Record high results in the Toys and Hobby Unit in the first six months. Aiming for further growth under ALL BANDAI NAMCO.
Executive Vice President and Director, BANDAI NAMCO Holdings Inc.,
President and CEO, BANDAI CO., LTD.
In the first six months of FY2021.3, the Toys and Hobby Unit achieved record high net sales and operating profit. Through the Unit combination that is planned for April 2021, the Toys and Hobby Unit will combine with the Network Entertainment Unit and aim for further growth in the years ahead. In this section of the newsletter, Masaru Kawaguchi, Executive Vice President and Director of BANDAI NAMCO Holdings Inc. and President and CEO of BANDAI CO., LTD., the core company in the Toys and Hobby Unit, discusses the Unit’s current situation and future outlook.
As the Executive Vice-President of BANDAI NAMCO Holdings, what is your analysis of the current circumstances?
Kawaguchi: In June 2020, I became Executive Vice President of BANDAI NAMCO Holdings. I believe that my mission is to take the lead in advancing stronger collaboration among Units. BANDAI NAMCO has grown as a Group by rolling out business activities under a spirit of independence and autonomy for each business.
However, looking at the current market environment, large companies from around the world are investing in IP, and there are also new companies that are posting rapid growth due to the strength of their promising content. Competition to secure IP is becoming more intense. To increase our competitiveness in global markets and to further strengthen the IP axis strategy, which is the Group’s strength, we need to further bolster the connections among Units and work under the ALL BANDAI NAMCO concept, while leveraging the characteristics and strengths of each Unit.
As the Executive Vice President and Director of BANDAI NAMCO Holdings Inc. and the president of the Toys and Hobby Unit, I believe we should strongly advance collaboration among Units.
In April 2021, the Toys and Hobby Unit and the Network Entertainment Unit will be combined.
Kawaguchi: One of BANDAI NAMCO’s competitive edges is that we have both tangible and digital businesses and we can roll-out products and services in a wide range of business fields. Up to this point, the Toys and Hobby Unit, which offers tangible products, and the Network Entertainment Unit, which conducts digital businesses, have each aimed for growth in their respective fields. However, to create a growth strategy looking 5 years or 10 years into the future, we must move forward with the creation of new entertainment that combines tangible and digital elements and is aligned with changes in customer values. Through the combination of the two Units, we will be able to advance collaboration among businesses and make more effective use of the Group’s wide range of business fields. In this way, we will strive to further increase BANDAI NAMCO’s competitiveness in global markets.
Please discuss the current trends in the Toys and Hobby business.
Kawaguchi: In FY2021.3, we have captured demand from people staying at home due to COVID-19, and favorable results have been recorded by products for the mature fan base, such as Gundam plastic models and collectible figures. Moreover, toy-related items, such as confectionery and sundries, have been popular, and we moved quickly to offer new IP products, such as DEMON SLAYER: Kimetsu no Yaiba and Disney: Twisted-Wonderland. These initiatives have generated significant results.
Our measures to reinforce marketing initiatives with the use of digital technologies also supported the favorable results. In an environment that placed limitations on the holding of live events with people in attendance at a physical venue, we took the lead in the industry with the implementation of online meetings with business partners, and we aggressively rolled out online events for the public. Online events do not have geographical restrictions, and accordingly these events have helped us to identify fans who have previously not been able to participate as well as new customers and dormant customers. We previously recognized that the use of digital technologies is an issue, and I think that we have been able to accelerate the pace of reforms as we move to address these opportunities.
The negative influences of COVID-19 include the effect on sales of prizes, digital cards, capsule toys, etc., as a result of the closure of amusement facilities in Japan. In addition, there was an effect on the coordinated roll-out of programs and products due to the interruption of TV animations. Also, looking around the world, there was an effect on sales of products due to the closure of retail stores, centered on Europe and the Americas. I think that the Unit’s ability to achieve record high net sales and operating profit even in this type of environment was a significant result. I am very grateful for our employees, who flexibly addressed work issues, even in a challenging environment; drew on their insight; and worked hard.
▲ENTRY GRADE 1/144 RX-78-2 GUNDAM
▲TAMASHII Features 2020 was a live event held in July.(Photo shows online distribution venue.)
Would you explain the details of the current situation in overseas businesses?
Kawaguchi: Asia, including China, was able to recover from COVID-19 at an early stage. We are making stable progress, centered on products for the mature fan base, and in particular Gundam plastic models are highly popular. These models are primarily manufactured at the BANDAI HOBBY CENTER in Shizuoku Prefecture. However, with consideration for rising demand around the world, we are constructing a new building on the grounds of the Center so that we will be able to implement stable production over the medium to long term. Through the start-up of this new building, we plan to increase production capacity to 1.4 times the level in FY2019.3, and we are aiming to put the new building into operation in December 2020.
Aiming for the number one position in the Christmas and New Year selling season with a diverse product lineup
What is the situation in Europe and the Americas?
Kawaguchi: In Europe and the Americas, where the achievement of a recovery in our results is an urgent issue, under the current Mid-term Plan we have implemented a variety of initiatives, such as strengthening products for the mature fan base. However, with the influence of COVID-19 this year, we have been unable to advance our initiatives in the way we wanted, and we face ongoing issues. Even in these circumstances, however, our in-house e-commerce initiative, which was placed into full-scale operation in the U.S. this year, appears to have gotten off to a favorable start, and I think that we can look forward to good results in the future. Also, another major success was the introduction of Gundam plastic models in approximately 520 stores operated by Target, one of the largest retail chains in the U.S. Other products for the mature fan base are also being introduced in large retail chains, and accordingly we will work to leverage these opportunities to steadily develop fans going forward.
The busy Christmas and New Year selling season is almost here.
Kawaguchi: For the busy year-end and New Year selling season, we are adding depth to our product lineup, with new IP such as DEMON SLAYER: Kimetsu no Yaiba, which is highly popular among elementary school students, joining established IP products, such as KAMEN RIDER Saber, for which broadcasts started in September, and Ultraman Z, which is a third-generation IP with strong popularity. KAMEN RIDER Saber and Ultraman Z are popular among preschool boys, and we will roll out products centered on toys. We will strive to meet the needs of all fans with our diverse lineup of DEMON SLAYER: Kimetsu no Yaiba products, including Kimetsu no Yaiba DX Nichirinto, Kimetsu Tamagotchi, and Donjara. In rolling out products for preschool and elementary school children, the Christmas and New Year selling season is a major sales peak. The entire Unit will work together so that we can secure the number one market share.
▲Transformation Belt DX Seiken Swordriver
What are your policies toward work?
Kawaguchi: With the COVID-19 crisis, the BANDAI NAMCO Group’s corporate culture of taking on challenges has been leveraged to the fullest extent, such as in the introduction of new IP and in the use of digital technologies. Through the Unit combination in April 2021, we will join the product planning, development, and manufacturing capabilities of the Toys and Hobby Unit with the digital domain knowhow of the Network Entertainment Unit, thereby facilitating the roll-out of business initiatives with even more free and open concepts. I would like everyone to approach this as an opportunity and to continue to take on challenges. From my position in management, I will do my utmost to establish a framework that will enable Group employees to realize their own ideas to an even greater extent. Please look forward to what the future holds for the BANDAI NAMCO Group.
This article is an extract from the Newsletter, BANDAI NAMCO News, which was published in December 2020 and partially re-edited.