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.