation. game applications for domestic and overseas ¥500.0 billion and operating income of ¥50.0 markets, such as DRAGON BALL Z DOKKAN billion in a stable manner. We will then aim What steps are being taken for the BATTLE, maintained high levels of popular- for the next stage. I think that there are still next Mid-term Plan? ity. The Network Entertainment Business many things that we need to do to achieve Taguchi: Specific details have not been final- provided a strong driving force that support- sustained growth. To resolve these issues, ized, but we recently started the formulation ed the Group’s overall results. In the Visual we need to step up innovation in order to process by discussing where we want the and Music Production business, favorable heighten the sustainability of businesses and Group to be in 10 years. We had an off-site performances were recorded by initiatives IP. We also need to strengthen strategic invest- meeting of all officers, including outside centered on popular IP, such as Love Live! ment in order to cultivate new initiatives. In directors and outside audit & supervisory series and GIRLS und PANZER. These IP are addition to typical investments, in FY2016.3 we board members, to determine the Group’s receiving strong support from both existing also implemented strategic investments, such long-term vision. At this meeting, we reem- fans and new fans. as acquiring commercialization rights for new phasized the need to bolster the IP axis strat- IP and making WiZ CO., LTD., a planning egy, which will remain our biggest strength The outlook for the full fiscal year and development company, a subsidiary. In in the years ahead. We also recognized that has been revised. FY2017.3, we are continuing to step up IP we will achieve growth by leveraging this Taguchi: Considering the results in the first half initiatives overseas and are starting to invest strength on a worldwide basis. Accordingly, of the fiscal year and the current situation in in such areas as strengthening relationships I believe that, rather than striving to finalize each business, we revised the full-year projec- with IP rights holders. things on our own, we need to think about the tions to ¥590.0 billion for net sales and ¥57.0 We have passed the half-way point of the Group’s growth while drawing on outside billion for operating income. These challenging Mid-term Plan, and our performance has been knowledge and capabilities through the for- projections represent record-high levels of net basically in line with the plan, including our mation of a wide range of partnerships. sales and operating income for the BANDAI financial results. However, it will not be easy
* IP: Intellectual property, such as characters December 2016 1 Management Interview with the President
Leveraging technical capabilities and rapidly offering localized transformation belts with varying specs and at different price ranges. In addressing new platforms these ways, we are implementing initiatives to deepen our ties with local markets. Would you discuss the circumstances What is the situation overseas? in the Toys and Hobby Business? Taguchi: For Power Rangers, which is a lead- What is the situation in the Network Taguchi: From the fall, new programs were ing IP in Europe and the Americas, there will Entertainment Business? launched for KAMEN RIDER Ex-Aid, Heybot!, be a nationwide movie launch in the United Taguchi: Currently, virtual reality (VR) and and Digimon Universe App Monsters. Of these, States in March. In advance of this opening, augmented reality (AR) are drawing attention. KAMEN RIDER Ex-Aid has drawn consider- a new TV series — Ninja Steel — will start. In conjunction with the recently introduced able attention. Children can easily adapt to its In conjunction with TV and movies, we will Play Station VR, we have launched SUMMER TV game motif, and its design leverages conduct a series of large-scale promotions, LESSON, which enables users to enjoy char- luminescent colors. This bold challenge has and we will work to build on these initiatives acters and communications, and The iDOLM@ been well received by children, and KAMEN to promote business in FY2018.3 and there- STER Cinderella Girls: Viewing Revolution, RIDER Ex-Aid products have made a strong after. For girls, the Miraculous action doll has which enables users to enjoy highly realistic start, even for products in the Heisei Riders become popular, and moving forward we will live performances. Both of these products have series. This will be a key product for the busy nurture it as new IP. In addition, in Europe been highly evaluated. In addition, we also plan year-end sales period. Repeated broadcasts and the Americas, we are working to step up to offer titles for Nintendo Switch, which is have been establishing the popularity and initiatives for figures and other collectable Nintendo’s new platform. One of our strengths recognition of Heybot! animations, which are products as well as for plastic models. As one is the ability to rapidly respond to the launch for elementary school boys, and of Digimon of those initiatives, this fall we commenced of new platforms because we are always in Universe App Monsters animations. Accordingly, sales of DRAGON BALL plastic models in contact with advanced new technologies. we will utilize products to carefully nurture conjunction with the launch of DRAGON Moving forward, we will continue to take on these IP. BALL XENOVERSE 2 game software and an challenges that leverage the technical capa- In addition, targeting the busy year-end overseas campaign for DRAGON BALL Z bilities of the BANDAI NAMCO Group. sales period, we will launch major products DOKKAN BATTLE game application. Moreover, in home video game software, in the Power Rangers and Ultraman series In Asia, Gundam plastic models continue as I mentioned, DARK SOULS III has become for boys and the Pretty Cure! and Himitsu no to record favorable results. We have started a major hit. In addition, DRAGONBALL Cocotama series for girls. Also, Tamagotchi the distribution for the second season of Mobile XENOVERSE, which launched in February reached its 20th anniversary, and we launched Suit Gundam: Iron-Blooded Orphans at the 2015, has recorded shipments of more than 4 an anniversary product, Tamagotchi m!x. same time in Japan and overseas, and we are million units. DRAGON BALL XENOVERSE Characters that appeared in the first-generation also holding events in locations throughout 2, the latest entry in the series, was launched Tamagotchi also make an appearance in the Asia. In these ways, we are implementing in October and initial shipments surpassed anniversary product. In this way, two gener- detailed marketing initiatives. Moreover, for 1.4 million units. We will continue to implement ations — parents and children — can enjoy KAMEN RIDER, in overseas markets we are online events and other initiatives to sustain playing Tamagotchi together. selling products that have the same specs as the popularity of DRAGON BALL XENOVERSE products in Japan. In addition, we are also 2 for an extended period of time.
Focus Products in Each Business
KAMEN RIDER Ex-Aid transformation belt is off to a good start. Worldwide, DRAGON BALL Z DOKKAN BATTLE has In visual packaged products, surpassed 100 million downloads. the new series Love Live! Sunshine!! is recording favorable results. ©バードスタジオ／集英社・フジテレビ・東映アニメーション ©2016 石森プロ・テレビ朝日・ADK・東映 ©BANDAI NAMCO Entertainment Inc. ©プロジェクトラブライブ！サンシャイン!!
2 BANDAI NAMCO NEWS How is the Network content business Would you discuss the situation in doing in Japan and overseas? the Amusement Business? Taguchi: In Japan, The iDOLM@STER Taguchi: Existing amusement facilities in Japan Cinderella Girls: Starlight Stage, which has have recorded year-on-year improvement in been available for more than a year, continues results. In addition, our differentiated content to maintain one of the top popularity rankings and locations are popular. These include Seaside among rhythm game applications. It has become Kids’ Beach, which leverages our technical an extremely well-established, long-lived capabilities, as well as ANI ON STATION and product. Moreover, DRAGON BALL Z DOKKAN Nazo Tomo Cafe, which are new business BATTLE recently surpassed 100 million down- formats. In amusement machines, which faced loads worldwide. Overseas, solid market difficult conditions in the previous fiscal year, presences have been created by DRAGON we will aim to improve revenues through BALL Z DOKKAN BATTLE and other products initiatives with a streamlined group of popu- that are distributed online around the world, lar titles. Furthermore, we are also working as well as by Naruto Mobile in the China on a variety of projects that combine amuse- market. In the second half of the fiscal year, ment facilities and machines. VR ZONE Project we will launch additional new titles in Japan i Can, which is offered on a limited-time basis, and overseas. We will also work to promote grew out of those initiatives. This project DOKKAN BATTLE and ONE PIECE Treasure provides value that is only available from the Cruise by implementing large-scale campaigns BANDAI NAMCO Group. Moving forward, overseas. In these ways, we will strive to we will continue working to provide differ- further increase enthusiasm for the network entiated locations and content. content business.
Working with the attitude that we must take on challenges in order to gain momentum and accelerate evolution
What is the situation in the Visual In addition, IDOLiSH7, which originated times and to rapidly implement initiatives. and Music Production Business? from a game application, has recorded rapid Moreover, in addition to taking steps to address Taguchi: GIRLS und PANZER has become an growth. The game itself is popular, and the current issues, we will also invest in IP, busi- exceptionally long-run theatrical film, and this music CD has also recorded extremely favorable nesses, and services from a medium to long IP has earned a high level of popularity, cen- sales. From this fall, we launched the Dream term viewpoint. We will work to build a busi- tered on visual and music packaged software. Festival! and Magic-Kyun! Renaissance ani- ness portfolio that includes not only Japan but Recently, we announced that we had decided mations, which are targeted at adult women also markets around the world. Thanks to to produce GIRLS und PANZER: The Final and feature multidimensional male idols. The everyone’s hard work, the Group is now mak- Chapter, and fans are showing increasing Group will focus on implementing IP develop- ing good progress. Moving forward, the entire interest in the series. For the Love Live! series, ment initiatives that will foster the acquisition Group will work together with the attitude that Love Live! Sunshine!! has been introduced, of new groups of customers. we must take on challenges in order to gain and the Aquors school idol group has been momentum and accelerate evolution. launched to follow up the ’s group. Support Where will the Group focus its has been received from existing fans and new enthusiasm? fans are also being created, resulting in ideal Taguchi: In addition to working to achieve the launches. For Mobile Suit Gundam, we will Mid-term Plan, our top priority will be to achieve continue to provide products aligned with the sustained growth for the Group and to expand characteristics of each target group. THE corporate value over the medium to long term. ORIGIN series and Thunderbolt are for older Targeting those objectives, we will always work customers, while the second season of Mobile with a sense of urgency, and maintain a rigor- Suit Gundam: Iron-Blooded Orphans is for ous focus on the customer. On that basis, we teenagers. will strive to track the current changes in the
December 2016 3 Business Angle Introduction of Group Officers Future Outlook for Sunrise, Which is Creating Multiple Attention-Getting Products
The approach of “taking on any challenges that What role does Gundam play for Sunrise? have interesting potential” has been adopted Miyakawa: The Gundam content comprises throughout Sunrise, which has created a number three basic elements. These are robots, a war- time setting, and a group of youths. Based on of visual products that are the focus of attention. these elements, we have created a wide vari- ety of products by working freely in line with In recent years, Sunrise Inc. has created a number of popular visual products, the times. As a result, Gundam has maintained such as the Mobile Suit Gundam series, which is a big hit, and Love Live! series, its popularity for 37 years. In addition, I also which has become a major boom that could be called a social phenomenon. In think an important role was played by the this section, Sunrise President Yasuo Miyakawa discusses the role of Sunrise as development of the product world-setting, a member of the BANDAI NAMCO Group, the Group’s distinctive strengths, the with important roles played both by both current status of BANDAI NAMCO Pictures INC., which was established last year, products, such as Gundam plastic models, and and the future outlook. by animations. This could be said not just about Gundam but about all products. The creation of a prod- Sunrise has been known for its robot strongly committed to this project, and we uct starts from the strong determination of a animations, but the company has focused on quality above all else. That led to single employee who says “I want to make also created a number of other the careful creation of the animations, and to this.” The hit products that we have created popular products. coordinated initiatives including animations, to date include many that were originally Miyakawa: I think we are having good results music, and live events. opposed by nine out of ten people at the with our approach of “taking on any challeng- planning stage because the originality of the es that have interesting potential.” Previously, What led to the mix of video, music, products was not understood. Projects that are we certainly had an image as a robot animation and live events? supported by nine out of ten people tend to be company, but Sunrise has developed a culture Miyakawa: I think the start can be traced to simple extensions of something that was done of taking on interesting challenges, and this the Mobile Suit Gundam SEED FESTIVAL, a in the past. My priority in planning meetings free and open atmosphere has resulted in the full-fledged live event integrating video and is to focus on what the producers believe in creation of multiple products. In addition to the music that was held in 2003. Subsequently, and are committed to. I have confidence in animation of the underlying work, we have a in 2006 Lantis Co., Ltd. joined the Group, and the strong commitment of the company’s tradition of nurturing our business, with a in 2010 BANDAI NAMCO Live Creative Inc. producers and I trust them to do a great job. commitment to original products. One of the was established. In this way, we developed reasons why the Love Live! series is enjoying the ability to conduct full-scale music and live Multiple new programs are being such success is that Sunrise has a culture of event business activities that we can control broadcast. nurturing original products. ourselves. With the entire Group working Miyakawa: In the fall, broadcasts were started together on video, music, and live events, we for the second season of Mobile Suit Gundam: Being a member of the BANDAI developed the ability to create stage presen- Iron-Blooded Orphans, Dream Festival!, NAMCO Group is also key strength. tations that reproduce the IP world-setting in Magic-Kyun! Renaissance, ClassicaLoid, and Miyakawa: I think that the Group has an amaz- an extremely high-fidelity manner that satis- Heybot!. The Heybot! IP has invigorated the ing collaborative power. In conjunction with fies customers. This marked a significant step Group through collaborations with toys and animations, Group companies are working forward for us, and the result can be seen in games for elementary school boys. Dream together, not only in toys and games but also the Love Live! series. Festival! and Magic-Kyun! Renaissance are in such areas as music and live events. Group companies do not take a scattered approach to commercialization. Rather, activities are carefully controlled on a Groupwide basis with an IP-centered approach. These com prehensive strengths are important, and I believe that they are unique to the BANDAI NAMCO Group.
What do you think about the huge success of the Love Live! Series? Miyakawa: In producing animations, we do
our utmost to carefully create the products. Mobile Suit Gundam: Iron-Blooded Love Live! Sunshine!! Heybot! The director, scriptwriter, and staff were Orphans ©創通・サンライズ・MBS © 2 0 1 6 プロジェクトラブライブ！サンシャイン!! ©BNP/BANDAI,HEYBOT!PROJECT
4 BANDAI NAMCO NEWS targeted at women, where there is a market classical music. We are taking on new chal- but we have not yet captured a sufficient share. lenges for each of these products, so please Furthermore, ClassicaLoid is an entirely look for new developments. new product that aims for integration with
Continuing to create IP and products that reflect a commitment to the original work
What is your view of the current that are popular not only in Japan but around situation for IP? the world. Miyakawa: Currently, I am working as a mem- ber of the government’s Cool Japan Promotion What are your policies toward work? Council. The communication of Japan’s culture Miyakawa: My personal policy is “let’s have around the world will be a positive development fun doing this.” Next, I believe in working to for the industry, and I will strive to help advance achieve the things that you want to do. For Yasuo Miyakawa this initiative in a forward-looking manner example, one of the reasons why we established President & Representative Director from the viewpoint of IP. The closing ceremony a live events company is that I personally like Sunrise Inc. for the Rio Olympics changed the world’s view live events. Everyone has occupations that of and interest in Japanese IP, and this will fascinated them when they were young, and ■ Profile of President Yasuo Miyakawa also be a tailwind for the industry. Furthermore, things that they want to do. I think it is a good
A year has passed since the What type of company would you establishment of BANDAI NAMCO like to see Sunrise become in the Pictures. years ahead? Miyakawa: BANDAI NAMCO Pictures was Miyakawa: I would like to see Sunrise become established in April 2015 through the separa- a company that rapidly creates IP and original tion of a portion of the production department products. Also, right now the company needs at Sunrise. The company’s aim is create ani- to improve in the area of consistently creating mations, especially animations for children new video products each year. I would like to and families. BANDAI NAMCO Pictures has achieve this goal. Initially, this will entail just gotten started, but moving forward the initiatives on a small scale and may require company will focus its efforts on continued some time. However, I would like Sunrise to initiatives to create the products that will be a company that can work together with new follow Aikatsu! and BattleSpirits. In product partners and talent, build relationships, and development, BANDAI NAMCO Pictures continue to create high-quality video products. will continue to focus on products for elemen- tary school children and other children. Also, considering the trend in Japan toward fewer children, in the future we must create products
December 2016 5