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. However, with consideration for approach this change in the organization as the IP axis strategy on a global basis. To that end, objective of maximizing IP value. Then, we rent and labor costs at facilities that were closed the development of virtual spaces specialized trends in the market environment, the influence an opportunity for growth and to make full, we will need to adapt further to the changes of will work to integrate tangible-goods and in response to requests from the national gov- in live events. These initiatives hold the of COVID-19 on our business operations, mutual use of their respective know-how. the times and enhance our competitiveness in digital businesses, respond to the digital trans- ernment or local governments have been potential to generate new market opportu- results in the first three months of the fiscal global markets. Accordingly, from April 2021 formation, and create entertainment that recorded under extraordinary loss as “loss on nities for visual, music, and live events, and year, and future product and service plans, Finally, do you have a message (FY2022.3), we will combine the Toys and Hobby addresses the new values of customers. In this temporary store closures and other related to accordingly we will aggressively take on we have set the full-year forecasts for FY2021.3 for readers? Unit and the Network Entertainment Unit, as way, we will strive to further increase the COVID-19.” The facilities have gradually these challenges. at ¥650.0 billion for net sales and ¥50.0 billion Taguchi: Since the beginning of 2020, market well as the Visual and Music Production Unit competitiveness of BANDAI NAMCO in started to reopen, but we are also implementing for operating profit. With consideration for environments around the world have undergone and the IP Creation Unit. In this way, under the global markets. measures with consideration for social distanc- Please discuss the IP Creation Unit. the unclear environment, we are reevaluating dramatic change. The digital transformation ALL BANDAI NAMCO concept, we will step Also, through the combination of the Visual ing, and we have not yet reached a 100% Taguchi: The IP Creation Unit was not sig- nonessential costs and implementing initiatives is accelerating, and people’s lifestyles, values, up the unity of our operations around the world and Music Production Unit and the IP Creation recovery. After the restart of operations, the nificantly influenced by COVID-19 in the first to strengthen our financial position. However, and working styles are changing significantly. and build a system for close cooperation. Unit, we will consolidate production studios Real Entertainment Unit has seen favorable quarter. However, we think there is a possibility we will continue to proactively consider invest- It has been said that even after the end of results with a Demon Slayer: Kimetsu no Yaiba that future broadcast and opening schedules ment linked to future growth. COVID-19, society and lifestyles will not campaign implemented in conjunction with will be affected. We will continue working to BANDAI NAMCO Group Organization return to the way they were before, and we the Toys and Hobby Unit, and accordingly we create IP, which is the Unit’s most important The Company announced a change think that is true. However, even in these will rapidly advance measures with a strength- mission, while minimizing these effects. Look- regarding the starting fiscal year of From April 2021 challenging circumstances, people will not New Unit ened focus on the IP axis strategy. In amusement ing at established IP, in the Love Live! series the next Mid-term Plan. lose their need for Dreams, Fun and Inspiration. machines, with consideration for the overall we are starting a TV animation, Nijigasaki Taguchi: The next Mid-term Plan was previ- Toys and Hobby Unit Rather, we will likely see the creation of new situation in the industry, we will work to increase High School Idol Club, and a new project, ously scheduled to start from April 2021 types of fun and entertainment, in new and development efficiency and consider the optimal Love Live! Superstar!!. For new IP, we are (FY2022.3), but we have decided to start it different forms, with people and entertainment Network Entertainment Unit launch timing. drawing even closer together. Our future lies Real Entertainment has been substantially beyond change. We will approach this as an Actual or expected influence of COVID-19 on businesses in FY2021.3 affected by COVID-19. However, to fulfill its opportunity, and compete in a new way that Real Entertainment Unit role of providing venues within the Group, the Influence on consumption due to store closures, etc. leverages our distinctive strengths. In this way, Event postponement and cancellation, and accompanying influence on Unit will aggressively address digitalization, BANDAI NAMCO we will work together with fans around the promotions, etc. such as with the Torumo online crane game, and Holdings Inc. New Unit world to open up a new era in entertainment. Influence on product development schedules we will work to build a structure that can generate Visual and Music Production Unit earnings even in challenging environments. Influence on production schedules, etc., at in-house plants and cooperating plants Influence on development schedules and operational systems for home video games and network content How about Visual and IP Creation Unit Influence due to closure of amusement facilities, etc. Music Production Unit? Influence on schedules for visual production, visual product openings, and Taguchi: In the first quarter, almost all events Affiliated Business Companies package sales were canceled, and the launches of multiple

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