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Home , Bandai, Bandai Namco Holdings, Cowboy Bebop, Haro (character), Mobile Suit Gundam, Wangan Midnight

NEWSLETTER September 2018 Holdings Inc. BANDAI NAMCO Mirai-Kenkyusho 5-37-8 Shiba, Minato-ku, 108-0014

Mitsuaki Taguchi Interview with the President President & Representative Director, Inc. Continuing to innovate with a focus on global business initiatives aligned with changes in our markets

Under the Mid-term Plan, the Group announced a mid-term vision of CHANGE for the NEXT — Empower, Gain Momentum, and Accelerate Evolution, and launched a five-Unit system. In the first quarter, the Group achieved record-high sales. In these ways, the Mid-term Plan has gotten off to a favorable start. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the future results forecast and the situation with each of the Group’s Units.

How were the results in the first What is the outlook for the future? for the mature fan base, BANDAI SPIRITS quarter? Taguchi: In our industry, the environment is CO., LTD., a new company that consolidates Taguchi: In the first quarter of FY2019.3, in undergoing drastic changes, and it is difficult the mature fan base business of the Toys and comparison with the same period of the previous to forecast all of the future trends based on Hobby Unit, started full-scale operation. With year, each business recorded favorable overall three months of results. Considering bolstered a separate organizational structure and a clarified progress with core IP* and products/services, marketing and promotion for businesses mission, the sense of speed in this business despite differences in the home recording favorable results; recent business has increased. In Europe and the Americas, title portfolio in the Network Entertainment trends, such as changes in title launch timing; SUPER CARD GAME, a trad­ business. In particular, the Toys and Hobby and future products and service lineups, there ing card game that was launched to strengthen business and the Visual and Music Production are no changes to the forecasts that we an­ our initiatives in business for the mature fan business recorded higher sales and profits year nounced in May — sales of ¥306.0 billion base, has recorded growing popularity, and in on year, and overall the Group registered sales and operating profit of ¥29.0 billion in the August we held a nationwide tournament in of ¥150.8 billion and operating profit of ¥17.8 first half of the fiscal year and sales of ¥650.0 the U.S. In addition to Europe and North billion. Thanks to the efforts of our employees billion and operating profit of ¥60.0 billion America, we are expanding the region where to ensure that the new Mid-term Plan gets off for the full fiscal year. As I mentioned, core this product is sold to include South America, to a smooth start, in the first quarter we achieved IP products/services are recording favorable Asia, Oceania, etc., and moving forward will record-high sales. results, and we view these figures as goals step up initiatives for this game as a focus Looking at the two business that achieved that we must achieve. I would like to respond product in overseas markets. higher sales and profits year on year, the Toys to the expectations of stakeholders and aim Furthermore, we have begun to implement and Hobby business strengthened its roll-outs to reach even higher. initiatives targeting a full-blown entry to the of products for the mature fan base as a main mainland China market. We are moving forward strategy under the Mid-term Plan. In and Would you discuss the trends in with preparations for the establishment of overseas, favorable results were recorded by each business? company to handle the local Toys and Hobby products for the mature fan base, such as Taguchi: In the Toys and Hobby business, business, and we are already taking steps to plastic models, collectable figures, broadcasts of ZI-O, the new increase sales of toys and Gundam and a lottery-related product. Also, in Japan KAMEN RIDER, started in Japan in September. plastic models, which are highly popular. As established IP, such as DRAGON BALL, KAMEN This is a compilation of Heisei KAMEN RIDER a new initiative for Gundam plastic models, RIDER, and !, was also popular. series, and accordingly we will implement a in August we opened THE GUNDAM BASE In the Visual and Music Production business, product roll-out featuring this product for the SHANGHAI, our flagship facility in Shanghai. core IP, such as Love Live! Sunshine!! and THE busy year-end sales period. In addition, we Moving forward, this facility will be a base IDOLM@STER, contributed to favorable sales continue to launch new IP, such as Bakutsuri for the communication of information about of such products as visual and music packaged Bar Hunter, for boys, and the new Cocotama Gundam plastic models to local fans. products, live events, and related goods, which series, for girls. offered a variety of added value. Moreover, to expand our business in products

*IP: Characters and other intellectual property September 2018 1 Interview with the President

Each Unit is advancing initiatives the establishment of “venues” at which con­ What is the status of the new Gundam has made well-received guest appear­ sumers can experience fun that leverages the IP Creation Unit? ances in Pacific Rim: Uprising, a film released aligned with the main strategies in distinctive capabilities of BANDAI NAMCO. Taguchi: In regard to IP creation, Group com­ this year and produced by Legendary, and in the Mid-term Plan. These include VS PARK, a variety sports facility panies and partner companies are working Ready Player One, which was directed by that was opened in Osaka and has become together to create new IP. At the same time, Steven Spielberg. We are also advancing these What is the situation in the Network What are the trends in home video popular. As we move forward we will continue we are also taking steps to increase the recog­ types of initiatives to leverage the appeal of Entertainment business? games? to open “venues” that draw on our distinctive nition of existing IP. Recently, at the IP brands around the world for . Taguchi: In network content, the eagerly awaited Taguchi: Home video games are registering strengths, such as opening a VR ZONE flagship Expo in the U.S., which is one of the largest If we succeed in linking these initiatives to new title DRAGON BALL Legends made a favorable results, centered on overseas markets. facility in Osaka and the No. 2 TONDEMI, a animation events in North America, we increases in IP recognition and value and to smooth start, surpassing 10 million downloads Going forward, we will launch worldwide popular new format. announced that we would cooperate with the establishment of a foundation for the roll- in the first month. Also, stable popularity was titles, such as VI and In amusement machines, in the previous Legendary, a film company, in the joint devel­ out of Group products, then we will also maintained by existing core titles in Japan and TO BORUTO: Shinobi Striker. Furthermore, year our initiatives were centered on the devel­ opment of a live-action implement similar initiatives for other IP in overseas, such as titles in the DRAGON BALL in the first quarter we continued to record opment of VR-related equipment, but in film. This news drew considerable attention. the future. Z DOKKAN BATTLE, Treasure favorable sales of DARK series products FY2019.3 we will launch new products in Cruise, and THE IDOLM@STER series. For and DRAGON BALL FighterZ products, espe­ popular series, such as Mobile Suit Gundam: Having a sense of pride and responsibility existing titles, we are using data analysis and cially in Europe and the Americas. As with Extreme Vs. and . In this way, devoting resources to marketing and operations network content, we will implement ongoing we will leverage synergies with facilities. about working in entertainment activities aligned with the characteristics of communications initiatives and promotional In Visual and Music Production, , fans in each region in order to ensure that events to ensure that these also become long- an IP that originated from network content, Product roll-out initiatives targeting How was the General Meeting of also increase the speed with which we address consumers can enjoy them for longer periods lived products. In addition, e-sports has become has generated not only a popular game but also overseas fans are also being stepped up Shareholders? services and experiences that utilize new tech­ of time. For newly launched titles, we will a topic of conversation as a new type of com­ successful coordinated roll-outs of video prod­ for DRAGON BALL. Taguchi: At the General Meeting of Shareholders nologies and devices. Moving forward, the conduct planning and development with an petition that utilizes games. In e-sports, we ucts, music, and live events. Accordingly, it Taguchi: We participated as a Group in the held in June, we received a range of opinions BANDAI NAMCO Group will continue to enhanced focus on quality and work to meet will aggressively implement initiatives for has attracted further attention among young DRAGON BALL NORTH AMERICA TOUR. and questions, and I think that we were able take on the challenges of products, services, the expectations of fans. tournaments using such products as TEKKEN7 women, and we recently decided to produce This event, which enabled consumers to expe­ to communicate with our shareholders. At the and businesses that are aligned with the times. Also, with enza, which is new platform and DRAGON BALL FighterZ in order to a second season of TV animation. The ability rience the worldview of DRAGON BALL, was same time, I was able to directly experience launched in April, primarily for browser games expand the base of players. to develop IP along both digital and real axes held in cities in North America from the scale of the expectations for our future Finally, do you have a message for using HTML5, we commenced full-scale is a distinctive strength of BANDAI NAMCO. July. At the event site, we conducted promotions products and services, as well as for the Group readers? promotional initiatives from the summer. These Would you discuss the situation in the By leveraging this experience and know-how of core products and services, such as figures, itself. Accordingly, I would like to see all Group Taguchi: The BANDAI NAMCO Group aims include the appointment of soccer player Yuto Real Entertainment and Visual and and working in collaboration with external cards, network content, and home video games. employees earnestly working together so that to provide “Dreams, Fun and Inspiration” to Nagatomo as an official supporter of DRAGON Music Production businesses? partners, we will continue to produce a wide Moving forward, while fostering close collab­ we can meet those expectations. people around the world through our products BALL Z BUCCHIGIRI MATCH. A special Taguchi: In the first quarter, results in the Real range of IP and aim to maximize IP value. In oration with animation production, we will and services, and our vision is to become “the feature of enza is that it leverages a variety of Entertainment business did not reach the level addition, for China, which we have positioned continue working to roll out products and Please discuss your enthusiasm for Leading Innovator in Global Entertainment.” initiatives involving collaboration across Group of the same period in the previous year, when as focus region for the Group, we have started services that earn the support of fans around the future. Our products and services are not essential Units, and we are excited about the potential sales at existing facilities in Japan were strong. initiatives for local fans, such as offering online the world for many years. Taguchi: The Mid-term Vision — CHANGE for life, but they are indispensable parts of of enza going forward. However, we are working to invigorate facilities distribution of animation songs and holding for the NEXT: Empower, Gain Momentum, people’s lives. Moving forward, we will have through such means as original campaigns and live events. President Taguchi, I heard that you visited and Accelerate Evolution — incorporates the a sense of pride and responsibility about our prizes. Moreover, we are moving forward with the Anime Expo. idea that, in an operating environment under­ work in entertainment, and we will continue Taguchi: At the Anime Expo, in addition to going dramatic change, we too must continue to implement initiatives with a focus on the the Gundam live-action film that I mentioned, to change, without being bound by current future as we strive to provide products and a number of other BANDAI NAMCO initia­ business models and established ideas. In services that are always aligned with the times. tives were also at the center of attention, such accordance with this vision, each Unit will I am enthusiastic about the future of the as product exhibitions, promotions, and live determine how it can best adapt to market BANDAI NAMCO Group. events for Love Live! Sunshine!! and THE changes, and on that basis advance a range of IDOLM@STER. By going the event site, I initiatives. In addition to initiatives for the once again understood the popularity and creation of new IP, we will take aggressive visibility of Japanese IP. I also realized that, steps for established IP as well in order to foster in order to compete with other companies in entirely new innovation that is aligned with huge overseas markets, we will need to look the times and also reflects a focus on worldwide

THE GUNDAM BASE SHANGHAI was opened in Shanghai. SOULCALIBUR VI, a worldwide title closely at local fans, share local information business initiatives. ©創通・サンライズ CD PROJEKT®, The Witcher®, Geralt® are registered trademarks of on a Groupwide basis, and concentrate the CD PROJEKT Capital Group. The Witchergame © CD PROJEKT S.A. We must take action now to ensure that the Developed by CD PROJEKT S.A. All rights reserved. power of the ALL BANDAI NAMCO concept. BANDAI NAMCO Group can leverage its SOULCALIBUR™ VI © BANDAI NAMCO Entertainment Inc. This will not be easy, but I believe that it will market presence and continue to record sustained Announcing the production of a live-action Mobile Suit Gundam film be worthwhile. growth in the years ahead. In addition, we must

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Aiming to advance growth strategies aligned rapid manner. The new system has just gotten preparatory initiatives, including the establish­ IP and products in the local market. In these started, but I believe that the mission for each ment of a local company. In response to ways, we will aim for further growth. with the positioning of each business and to business has been clarified and that we have popularity of Gundam plastic models in mainland In Europe and the Americas, DRAGON achieve further strong growth in Japan and started to establish an environment that makes China, we opened THE GUNDAM BASE BALL trading cards and collectable figures are overseas it easy to take on challenges. SHANGHAI in August in Shanghai. This is our enjoying favorable demand. Going forward, first flagship facility for Gundam plastic models we will further expand products for the mature In the current Mid-term Plan, the new mid-term vision of the Toys and Hobby Unit Five main strategies were announced. in mainland China. In addition, localized Ultra- fan base. In addition, we will roll out products is Break Out of the Box. Wow the World! In accordance with this vision, the Toys Kawaguchi: The first is to create, nurture, and man toys are also recording favorable sales. in conjunction with the TV broadcasts of Disney and Hobby Unit has announced five main strategies, and in the first quarter of obtain new IPs. The Toys and Hobby Unit is Moving forward, we might incorporate the IP Big Hero 6, and roll out in-house IP, such FY2019.3, the unit achieved favorable results, with year-on-year gains. In this working to nurture and expand core IP and to idea of “local production, local consumption,” as and Hyper Yo-Yo. In these ways, section, Masaru Kawaguchi, the president of BANDAI CO., LTD., the core company acquire the commercialization rights for new under which we would consider the possible we will work to increase the profitability of in the Toys and Hobby Unit, discusses specific initiatives for the strategies in the IP. Going forward, the Unit will also strive to implementation of sales of China-originated our operations in Europe and the Americas. Mid-term Plan, his expectations for specific focus IP, and his message for employees. create new IP. In August, we launched the Content Project, which is a Unit-wide initiative. The current Mid-term Plan has gotten doing things. We must move beyond existing The core members of the project are employees We will work to maintain a corporate culture off to a good start. who are well versed in each business, and they Masaru Kawaguchi concepts and strive to create new forms of fun. that enables employees to think and take President and Representative Director, Kawaguchi: In the first quarter, the Toys and Our new vision was created to strongly advance are working to foster the creation of new IP. action without fearing failure. BANDAI CO., LTD. Hobby Unit recorded sales of ¥50.5 billion, those ideas in the current Mid-term Plan. The second strategy is to bolster positioning up 18% year on year, and operating income of and business growth. This incorporates measures ¥5.2 billion, an increase of 293%. We have A reorganization was implemented to achieve growth through an overwhelming Would you discuss the remaining two BANDAI will launch a number of new products, atten­tion at the International Tokyo Toy Show. gotten off to a good start. Our results were in April. No. 1 position for each business in Japan, with strategies? so there will be exciting developments as we Moving forward, we will strive to rapidly take centered on products for the mature fan base, Kawaguchi: Up to this point, BANDAI has a worldwide perspective. I would like all of Kawaguchi: In expanding new business domains, move forward. on the challenge of creating these types of such as Gundam plastic models and collectable implemented initiatives for a wide range of target our companies and departments to clarify their the Toys and Hobby Unit will take a broad Also, the new Himitsu no Cocotama series products and services that incorporate new figures, and core IP products, such as DRAGON customers and business fields. However, looking originality and target market position and work view of its business fields and work to create — Kira Kira Happy Hirake! Cocotama viewpoints. BALL, KAMEN RIDER, and PRETTY CURE! at products for pre-school children and elementary to achieve steady gains in line with their various new products and new businesses. Until now, — will start from September, and Bakutsuri school students, and then products for the mature distinctive characteristics and growth stages. our business development initiatives have Bar Hunter TV animation , for which product What are your expectations of What is the Unit’s mid-term vision? fan base, there are substantial differences in such focused on the fields of toys and hobby products. roll-outs are already being implemented, will employees? Kawaguchi: Our vision is Break Out of the Box. areas as production methods, marketing measures, Is the Unit making progress in regard However, moving forward we will also aggres­ start from the fall. The Toys and Hobby Unit’s Kawaguchi: We all work at an entertainment Wow the World! To achieve stable earnings in and ways of advancing into overseas markets. to strategy, which is sively take on new challenges, such as utilizing business development initiatives are centered company, and accordingly I would like to see an industry in which results are significantly As a result, it became difficult to operate these breaking into the Chinese market? digital technologies and addressing demand on products for pre-school children and ele­ everyone do things that they really want to affected by the presence or absence of hit prod­ different businesses under the same organization. Kawaguchi: The full-blown entry into the for experiences rather than things. In addition, mentary school students, and the Unit plays a do, and to take on challenges that they consider ucts, the Toys and Hobby Unit has worked to Accordingly, we split off the departments that Chinese market was announced as a pillar of we will also step up collaboration with other role within the Group in regard to the to be interesting, without fearing failure. The enhance its IP lineup and establish organizational handle products for the mature fan base and the Group’s Mid-term Plan, and accordingly Units and external partners, and we will strive creation and development of future BANDAI BANDAI NAMCO Group has a corporate systems. However, to step up to the next stage consolidated them into BANDAI SPIRITS CO., the Toys and Hobby Unit set up an office in to create and nurture our next business pillar. NAMCO fans. Moving forward, we will strive culture that values independence and treats with a view to markets around the world, we LTD. In this way, we will aim to implement April to take charge of related preparations. In strengthening functions to maximize busi­ to roll-out products and services that touch the failure as a learning opportunity. If you have cannot limit ourselves to current methods of business development in a more-strategic and On that basis, we are moving forward with ness, we will implement organizational hearts of children and to create future oppor­ an idea and take on the challenge of imple­ restructuring and personnel development and tunities for other Units as well. menting it, even if you fail you will be able 【NG例】赤みが強くならないように 元素材 will formulate measures to address e-commerce, to leverage that experience in your next chal­ which is expected to record further growth in the Are there other focus products? lenge. If you can do that, then your career will future. In particular, in overseas markets business Kawaguchi: We have started to take orders for not suffer. I myself have failed many times growth is not possible without e-commerce. Gundam Concierge , a communication in my career. We need to strive to maintain Under the current Mid-term Plan, we will focus . To establish the theme that guided the our free and open-minded corporate culture on the establishment of a foundation for the development of this product, we asked a ques­ and to achieve further business growth and further expansion of global e-commerce. tion. What if Haro, the mascot robot that expansion through the growth of individual appeared in the Mobile Suit Gundam series, employees. What IP and products will the Unit actually existed now? On that basis, we took focus on during the current fiscal year? on the new challenge of incorporating AI into Kawaguchi: KAMEN RIDER ZI-O, for which IP products. broadcasts started in September, marks a turning In addition, the Dango Mushi capsule toy point as the 20th series of Heisei KAMEN was launched in August. This product has a RIDER. The ability of the character to draw high profile, and at the same time, as a capsule on the powers of generations of KAMEN toy, it is environmentally friendly. As a result, KAMEN RIDER ZI-O Kira Kira Happy Hirake! Cocotama Bakutsuri Bar Hunter RIDERS has been well received in the market. Dango Mushi received considerable ©2018 石森プロ・テレビ朝日・ADK・東映 ©BANDAI/TV TOKYO・ここたま製作委員会 ©鈴木サバ缶／小学館・爆釣団・テレビ東京

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