NEWSLETTER September 2020 BANDAI NAMCO Holdings Inc. BANDAI NAMCO Mirai-Kenkyusho 5-37-8 Shiba, Minato-ku, Tokyo 108-0014 Interview with the President By competing in a new way that leverages our distinctive strengths, we will work together with fans around the world to open up a new era in entertainment. In conjunction with the announcement of its results for the first quarter of FY2021.3 (April to June, 2020), BANDAI NAMCO Holdings has also announced a change to the start date of the next Mid-term Plan and a reorganization of the Group. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mit- suaki Taguchi discusses results trends and future strategies. Mitsuaki Taguchi The results for the first quarter of as candy and sundries, as well as IP that is gen- President & Representative Director, FY2021.3 have been announced. erating buzz, such as Demon Slayer: Kimetsu BANDAI NAMCO Holdings Inc. Taguchi: In the first quarter of FY2021.3, we no Yaiba and Disney: Twisted-Wonderland. recorded net sales of ¥145.0 billion and oper- In Japan, COVID-19 affected sales of prizes, gotten off to a favorable start, and accordingly ating profit of ¥19.9 billion. Accordingly, we digital cards, etc., as a result of the closure of going forward we will work to develop fans. did not reach the level of results that we amusement facilities, and coordinated rollouts recorded in the same period of the previous of products and programs, which were influ- What is the situation in the Network year, when circumstances were favorable. enced by the interruption of TV animations. Entertainment Unit? Looking at the influence of the spread of the Overseas, there was an influence on sales of Taguchi: In network content, favorable results COVID-19 infection in the first quarter, if we products due to the closure of retail stores, were recorded by mainstay titles, including buzz add up the obvious factors, such as the cancellation especially in Europe and the Americas. Due created by annual events for DRAGON BALL of events, the closure of amusement facilities, to the closure of facilities, etc., for a certain LEGENDS and THE IDOLM@STER SHINY and product sales at closed facilities and retail period of time goods for sale through retail COLORS. Moving forward, we will continue to stores, there was an influence of approximately channels were not shipped, and as a result we strengthen existing mainstay titles and to nurture ¥20.0 billion on net sales and approximately ¥8.0 think there could be an influence on shipments carefully selected new titles into new pillars. billion on operating profit. I think that, in these from the second quarter, centered on Japan. In home video games, accompanying the circumstances, our ability to recover to a level Currently, in conjunction with changes in closure of retail stores in Europe and the close to our performance in the same period of the operating environment, in a wide range of Americas, digital demand has increased, and the previous year was the result of our imple- categories we are reinforcing marketing initiatives sales of repeat titles were favorable, including mentation of a variety of business initiatives, that utilize digital techniques. In IP development DRAGON BALL Z KAKAROT and other prod- such as aggressively addressing digital demand. initiatives, we will rapidly rollout popular new ucts in the DRAGON BALL series, ONE PIECE IP products, such as Demon Slayer: Kimetsu Pirate Warriors 4, TEKKEN7, and the DARK Would you discuss the circumstances no Yaiba, and we will work to create buzz about SOULS series. However, in consideration of in each business? First, what are the new KAMEN RIDER SABER products in the lack of clarity in the environment, from the circumstances in the Toys and the busy year-end/New Year's sales period. the second quarter we are not expecting repeat Hobby Unit? Overseas, in Asia we will work to highlight title sales to continue on as an extension of Taguchi: In the first quarter, the Toys and Hobby mainstay IP products, centered on China, where the results in the first quarter. Once again, the business strengthened digital marketing in Japan, the market is recovering. In North America, long-lived titles are the ones that fans consider centered on products for the mature fan base, where we established a company for the mar- to be high quality. Currently, we are advancing such as Gundam plastic models and collectible keting of products for the mature fan base, we the development of SCARLET NEXUS and figures. As a result, we had favorable results in started to introduce Gundam plastic models to Elden Ring. (The launch dates for these prod- capturing demand associated with the trend approximately 520 stores run by Target, a leading ucts have not yet been determined.) In the toward people staying at home. In addition, retail company. Even in a challenging market future, we will continue to focus on develop- popular products included toy-related items, such environment, the Toys and Hobby business has ment that emphasizes quality. * IP: Characters and other intellectual property September 2020 1 Interview with the President Changing the starting fiscal year of the next now advancing Saikyo Kamizmode, a cross-or- from April 2022 (FY2023.3). Due to the influ- than hurrying to complete the next Mid-term and production functions and work to ganizational project coordinated with a digital ence of the spread of COVID-19 on society Plan, we think that we should formulate it create even higher quality IP. In addition to Mid-term Plan and formulating strategies with card game. overall, people’s lifestyles and values are with careful attention to the changes of the collaboration within the Units, we will also a focus on the changes of the times In addition, we announced the Gundam changing, and we expect to see a new era that times. We have positioned the period from aggressively advance alliances with other Units China Project as one part of our efforts to is entirely different. Accordingly, we decided FY2021.3 to FY2022.3 as a time for formu- and with external partners. In this way, we Taguchi: In the first three months, the Network visual and music packaged products were make Gundam a worldwide IP. In 2021, we that it would be necessary for the next Mid- lating the next Mid-term Plan, which will will aim to be an IP creation organization Entertainment business did not have any major delayed. We expect the influence of event will roll out products and services in conjunc- term Plan to incorporate a new way of be a new way of competing for BANDAI that addresses production from a variety of negative effects on results from COVID-19, cancellations, etc., to continue going forward. tion with the installation of a life-size Freedom competing in a new era. With the future uncer- NAMCO, and for implementing a variety of approaches. Furthermore, we will also strive other than the cancellation of events. The We are in a challenging environment, but Gundam statue in Shanghai, and moving for- tain and current circumstances marked by a preparations and foundation enhancement to establish a new content outlet strategy in environment on the front lines of development, looking ahead, we will aggressively take on ward we will reinforce overseas development large number of indefinite elements, rather initiatives in order to implement that strategy. addition to live events and on-line distribution. where there have been delays, is recovering, the challenge of new IP and new products. In of Gundam on a Groupwide basis. Nearly 1.5 We will implement this reorganization of but we think that there could be an influence regard to live events, demand from fans is million fans participated in the on-line Reorganizing the Units to enhance seamless, the Units in advance of the start of the next on development schedules, and that adjustments high, and accordingly, in line with the COVID- announcement of this project, for which they Mid-term Plan, and accordingly the next Mid- of launch timing could be necessary. 19 circumstances, we will consider methods have high expectations. close collaboration term Plan will be considered on the basis of of holding events while strictly observing the new structure. We will strive to formulate Please explain the reorganization What are the roles of the What is the situation event guidelines. The results forecasts for the full fiscal strategies and measures that are more realizable. of the Units. new Units? in Real Entertainment Unit? In addition, we are moving forward with year have been announced. Furthermore, we expect that the combination Taguchi: The start timing of the next Mid-term Taguchi: Through the combination of the Toys Taguchi: In the first quarter, operations were new initiatives, such as the start of service for Taguchi: In May, we had not yet determined of different Units will activate the exchange Plan has changed, but there will be no change to and Hobby Unit and the Network Entertainment generally suspended at facilities around the Mix Box, a 24-hour streaming distribution service the forecasts because of the difficulty of cal- of know-how and personnel, and foster pow- our major direction of aiming for sustained growth Unit, we will strengthen mutual collaboration world, and there were substantial declines in for video and music; the launch of Purple culating them as a result of the influence of erful synergies. I would like employees to over the medium to long term and strengthening in a wide range of business fields, with the revenues and profits. Fixed expenses such as One Star, a new label; and participation in COVID-19.