Business Risks

For the Bandai Namco Group to record sustained growth over the medium-to-long term, we will need to reduce risks and make the most of opportunities by responding rapidly to changes in the environment, identifying risks and opportunities for the Group, and considering and implementing measures to address them. At top management meetings and various committees, we are analyzing and sharing information about risks and opportunities and considering measures. In these ways, we will maintain an appropriate risk management system. In addition, we will strive to leverage new opportunities arising from changes in the business environment and to implement a range of initiatives going forward

(1) Major Groupwide Risks and Opportunities

①Items accompanying the spread of COVID-19

Major Risks and Opportunities Measures
  • Influence on consumption due to retail store closures, etc.
  • Event postponement / cancellation and accompanying influence on promotions, etc.
  • Influence on development, production, and distribution of products and services
  • Influence on production and release schedules for visual products
  • Influence resulting from amusement facility closure and reduced operating hours
  • Increase in digital demand, such as online events and use of e-commerce
  • Enhancement of work-life balance through the introduction of new working styles
  • Thorough hygiene management
  • Implementing initiatives in accordance with the requests of national and local governments in each country / region
  • In accordance with business continuity plan (BCP) and business continuity management (BCM), collecting information, discussing policies, and promoting awareness in the Group through periodic meetings of a crisis management committee that is dedicated to preventing the spread of COVID-19
  • Strengthening the use of digital technologies products, services, and marketing
  • Implementing social support, such as through the contribution of support funds and business-based measures
  • Introducing new working styles, enhancing environments and systems

②Items accompanying the advancement of the IP axis strategy

Major Risks and Opportunities Measures
  • Rapid changes in markets and customers; technological progress
  • Dependence on specific IP
  • Increased investment related to IP creation/acquisition
  • Intensifying competition
  • Problems with quality, etc., in products and services that utilize IP
  • Damage to IP value, such as IP infringement
  • Securing and developing the human resources who will advance the IP axis strategy
  • Promoting collaboration among regions and businesses
  • Expanding potential for the creation of new markets, businesses, and IP
  • Spreading Bandai Namco's Purpose, enhancing brand value
  • Advancing main strategies in the Mid-term Plan
  • Implementing initiatives for new business models, businesses, and platforms
  • Strengthening collaboration among Units and cooperation with external partners
  • Establishing balanced IP, business, and regional portfolios
  • Strengthening quality control / inspection systems, strengthening employee training and supply chain management
  • Strengthening development system with focus on quality
  • Implementing strategic investment
  • Appropriately utilizing and protecting IP, including the elimination of counterfeit products and services
  • Taking steps to achieve workplace environments that foster mutual respect, including the introduction of systems and frameworks that facilitate active careers for diverse human resources
  • Bolstering sound financial position
  • Expanding global rollouts, implementing organizational restructuring

③Changes in the natural environment, such as climate change

Major Risks and Opportunities Measures
  • Higher raw materials costs as well as production and procurement costs due to carbon regulations and plastic use regulations
  • Higher costs due to the introduction of new technologies, investment in R&D, or capital investment
  • Property damage, supply chain interruption, or resource depletion due to natural disasters
  • Lower electricity costs due to energy-saving
  • Lower costs due to the introduction of efficient production / transportation processes
  • Creation of new markets due to changes in customer preferences
  • Advancing initiatives for harmonious coexistence with the natural environment
  • Advancing energy-saving measures; increased efficiency measures
  • Using low-carbon energy, such as renewable energy
  • Advancing recycling
  • Introducing new technologies and materials; implementing capital investment

④Items accompanying other external factors

Major Risks and Opportunities Measures
  • Disasters, such as natural disasters and accidents
  • Changes in political situation
  • Revision of laws, regulations, etc.
  • Exchange rate fluctuations
  • Cyber-risks, such as cyberattacks on core systems, etc.
  • Promoting activities and implementing continued reevaluations based on BCP and BCM
  • Strengthening risk management system
  • Strengthening system for the collection and sharing of the latest information about each business and region
  • Strengthening cybersecurity, such as collecting the latest information and implementing regular verification
  • Initiatives for harmonious coexistence with communities

(2) Major Risks and Opportunities in Each Business

①Items extending across all businesses

Major Risks and Opportunities Measures
  • Spreading /expanding network environment
  • Technological progress
  • Expanding customer touchpoints through digitalization
  • Using online measures to strengthen initiatives to enhance IP recognition as well as global rollouts
  • Aggressive use of new technologies
  • Strengthening digital initiatives, such as online events and e-commerce

②Entertainment Unit Digital Business

Major Risks and Opportunities Measures
  • Platform diversification
  • Technological progress
  • Lengthening development periods and increasing investment amounts
  • Aggressively addressing new technologies and new platforms
  • Strengthening technical research
  • Strengthening development system with focus on quality and increasing efficiency
  • Continued communication with fans after title releases

③Entertainment Unit Toys and Hobby Business

Major Risks and Opportunities Measures
  • Trend toward fewer children in Japan
  • Oil price increases; strengthened regulations regarding the trend away from the use of plastic
  • Rising distribution costs
  • Concentration of production regions; quality control
  • Expanding target customer groups and regions
  • Value chain reform in development and production
  • Initiatives for recycling, initiatives to address the trend away from the use of plastic, such as new material R&D
  • Dispersing manufacturing bases, strengthening quality control system (continued reevaluation of quality standards, implementation of Code of Conduct (COC) audits, etc.)

④IP Production Unit

Major Risks and Opportunities Measures
  • Intensification of competition in IP creation
  • Developing and securing human resources in production
  • Consolidation of studio and production functions
  • Collecting know-how regarding visual products, music products, and live events
  • Enhancing production environment, strengthening human resources development
  • Investing to enhance production technologies
  • Strengthening collaboration with all partners inside and outside the Company

⑤Amusement Unit

Major Risks and Opportunities Measures
  • Diversification of entertainment utilizing real venues
  • Strengthening collaboration with Group resources, such as IP, products, and services
  • Strengthening stable business foundation