NEWSLETTER November 2018 BANDAI NAMCO Holdings Inc. BANDAI NAMCO Mirai-Kenkyusho 5-37-8 Shiba, Minato-ku, Tokyo 108-0014 Interview with the President Mitsuaki Taguchi President & Representative Director, BANDAI NAMCO Holdings Inc. Record-High Results in First Half of FY2019.3 Strengthening the Creation of New IP in Collaboration with a Wide Range of Partners In the first half of FY2019.3 (April to September 2018), the BANDAI NAMCO Group achieved record-high results in both consolidated net sales and operating profit. In this issue of the newsletter, BANDAI NAMCO Holdings’ President Mitsuaki Taguchi discusses the trends in each Unit, highly anticipated products and services that will be launched in the second half of the fiscal year, and the future outlook. Results were favorable in the first half. popularity. Moreover, we saw synergy effects mission with the change from three SBUs to Taguchi: Looking at our consolidated results with initiatives that integrated the three elements five Units. On that basis, we are continuing in the first half of FY2019.3, net sales were of visual, music, and live. to take on challenges. Going forward, we will ¥334.6 billion and operating profit was ¥43.9 leverage this approach and strive to establish billion. We have gotten off to a good start in What about the influence on full-year a new style for the Group. the first fiscal year of the Mid-term Plan. In forecasts? We still face many challenges. In particular, particular, the Toys and Hobby Unit and the Taguchi: Thanks to everyone’s hard work, we we must do even more in the creation of new IP Visual and Music Production Unit recorded had good results in the first half, but at this in order to strengthen the IP axis strategy, which significant gains year on year. The Network point we have not revised or reevaluated the is our most important task. However, we are not Entertainment, Real Entertainment, and IP full-year forecasts. In the second half, the Toys aiming just to increase numbers. We need to foster Creation units also got off to solid starts. Key and Hobby business will have the busy Christ- collaboration among Group businesses and pro- IP* and other products and services turned in mas and New Year sales period, which is its pose a deep and extensive range of new IP that good performances, and all units achieved the largest sales period, and we will also launch can be rolled out over the medium to long term. first-half plans that we announced at the begin- multiple major home video game titles. More- In the creation process, we will need to work ning of the fiscal year. I think that these results over, the operating environment and consumer together with a wide range of partners rather are an indication of how we have successfully purchasing trends are undergoing dramatic than trying to do everything within the Group. strengthened the Group’s portfolio. change, and in this setting it will be difficult This type of IP creation will also require con- to reach our forecasts simply by extending our siderable strength, and accordingly there will What were the factors behind the current performance, especially in the digital be challenges that are difficult for a single growth in the Toys and Hobby Unit and content business. We will carefully reexamine division or company to tackle on its own. That the Visual and Music Production Unit? this situation when the influence of these trends is why we created the BANDAI NAMCO Taguchi: In the Toys and Hobby Unit, favorable on our results becomes clear. Moving forward, Content Fund as one framework for providing results were registered in all categories, including I would like everyone to do their utmost and support for people on the front lines as they toy-related items. In particular, Gundam plastic aim for record-high results while implementing take on challenges. We plan to start full-scale models recorded significant sales gains in Japan forward-looking investments and initiatives. investment in the next fiscal year, but currently and overseas, and solid performances were As for dividends, our interim dividends will we are making selections from among more registered by figures and other collectible items be ¥18 per share. We will consider our annual than 50 proposals. I am sensing a trend through- and by lottery-related products. We are starting dividends in accordance with our basic policy out the Group, as an increasing number of to see the results of our measures to strengthen of providing a return to shareholders that targets people want to plant new seeds. businesses for the mature fan base, which is a total return ratio of 50% or more and based In addition, in China, which we have posi- one of our main strategies under the Mid-term on stable dividend payments of 2% of DOE. tioned as a key market, we are working to Plan. In the Visual and Music Production Unit, further strengthen operations that are already visual and music packaged products for Love How is the progress with the under way. To advance the ALL BANDAI Live! Sunshine!!, THE IDOLM@STER, IDOL- Mid-term Plan? NAMCO concept, we are also making steady iSH7, and other IPs were popular, and live Taguchi: CHANGE is the major theme of the progress with preparations for full-scale roll- events and related activities also enjoyed solid Mid-term Plan, and we have clarified our outs in other businesses. *IP: Characters and other intellectual property November 2018 1 Interview with the President Advancing Initiatives in Japan and Overseas will bolster promotions to increase awareness. Japanese market, such as developing compatible Gundam: Extreme Vs. 2, which has earned In addition, we will leverage the distinctive titles and sponsoring tournaments. strong reviews. In Osaka, we have opened to Strengthen Our Business for the Mature strengths of BANDAI NAMCO to enhance VR ZONE OSAKA as a new-format facility. Fan Base the provision of value. For example, with What is the situation in the Real We have started to operate new models DRAGON BALL BUCCHIGIRI MATCH, col- Entertainment Unit? of Godzilla VR and other games at this Would you discuss the trends in each facility. We are seeing a very favorable response, laborative initiatives with other Units have Taguchi: Following Yokohama in November, facility, and VR ZONE OSAKA has gotten Unit? and the Chinese market is showing signs of already been initiated. These include DRAGON we will open a Hamleys retail-tainment mall off to a solid start. Taguchi: In the Toys and Hobby Unit, broadcasts future potential that exceeds our previous expec- BALL Dragon Potato, a confectionary food that in Fukuoka in December. This is a collaborative Furthermore, in July we opened the of KAMEN RIDER Zi-O started in September, tations. We will utilize THE GUNDAM BASE is being sold by BANDAI. We plan to continue initiative with Hamleys, which is England’s second TONDEMI, a next-generation and the launch was favorable. This marks a SHANGHAI to do more than just sell Gundam to implement collaborative initiatives with oldest toy store. It will bring together a wide indoor athletic facility, and in October turning point as the 20th series in Heisei KAMEN plastic models. We will also use it as a base companies and products inside and outside the range of features, including real and digital we launched Indoor Adventure Island RIDER. Generations of RIDERs make appear- for the comprehensive provision of information Group. Also, looking at our efforts to strengthen performances, attractions that draw on BANDAI Docodoco, which enables visitors to enjoy ances, and as a result KAMEN RIDER Zi-O is to Chinese fans about Gundam works and other game titles, we recently held a presentation for NAMCO’s distinctive strengths, and game attractions using projection mapping. popular with fans across a wide range of age products and services. developers, and more than 120 people partic- corners. We are positioning this mall as a new Both of these new facilities have enjoyed groups. Related products are also enjoying good In addition, the DRAGON BALL trading ipated. We will implement a variety of measures type of venue. By incorporating performances solid popularity. Moving forward, we will results, including the transformation belt, which card game is popular with the mature fan base, as we work to build platforms, such as advancing with abundant entertainment value, we will continue to aggressively provide these types in Sublimation Inc., a computer graphics pro- is a core item. These are key products for boys, especially in North America. Moving forward, preparations for title development. work to enhance our hospitality skills and create of new venues that leverage the distinctive duction company. The industry has reached and we expect them to do well in the busy we will take steps to build interest in North new forms of entertainment. strengths of BANDAI NAMCO. the point where computer graphics are indis- Christmas and New Year sales period. America, such as holding nationwide tourna- What are the trends in home video In arcade games, we launched Mobile Suit pensable in animation production. Through this For girls, we launched Tamagotchi Meets, ments in the U.S., and we will also work to games? investment, we will strengthen our computer a new Tamagotchi model. This product provides expand our business in Europe, South America, Taguchi: In home video games, after the launch We will take the initiative to transform our- graphics production capabilities and enhance the enjoyment of taking care of characters, and and other regions. of SOULCALIBUR VI in October, we plan to our production skills for both hand-drawn and in addition a new application that links Tama- introduce a series of major, high-potential titles selves into a company from which consumers computer-graphic animations.