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

Interview with the President

The future of BANDAI NAMCO lies beyond change.

BANDAI NAMCO Holdings has announced its results for the first nine months of FY2020.3 (April to December, 2019) in February. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the results for the Group and the trends in each business.

Would you provide an overview of basis. Currently, DRAGON BALL Z KAKAROT, the results for the first nine months which was launched in January, has been highly of FY2020.3? evaluated by fans and shipments surpassed Taguchi: For the nine-month period, we 1.5 million units in the first week of sales. We achieved net sales of ¥532.5 billion and oper- are aiming for shipments of 2.0 million units ating profit of ¥72.0 billion. This marks the within FY2020.3. Moving forward, we will Mitsuaki Taguchi President & Representative Director, achievement of record high sales and profits continue to focus on high-quality development BANDAI NAMCO Holdings Inc. for the first nine months of a fiscal year. in network content and home video games. In the Toys and Hobby business, we had the mix in the same period of the previous year, favorable results worldwide with products for Would you discuss the situation in when we launched multiple, high-value-added the mature fan base, such as Gundam plastic the Real Entertainment, Visual packaged titles. Currently, we are moving ahead models and DRAGON BALL figures. Overseas, and Music Production, and IP Creation­ with the planning of multiple IPs from new products for the mature fan base were popular, businesses in the third quarter? viewpoints, and accordingly we would like including not only Asia but also North America, Taguchi: In Real Entertainment, existing amuse- everyone to look forward with anticipation. where we have established sales and marketing ment facilities in Japan recorded favorable In the IP Creation business, we worked to companies. In products for younger customers, sales. Furthermore, we advanced the roll-outs create IP-related buzz around the world. To established-IP* toys and toy-related items, of new-format facilities that leverage the dis- that end, we took steps to build excitement in such as KAMEN RIDER and Super Sentai, tinctive strengths of BANDAI NAMCO, such a variety of ways, including visual products were popular in Japan. As a result, the Toys as opening new TONDEMI athletic facilities. for the Mobile Suit Gundam series, which and Hobby business achieved record high results In amusement machines, sales were down reached its 40th anniversary. These products in the first nine months of the fiscal year. from the same period of the previous fiscal were released in theaters and on TV. The results The Network Entertainment business reg- year, when we launched major titles and intro- in the licensing business were down in com- istered stable results with mainstay network duced new versions of existing games. parison with the same period of the previous content titles, including DRAGON BALL, ONE The Visual and Music Production business year, when favorable results were recorded. PIECE, and THE IDOLM@STER, as a result worked to create buzz through IP production However, influence on profits was limited due of events, updates, and other initiatives. In initiatives extending to visual, music and live to a change in the transaction configuration. addition, we are also seeing progress with events. These initiatives included sales of visual Looking at the Love Live! series, which is one new titles, such as GUNDAM BREAKER and music packaged products and live events of a mainstay IPs, we have decided to produce MOBILE and Sword Art Online: Alicization for THE IDOLM@STER, Love Live! Sunshine!!, new animations and to roll out new projects. Braiding, which were introduced in FY2020.3. and IDOLiSH7 as well as the release of a new In these ways, we will work to create further In home video games, repeat sales of existing GIRLS und PANZER movie. Profits were influ- excitement about this IP. titles were up year on year on a unit sales enced by a product mix that was different from

* IP: Characters and other intellectual property

In regard to the recent spread of the novel coronavirus, we would like to express our sympathy for those who have contracted this illness or have had their lives affected by this crisis. In consideration of these circumstances, the BANDAI NAMCO Group is doing everything it can in such areas as business operations and employee work systems. Please note that this newsletter includes information as of the end of February 2020. Thank you for your understanding. We would like to offer our prayers for the early recovery of those who have contracted this illness and for the end of this crisis.

March 2020 1 (Information in this section is as of the end of February 2020.)

Interview with the President

Striving to create a world in which fans around The Group is stepping up ­Gundam- The Group has announced personnel What are the Group’s goals related activities. changes at the director level. for FY2021.3? the world transcend borders to create Taguchi: Mobile Suit Gundam reached its 40th Taguchi: On April 1, Masaru Kawaguchi, the Taguchi: The changes generated directly and ­connections through IP anniversary in 2019, and 2020 will mark the president of BANDAI CO., LTD., will become indirectly by digitalization are altering the 40th anniversary of Gundam plastic models. Executive Vice President and Director of structure of our industry and our markets. In The full-year forecasts for FY2020.3 4 will be launched in the fourth quarter. ONE Accordingly, we will continue to create buzz BANDAI NAMCO Holdings Inc. The objective response, we have selected CHANGE as the have been revised. PIECE Pirate ­Warriors 4 is scheduled for about this IP in a variety of ways. For the 40th of this move is to deepen collaboration between theme of our Mid-term Plan. This choice was Taguchi: We reevaluated the full-year forecasts launch in late March, and accordingly the costs anniversary of Gundam plastic models, we management and business execution and to based on belief that that the Group will have for FY2020.3, with consideration for our results will be recorded upfront in FY2020.3. Also, will implement cooperative initiatives with further solidify our management foundation. no future if we simply continue to follow our in the first nine months of the fiscal year, our due to the title mix and characteristics in the other companies, such as our collaborative Moving forward, the Group will strive to work previous ways of doing things. The speed of marketing plans for products and services in fourth quarter, we expect repeat-title unit sales products with J.LEAGUE, and launch strategic together and leverage our comprehensive change in the current age means that we cannot the fourth quarter, and a variety of initiatives and the download sales ratio to decline year products. Furthermore, to prepare for future strengths under the ALL BANDAI NAMCO afford to stand still. If we move too slowly, that we will implement, including investment on year. FY2020.3 was a period immediately growth in demand, we will also take steps in concept. To that end, it will be necessary for or simply take a passive approach, then it is for business development, in FY2021.3 and preceding the launch of home video game the area of production, such as expanding our Group companies to work in a more-unified possible that the value that we have created thereafter. Consequently, we did not change titles. In FY2021.3 we plan to launch THE manufacturing base in Shizuoka City in Japan. manner, to collaborate, and to foster chemical up to this point will be entirely lost. In the address customer needs and endeavor to pursue the forecast for net sales of ¥720.0 billion, IDOLM@STER STARLIT SEASON, SWORD Currently, Gundam enjoys a high level of change. In these endeavors, businesses involv- midst of this change, we must accurately the true nature of those needs. The continued but the forecast for operating profit was ART ONLINE Alicization Lycoris, Mobile popularity in Asia, including Japan. Moving ing tangible goods will be one of our core understand how customers feel about our existence of the BANDAI NAMCO Group revised from ¥70.0 billion to ¥75.0 billion. Suit Gundam: Extreme Vs. Maxi Boost On, forward, we will strive to develop this IP into operational areas. Mr. Kawaguchi, while con- products and services and carefully determine rests on our ability to provide products and In the fourth quarter, we expect results to and other titles. Moreover, although the launch “the world’s Gundam.” In particular, to increase currently working as the president of BANDAI our next steps. services that are irreplaceable, for IP and for be down year on year. The major reasons date has yet to be determined, we are moving awareness overseas, we will step up events, CO., LTD., will serve as the vice president of On the front lines, near our customers, we customers. I believe that the future of BANDAI include the following. In the Toys and Hobby forward with the development of ELDEN strengthen product and promotion roll-outs, BANDAI NAMCO Holdings Inc., and strive must strive to accurately understand customer NAMCO lies beyond change. Moving forward, business, we are planning e-commerce site RING, which is highly anticipated by fans. and implement a variety of other initiatives. to advance integration and collaboration from trends and thinking. This will continue to be we will strive to be a Group that responds promotions in global markets as we move to In 2020, we will set up a life-size moving the optimal viewpoint. important for BANDAI NAMCO. And in flexibly to the emerging trends of the times strengthen roll-outs of products for the mature Would you discuss dividends Gundam Statue in Yokohama, and Gundam providing products and services, we must and continues to CHANGE. fan base around the world, and we are also for FY2020.3? will serve as ambassador of the Japan Pavilion planning initiatives for the 40th anniversary Taguchi: The basic dividend policy of BANDAI at Expo 2020 Dubai. Moreover, the “G-SAT- of Gundam plastic models. Moreover, in con- NAMCO Holdings is to provide a return to ELLITE into Space” initiative, which is a Directors at Major Companies in the BANDAI NAMCO Group (as of April 1, 2020) sideration of market conditions in the year-end/ shareholders that targets a total return ratio project led by JAXA, will involve the launch New Year’s sales period, we are taking a cau- of 50% or more based on stable dividend of Gundam plastic models into space. In 2020, BANDAI NAMCO Holdings Inc. BANDAI NAMCO Entertainment Inc. BANDAI NAMCO Arts Inc. tious approach to future forecasts. In a typical payments of 2% of DOE (dividends on equity), Japan and Japanese culture will be the focus President and Representa- President and Representa- President and Representa- Mitsuaki Taguchi Yasuo Miyakawa Kazumi Kawashiro fiscal year, the fourth quarter is a period in while maintaining a stable level of dividends of attention from around the world. We will tive Director tive Director tive Director which we record upfront costs related to the over the long term and focusing on the cost work to create buzz, identify expectations, Executive Vice President Managing Director Nao Udagawa Vice President and Repre- Masaru Kawaguchi * Shunji Inoue launch of core IP in preparation for the fol- of capital. In accordance with this basic policy, and link these trends to the live-action film and Director sentative Director Managing Director Naoki Katashima * lowing fiscal year. In the fourth quarter of the we revised our FY2020.3 forecast for annual that is currently being produced jointly with Director Shuji Ohtsu Executive Director Satoshi Kono * Director Toru Konno current fiscal year, we will start the roll-out dividends to ¥123 per share, including the Hollywood. Moving forward, we will strive Director Yuji Asako Director Hideyuki Kurita Director Hiroshi Kawasaki of Healin’ Good ♥ PRETTY CURE! and Mashin stable dividend portion of ¥40 and a results- to create a world in which fans around the Director (Part-time) Yasuo Miyakawa Director Yuka Sakurai Sentai Kiramager products, and from April linked dividend of ¥83. An interim dividend globe transcend borders to create connections Director Masahiro Shimizu Director (Part-time) Hitoshi Hagiwara Director Kenji Hamada we will roll out Digimon Adventure: products. of ¥20 per share has already been paid, and through the Gundam IP. Director (Part-time) Daisuke Uchiyama * Director (Part-time) Kazumi Kawashiro Director Kimikazu Ueyama We will do our utmost to successfully launch accordingly the year-end dividend forecast is Director (Part-time) Masaru Kawaguchi Director (Part-time) Makoto Asanuma Director (Part-time) Kiyoko Matsumura these IPs as we move toward FY2021.3. ¥103 per share. BANDAI NAMCO Amusement Inc. In network entertainment, in the fourth Director (Outside) Yuzuru Matsuda Director (Part-time) Takaaki Suzuki President and Representa- Director (Outside) Satoko Kuwabara Hitoshi Hagiwara Director (Part-time) Makoto Asanuma quarter we will continue to approach customers tive Director worldwide through such initiatives as events Director (Outside) Mikiharu Noma Executive Vice President Kazuya Kiyoshima SUNRISE INC. for existing core titles in network content. Director (Outside) Koichi Kawana Managing Director Seiji Kagawa * President and Representa- Makoto Asanuma Furthermore, we will strengthen new titles tive Director Director Haruo Iwayaguchi and work to maintain a stable business scale. BANDAI CO., LTD. Managing Director Shin Sasaki President and Representa- Director Yoshiyasu Horiuchi In the network content business, worldwide, Masaru Kawaguchi tive Director Director Naoya Masaki we plan to launch eight more new titles in t Director (Part-time) Takahiro Mizuno Director Akihiro Sato Director (Part-time) Masayuki Ozaki he fourth quarter than in the same period of Gundam specially ◀ Director (Part-time) Kazuhiro Takenaka the previous year. Accordingly, the burden designed for the Director Nobuhiko Momoi Japan Pavilion at Director (Part-time) Hirofumi Inagaki of development expenses and other initial Expo 2020 Dubai Director Shinjirou Kaji expenses is expected to increase. In home ©創通・サンライズ Director Akira Togashi Director (Part-time) Yoshiyasu Horiuchi video games, the new titles DRAGON BALL ▲ Home video game ONE PIECE Pirate Warriors 4 Director (Part-time) Taro Tsuji Director (Part-time) Satoshi Kono Z KAKAROT and ONE PIECE Pirate Warriors ©尾田栄一郎／集英社・フジテレビ・東映アニメーション ©BANDAI NAMCO Entertainment Inc. Director (Part-time) Yasuo Miyakawa Newly appointed * Change in position

2 BANDAI NAMCO NEWS March 2020 3 (Information in this section is as of the end of February 2020.)

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Providing high-quality products around the as an opportunity and to provide customers Group has leveraged its distinctive strengths operates one of Japan’s largest platforms around the world with products that leverage to establish a cycle under which we work exclusively for contributions of original manga. world while accelerating collaboration inside our strengths. together to create IP, leverage our compre- The production of animations involves a large and outside the Group hensive strengths to make that IP a hit, and number of processes, and it is difficult for one What is the secret to creating then use the resulting profits to invest in the company to handle all of them. Accordingly, The IP Creation Unit handles a range of visual production activities, including high-quality products? creation of the next IP. Going forward, I think I think that it is important to strengthen our ­planning and production of animations as well as the management and use of Asanuma: It is important to rapidly create large we should strive to accelerate that cycle. foundation for the creation of visual products copyrights and other rights. In accordance with its Mid-term Vision—Evolving numbers of products while maintaining high through these types of measures. In addition, from Animation Production Company to IP Development—the Unit is aggres- levels of quality. Judgments about the quality Progress is also being made with the there is a growing labor shortage in animation. sively taking on the challenges of further reinforcing the strengths of its existing of a visual product can only be made when establishment of a business In this environment, we have established the IP, while at the same time strengthening its ability to create IP without being users watch the completed product on a screen. ­foundation and collaboration outside Sunrise Drawing Academy, and we are offering bound by animation frameworks, as well as bolstering its ability to communicate If you are just thinking about a plan, you will the Group. grants to support students. In these ways, we the appeal of IP in markets around the world. In this section, Makoto Asanuma, not obtain evaluations from users, and accord- Asanuma: We have received the transfer of are working to support the development of the president of SUNRISE, which is the core company of the IP Creation Unit, dis- ingly it is essential to move rapidly in the the visual production business from XEBEC animators. By providing opportunities for cusses the Unit’s market environment, focus titles, and vision for the future. creation of a visual product. However, visual and established SUNRISE BEYOND. We have younger generations to acquire skills, we will production involves creating 1 from 0, that is, also invested in Sublimation Inc., a CG pro- strive to activate the animation industry. It has been a year since you Would you discuss the operating creating something from nothing, and this duction company, and echoes Inc., which became president of SUNRISE. environment in the IP Creation Unit? process entails significant struggles. To over- Asanuma: I have been a member of the man- Asanuma: Japanese animation has always come those difficulties, it is important to believe agement team at SUNRISE INC., serving from been highly evaluated on the global stage in your own product plan and to have the Working to future bolster Gundam, Love Live!, April 2018 as Senior Managing Director and for its quality and quantity. Through the global strength to charge ahead. To cultivate that type Makoto Asanuma President and Representative Director, from April 2019 as President and Representative advances of online video distribution services, of attitude, we are holding regular lecture and other popular IP and to promote the SUNRISE INC. Director. Before I moved to SUNRISE, I worked such as over the Internet, Japanese animations meetings with experts from inside and outside creation of new IP with products and services utilizing IP in the can be enjoyed around the world. We now the company, such as the company’s highly Network Entertainment Unit, principally games, have an environment that makes it possible experienced producers and officers from other Gundam marked its 40th ­anniversary point. In addition to live events, such as Love What are your policies toward work? etc. In the Network Entertainment Unit, the to further increase the creation of global hits. Units. We are also implementing initiatives in 2019. Live! Fest, which brings together the school Asanuma: A company comprises the employees creation of new IP, such as IP from games, was Furthermore, in many countries CG ani- to support employee motivation. Asanuma: We rolled out a variety of initiatives idols who appear in the series, we also rolled working on the front lines. Of course, it also an important initiative. The mission of the IP mation is the mainstream rather than Moreover, the promotion of collaboration for the Mobile Suit Gundam 40th Anniversary out a variety of anniversary-related initiatives, involves working in accordance with instruc- Creation Unit incorporates not only creating hand-drawn animation, and in this environ- within the Group, in ways that transcend Unit Project, centered on five visual products. We such as goods, visual products, music, etc. tions from senior management, but ultimately IP but also aiming to maximize IP value by ment the quality of hand-drawn Japanese boundaries, is also a positive factor in the have strengthened overseas roll-outs, and in We recently decided to produce a new series what is important is employees doing their working in close cooperation with other Units. animation has become a strength. SUNRISE creation of visual products. Personnel exchanges July Mobile Suit Gundam: Narrative became of TV animations, and accordingly we jobs with motivation and loyalty. There is a Furthermore, production studios play a central has established a production department within the Group are being actively promoted. the first Gundam series product to be released will strive to create even more buzz as we difference in the quality of work when you role in our organization, which makes us a specializing in CG, and accordingly we can For example, I became president of SUNRISE in theaters in China. We have also opened an move forward. do something because you were told to or you unique Unit within the Group. As the president determine how to produce more-appealing after working as a director at BANDAI NAMCO official YouTube channel, the “Gundam Chan- do something on your own initiative. The role of the IP Creation Unit’s core company, I have animations by combining the quality of Entertainment Inc. Under the IP axis strategy, nel,” which we are using to provide information What products will the Unit focus on? of senior management is to establish an envi- a strong sense of the importance of my duties hand-drawing with CG technologies. In this the drive to create new IP has permeated about Gundam to fans around the world. Asanuma: In the Aikatsu! series, which is the ronment that enables employees to turn in and a great feeling of satisfaction about working way, we can strengthen our operations. Going throughout the Group. These factors are having In 2020, we plan to hold the theater opening Group’s original IP, the latest product is Aikatsu good performances. I believe that is the best in the creative business of visual production. forward, we will strive to approach change a major influence. The BANDAI NAMCO of Mobile Suit Gundam Hathaway, the latest on Parade!, which has been popular since way to improve a company. Going forward, visual product in the Gundam series, on July broadcasts started in October 2019. April 2020 I will strive to establish a distinctive IP Creation 23, and in October we plan to hold the public will mark the start of “Wave, Listen to me!,” Unit style of management that enables employ- opening of a life-size moving Gundam in a TV animation based on a manga featuring ees to tackle their work in a spirit of autonomy Yokohama. Moreover, at the Expo 2020 Dubai, a Hokkaido radio station created in collabo- and independence. which will open in October, Gundam will serve ration with the monthly magazine Afternoon. as the PR ambassador for the Japan Pavilion. We are also preparing products for global Through this bold initiative, we will strive to markets, such as a live-action Gundam film help Gundam make a leap to the status of in joint production with Hollywood, and global IP. Cowboy Bebop, a live-action TV series that will be distributed on Netflix in the U.S. In Love Live! reached its 9th anniversary. addition, we are also actively working with Asanuma: The theme of this IP is the activities the planning of visual products for new IP. So ▲ A new Love Live! series will be produced. ▲ Sunrise Drawing Academy of nine girls, so from the beginning we have there is a lot to look forward to. ◀We are planning to exhibit a life-size moving Gundam in considered the ninth anniversary to be a turning Yokohama in October 2020. ©創通・サンライズ

4 BANDAI NAMCO NEWS March 2020 5