NEWSLETTER June 2017
BANDAI NAMCO Mirai-Kenkyusho BANDAI NAMCO Holdings Inc. 5-37-8 Shiba, Minato-ku, Tokyo 108-0014
Management Interview with the President
Record High Sales and Profits in FY2017.3 Mid-term Plan Numerical Targets Achieved a Year Ahead of Schedule In FY2017.3, the BANDAI NAMCO Group achieved record high sales and profits on a consolidated basis. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the results trends, the situation in each busi- ness, the progress with the Mid-term Plan, and his enthusiasm about the future.
How were results in FY2017.3? What is the situation with the Taguchi: We got off to a good start in the first FY2018.3 plan? half of FY2017.3, and we achieved net sales of Taguchi: In FY2018.3, the operating environment ¥620.0 and operating profit of ¥63.2 billion. will be marked by dramatic change, and we Mitsuaki Taguchi President & Representative Director, Each of these figures represents a record high. cannot take an overly optimistic outlook that BANDAI NAMCO Holdings Inc. The three-year Mid-term Plan was launched in depends on the continuation of current hit prod- April 2015, and the numerical targets for the ucts. In addition, we have also taken into con- final year of the plan called for net sales of sideration such factors as the product and title a variety of initiatives, including a project to ¥600.0 billion and operating profit of ¥60.0 lineups in each business as well as launch timing further strengthen established IP, such as Mobile billion. Thanks to everyone’s hard work, we differences. As a result, the plan calls for net sales Suit Gundam and DRAGON BALL, in Japan were able to achieve these targets one year ahead of ¥600.0 billion and operating profit of ¥57.0 and overseas and a project aiming to expand of schedule. In operations, contributions to results billion. Also, in FY2018.3, in addition to the targeted customer groups. In addition, to strength- were made by a number of businesses, especially original strategic investment plan, we also intend en the IP axis strategy on a Groupwide basis, the Network Entertainment Business, which to increase strategic investment related to IP. over the past two years we have invested about had strong results with network content and ¥10.0 billion in such areas as creating new IP home video games in Europe and the Americas, The Group has entered the third year and strengthening overseas business initiatives. and the Visual and Music Production Business, of the Mid-term Plan and is making Moving forward, I believe that, while addressing which continued to register favorable results. good progress. changes in the market environment, we must Taguchi: We have been able to start the final continue to aggressively implement investment Would you discuss FY2017.3 dividends? year of the plan in a good position that exceeds and other initiatives as seeds that will lead to Taguchi: Our fundamental policy is to implement our expectations. We are recording good the next stage of growth. shareholder return with the objectives of main- progress. In particular, I believe that we are taining a base level of stable annual dividend starting to see results from strategies targeting What is the situation in the Toys and payments of ¥24 per share and a consolidated strengthened innovation with established IP, Hobby Business? dividend payout ratio of 30%. In accordance expansion of global initiatives, and growth Taguchi: Established IP products, such as with this approach, the Company will add a of new IP outlets. On the other hand, I also Mobile Suit Gundam, KAMEN RIDER, Super performance-based dividend of ¥38 per share think that we could have achieved an even Sentai, and PRETTY CURE!, are all recording and a special dividend of ¥20 per share to the greater range of new things. For the BANDAI favorable performances. A new ULTRAMAN stable dividend of ¥24 per share, resulting in NAMCO Group to realize sustained growth, program, ULTRAMAN GEED, and a new an annual dividend of ¥82 per share for the not only for this year and the next Mid-term Yo-kai Watch chapter will be launched in the fiscal year. Plan but also for the next 10 years or 20 years, summer, and accordingly we plan to introduce The special dividend incorporates our we must implement a variety of initiatives. products in line with the programs. For DRAGON gratitude for shareholders in regard to our BALL, development initiatives will center on record-high results and our achievement of The Group has invested aggressively in IP. the highly popular DATA CARDDASS. Also the Mid-term Plan’s numerical targets one year Taguchi: Aiming to further strengthen the IP the prize/lottery business was added in the ahead of schedule. axis strategy, in April 2016, we established the Toys and Hobby Business, and I would like IP Strategy Divisions within BANDAI NAMCO to further speed up our measures to reinforce Holdings. Currently, the divisions is advancing products for adults, such as figures. * IP: Intellectual property, such as characters June 2017 1 Management Interview with the President
Comprehensive facility for Gundam plastic has recorded cumulative worldwide shipments of more than 2 million units. In FY2018.3, we models, actual-size Gundam statue, and have high expectations for Tekken7, which large-scale VR facility was launched in June. This title has been eagerly awaited by fans around the world, and How is the Toys and Hobby Business In these ways, we will transmit information we will do our best to meet their expectations. doing overseas? about Gundam, including not only Gundam Furthermore, we also plan to launch ACE Taguchi: In Asia, Gundam plastic models are plastic models but also the Gundam IP itself, COMBAT 7 SKIES UNKNOWN, the latest popular, and collectible products for adult in Japan and overseas. title in the ACE COMBAT series. Drawing on customers are also recording solid results. the latest technologies, each of these titles Moving forward, in accordance with the strategy What is the status of the Network offers superb expression and world-settings, of simultaneously conducting business activities Entertainment Business? including VR compatibility, and I am confident in Japan and Asia, we will aim to expand IP Taguchi: In network content, DRAGON BALL that customers will get great enjoyment from and areas and to implement detailed initiatives. Z DOKKAN BATTLE has recorded more than them. In addition, we will also aggressively In the U.S., the Power Rangers theatrical version 150 million worldwide downloads and remains launch titles for new platforms, such as the was released at the end of March, and in the highly popular. In addition, favorable results PSVR and Nintendo Switch. first week of its release it recorded the second are being recorded by titles utilizing ONE highest level of box office revenues. The release PIECE Treasure Cruise, which are also being What is the situation in the of the theatrical version is expanding to Europe rolled out worldwide, and by titles utilizing Amusement business? and Asia. Furthermore, in home video games NARUTO, which are available in Asia. In Japan, Taguchi: In amusement machines, which faced and network content in Europe and the Americas, THE IDOLM@STER CINDERELLA GIRLS difficult conditions in FY2016.3, we were able DRAGON BALL has proved to be highly popular is highly popular. In each region, core titles to return to profitability in FY2017.3 due to a in local markets, and we also plan to release have earned stable popularity. In particular, I wide range of initiatives, including steady roll- Toys and Hobby products, such as card games believe that there is a potential for further outs of popular series and increases in efficiency. and figures. growth overseas, and accordingly in FY2018.3, Also, as one of our new ventures, we are devel- we will continue to aggressively take on the oping machines for casinos in cooperation with This summer, the Group will open a challenge of launching strategic titles and an overseas gaming product development com- comprehensive facility for Gundam expanding the areas for popular titles. pany. The first product will be a PAC-MAN plastic models. video slot machine, and we will subsequently Taguchi: At DiverCity Tokyo Plaza, a multi-use What is the situation with home move forward with the development of the facility in a waterfront area, we will open THE video games? second and third products while tracking market GUNDAM BASE TOKYO, a comprehensive Taguchi: In FY2017.3, extremely strong results trends. facility that will bring together Gundam plastic were registered by DARK SOULS III, which In amusement facilities, we will not simply models in a single venue for the first time in was launched in April 2016 and has reached continue to develop the same type of facility. Japan. Also, this fall, in the same location, we cumulative worldwide shipments of 4.8 million Rather, I think we should draw on the Group’s plan to exhibit an actual-size Unicorn Gundam units, and by DRAGON BALL XENOVERSE wide-ranging know-how to take on the challenge statue, which has been eagerly awaited by fans. 2, which was launched in November 2016 and of new business formats. We recently opened TONDEMI, a next-generation indoor athletic center, at Results under Current Mid-term Plan * FY2018.3 = Plan as of May 2017 the AEON MALL Makuhari Net Sales Operating Profit New City. Interest in sports is increasing in Japan, and this (¥ billion) Targets as of April 2015 Results / Plan (¥ billion) Targets as of April 2015 Results / Plan initiative is a test case for plans 63.2 600.0 620.0 60.0 for a new facility. In facilities 600.0 600.0* 60.0 575.5 560.0 57.0* and other areas, the IP axis 530.0 500.0 50.0 strategy is not limited to the 49.6 50.0 simple commercialization of IP. 45.0 400.0 40.0 Accordingly, we will strive to meet expectations for the pro-
300.0 30.0 posal of new entertainment possibilities and new entertain-
200.0 20.0 ment environments.
100.0 10.0
0 0 FY2016.3 FY2017.3 FY2018.3 FY2016.3 FY2017.3 FY2018.3
2 BANDAI NAMCO NEWS The Group plans to open a large-scale leverage the Group’s entertainment know-how VR facility in Shinjuku, Tokyo. and become an entirely new type of facility. Taguchi: This summer, we will open one of the Moving forward, the Network Entertainment country’s largest VR comprehensive entertain- Business will work to create new businesses ment facilities, which will have a total floor and develop new customers, without limiting space of approximately 3,630 square meters. its efforts to existing businesses. In addition to This facility will offer more than the type of VR, these initiatives will include new services VR in which customers wear goggles to enjoy drawing on artificial intelligence technologies the VR functionality. We also plan to offer a and new services integrating the real world and wide range of other activities as well as eating networks. and drinking. I believe that this project will
To provide dreams, fun, and inspiration to people around the world, we will continue to take on the challenges of the times
What are the conditions in the Visual we are also devoting resources to sponsoring the conclusion that even in 10 years, there will and Music Production Business? live events and holding live viewings overseas. be no change to our stance as a company that Taguchi: The Love Live! series continues to In addition, we have moved forward with centers its operations on the IP axis strategy record favorable results. In FY2017.3, Love overseas initiatives in the area of global distri- and provides “Dreams, Fun and Inspiration” Live! School idol project was extended with bution of Japan’s animation songs. To that end, to people around the world. Targeting the the launch of Love Live! Sunshine. In addition a number of companies involved with animation realization of this long-term vision, what do to previous fans, the series is also earning support songs, including Group companies Lantis Co., we need to do over the next three years? How from new fans, and has been highly evaluated. Ltd. and SUNRISE Music Publishing Co., Ltd. should we arrange our IP strategy and outlet Furthermore, the theatrical version of GIRLS as well as such other companies as FlyingDog, strategy in response to the changing times? und PANZER, which was released in November Inc. and KADOKAWA CORPORATION, have These are the fundamental questions that we 2015, became a long-running hit that was in established a new company, ANiUTA Co.,Ltd., will need to address in formulating the next theaters for more than a year. This IP remains which has already commenced flat-rate stream- Mid-term Plan. highly popular. Also, in the past year we took ing services for animation songs. Moving steps to lay the foundation for the continued forward, we will strive to communicate the Do you have a message for success of Mobile Suit Gundam by launching appeal of animation songs and to nurture fans shareholders? titles for each target customer group. in Japan and overseas. Taguchi: In FY2017.3, we were able to record In FY2018.3, we plan to implement new good results thanks to everyone’s hard work. initiatives, such as the second phase animation What are the Group’s ambitions for However, we still face challenges. That is why of Love Live! Sunshine and the OVA final this fiscal year? our employees are not content with the status chapter for GIRLS und PANZER. As we strive Taguchi: FY2018.3 will be the final year of the quo and continue working to create a corporate to continually foster innovation in key IP, we Mid-term Plan, and I think that as we approach culture that encourages everyone to continually will take steps to build a balanced IP portfolio, the start of the next Mid-term Plan, we need take on challenges with a sense of urgency. I including the Space Battleship Yamato 2202 to ensure that the IP axis strategy is linked to believe that we must be the type of company series and an animation based on IDOLiSH7, sustainable business. In addition, we have that continually takes on challenges. This refers which originated from an in-house game identified issues where we need to step up our not to the challenges posed by others, but rather application. efforts, such as creating new IP with high to taking on the challenges of the times. We frequency and ensuring the sustainability of need to become the type of company that can The Group is also focusing on IP overseas businesses. As we formulate the next respond to the ideas of fans, children, and other production. Mid-term Plan, we need to securely reinforce people around the world by leveraging the Taguchi: We are also strengthening live events our footing. trends of the times to rapidly create new enter- and fan club sites, which enable us to commu- For the next Mid-term Plan, we have dis- tainment. I would like to ask for your continued nicate the worlds of IP directly to fans. To build cussed our vision for the BANDAI NAMCO support in the future. a foundation for further expanding live events, Group in 10 years. These discussions reached
June 2017 3 Business Angle Introduction of Group Officers Future Outlook for the Network Entertainment SBU
Aiming to strengthen the IP axis strategy, What is the situation in the Amusement Facility business? our biggest asset, and build a new business Oshita: In arcade game machines, conditions in Japan and overseas were difficult in FY2016.3, and this business The Network Entertainment SBU, which is rolling out a variety of outlets for recorded a loss, but we have reevaluated our IP, is recording favorable results in Japan and overseas with network content systems and product lineups. In FY2017.3, we and home video games. In this issue of the newsletter, BANDAI NAMCO got off to a new start with a streamlined system Entertainment Inc.’s President Satoshi Oshita discusses the situation in the and increased efficiency. As a result, the business final year of the Mid-term Plan as well as future ambitions. was able to return to profitability. From this year, in addition to conventional arcade game machines, we will utilize VR and Would you discuss the situation in the 2 recorded especially strong results in Europe will commence full-scale initiatives in gaming Network Content business, which is and the Americas and made a contribution to machines for casinos. I am confident that we recording favoratble results? our performance. One of the BANDAI NAMCO are already an industry leader in terms of Oshita: In FY2017.3, core titles demonstrated Group’s strengths is the fact that we sell these VR-related know-how. This summer we plan their strong market positions in Japan and types of titles backed by strong IP as well as to open VR ZONE SHINJUKU, an entertainment overseas, including DRAGON BALL Z DOKKAN popular titles from other companies that have facility using VR technologies, in Shinjuku, BATTLE, for which worldwide downloads sur- entrusted us with sales due to our strong overseas Tokyo. From April to October 2016, in Odaiba, passed 150 million, and THE IDOLM@STER distribution network. Tokyo, we opened the VR ZONE Project i Can CINDERELLA GIRLS STARLIGHT STAGE. In FY2018.3, we will implement worldwide on a limited-time basis. Leveraging the know- In FY2018.3, we will continue to carefully roll-outs of major titles based on in-house IP how cultivated through that initiative, BANDAI develop core titles, with game play and operation — Tekken 7 (on sale from June) and Ace Combat NAMCO Entertainment Inc., BANDAI NAMCO that leverage abundant lineups of IP assets and 7 (planned to be launched in 2018). We have Studio Inc., and NAMCO LIMITED are now their world-settings. In network content, leveraged our technical development capabilities working together with preparations to offer an accompanying rapid market expansion, we so that both of these products feature clear unrivaled VR experience at the new facility. still have considerable potential for growth, graphics and high degrees of realism, so please Please look forward to this opening. especially overseas. At the same time, our look forward to their launch. In regard to gaming machines, we will start markets undergo rapid change, and accordingly Despite the fact that they are played on to introduce products this summer, centered we must always work with a sense of urgency different devices, home video games and network on North America and starting with Las Vegas. and speed. In China, where we have been content are similar in the sense that they are First, we plan to roll out PAC-MAN VIDEO implementing full-scale business development both purchased by game fans. Moving forward, SLOT WILD EDITION, which is gaming initiatives since FY2016.3, our business oper- I would like us to work to expand our overseas content that we developed jointly with ations are making favorable progress. Moving business as we address the expectations of fans Ainsworth Game Technology Limited, a leading forward, we will continue working to achieve around the world who are eagerly awaiting developer of gaming machines that is based further business growth, not only in Japan but games from BANDAI NAMCO. On the other on Australia. In addition, in arcade game also overseas. hand, the term “overseas” encompasses a wide machines, in cooperation with NAMCO, we range of countries and regions with differences will move forward with proposals of new Home video games are showing in preferences regarding devices, IP, and games. products that leverage new approaches. good results. Accordingly, I think we need to carefully consider Oshita: In FY2017.3, titles such as DARK the distinctive characteristics of each region SOULS III and DRAGON BALL XENOVERSE and focus our initiatives.
VR ZONE SHINJUKU, a VR entertainment facility
©バードスタジオ／集英社・フジテレビ・東映アニメーション ©BANDAI NAMCO Entertainment Inc. DRAGON BALL Z DOKKAN BATTLE, Tekken 7 home video game ©CAPCOM U.S.A., INC. ALL RIGHTS RESERVED. a smartphone game application TEKKEN™7 & ©BANDAI NAMCO Entertainment Inc.
4 BANDAI NAMCO NEWS In April, the BANDAI NAMCO Centered on the IDOLM@STER and Tales of Entertainment established the LE ... series of original IP, which originated with Business Unit. games, the new office will bolster our operations Oshita: We created this independent unit to in such areas as live events and other events handle live event planning and sales of goods. as well as sales of goods. Moving forward, we It was split off from the Content Licensing will expand the worlds of our IP. Unit, which handles licensing operations.
The next Mid-term Plan will mark a step toward being a global company Continuing to take on challenges with a spirit of autonomy and independence
What types of strategies are bases, which have the best grasp of local under consideration for the next conditions. The increasing speed of the Internet Mid-term Plan? will support the ongoing creation of new Satoshi Oshita Oshita: businesses in the future. While maintaining a The key phrase is “Taking the next step President and Representative Director, to grow from a Japanese company into a global sense of urgency and speed, we will need to BANDAI NAMCO Entertainment Inc. company.” In this phrase, “step” refers to the continue to leverage business models that draw next stage. We cannot make a jump directly to on the distinctive strengths of the BANDAI Profile of President and the next stage, so we will take the next step in NAMCO Group. Representative Director Satoshi Oshita that direction. Moving forward, we will work
June 2017 5