Games, Pro Basketball, Shogi AI—Bandai Namco’s Goal to Create "Entertainment that Delights People" Through New Business and Startup Investments

Satoshi Iwasaki
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Bandai Namco Entertainment 021 Fund

‍After joining Namco (now BNE) in 2004, Satoshi Iwasaki was primarily responsible for the development of overseas game titles. Later, he was involved in the launch of a new business focused on game method consulting services. At BNE's Corporate Planning Office, he handled investments in several startup companies. In 2019, he oversaw the M&A of the Shimane Susanoo Magic team and transferred to the company. As the Business Development Director, he promoted business expansion in areas such as tickets, fan clubs, and merchandise. He returned to his original position in 2022 and joined the 021 Fund.

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IPO Cases of Portfolio Companies Helped Drive Fund Launch

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- Could you tell us about the structure, organization, investment stages, and scale of the "Bandai Namco Entertainment 021 Fund" (hereafter, 021 Fund) you belong to?

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The 021 Fund is an investment team that was launched in April 2022 as the CVC (Corporate Venture Capital) division of Bandai Namco. Although it is referred to as a "fund," the structure is such that investments are made directly from Bandai Namco Entertainment’s balance sheet.

The target investment stages range from seed to later stages. The focus is more on follow-up investments rather than lead investments. The 021 Fund has a size of 3 billion yen over three years, with an annual investment target of around 1 billion yen. The typical ticket size ranges from 30 to 50 million yen, but larger investments of several hundred million yen can also be considered.

The Japanese team consists of five capitalists. Two of them, including myself, are internal hires, while three are mid-career professionals from VC, trading companies, and other industries. I am the only one with direct experience in game development, and the team is made up of people with diverse backgrounds. Although the official launch of the 021 Fund was in 2022, the company had already been investing in startups before the fund's establishment, and I am also responsible for investments made prior to the fund's launch.

The team also has bases in Europe and the United States, and has accumulated investment experience in companies in India and the UK. Overseas offices primarily focus on gathering information through LP investments in foreign VCs, sourcing investment opportunities, and liaising with overseas subsidiaries to propose investments to their partners.

Compared to before the launch of the 021 Fund, we have established a more streamlined decision-making process, and decisions can be made in about two months from the start of discussions. For smaller investments, decisions can often be made even more quickly.

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- Could you tell us about the business areas, objectives, and areas of collaboration that the 021 Fund targets for investment?

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The 021 Fund is positioned as a CVC focused on strategic investments, and it places greater emphasis on creating valuable business stories within the entertainment domain rather than purely financial returns.

When it comes to capital or business partnerships directly related to the existing game business, these are handled by the respective business divisions. Therefore, in terms of the business story angle that the 021 Fund considers for investment, we primarily focus on the following three areas:

1. Collaboration utilizing advanced technologies and ideas held by startups (e.g., AI algorithms, VR, etc.)
2. Complementing and absorbing missing know-how and capabilities for business initiatives like "IP Metaverse," which Bandai Namco is currently promoting (e.g., fanbase, XR gadgets, creator tools, Web3.0, etc.)
3. Exploring possibilities and supporting growth in future large markets (e.g., eSports, NFTs, space entertainment, sleeptech, etc.)

The 021 Fund is actively investing in companies that align with any of these patterns. In particular, for overseas investments, we often focus on advanced themes that are difficult to tackle in Japan due to regulatory challenges (e.g., NFTs, blockchain), making the third point particularly relevant.

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Some examples of collaborations include: with Heroz, in which we invested in 2016 and the company went public in 2018. We have collaborated on the development of AI algorithms for in-game implementation, automatic content creation, AI-based game balance adjustments, and debugging automation.

With Mirrativ, a service that allows smartphone games to be streamed from just one smartphone, we are exploring collaborations with a focus on Bandai Namco's "Gundam Metaverse" while considering the future of game users migrating to micro-fan communities.

Additionally, we invested in SUPER GAMING, an Indian game company, for the purpose of marketing and gathering information as we strategize for entering the Indian gaming market.

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- What was the background leading up to the establishment of the CVC and the execution of strategic investments for startups at Bandai Namco?

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At our company, even before the fund was established, we had been working on creating new businesses by involving external companies.

The first new business I was involved in was "Game Method Consulting," which we launched in 2011. The idea was to apply the technologies and know-how we had cultivated in game development and entertainment content creation to product and service development in other industries.

We worked on adapting the game development methods, which design products and services to be intuitive, easy to use, understandable, and fun to interact with, to areas such as home electronics, service interfaces, and educational materials.

Through this initiative, I had the opportunity to interact with people from various industries, and my connections with startups increased. In 2013, I started participating as a mentor in Deloitte’s Morning Pitch program.

From 2015, the company began making startup investments, advancing investments in AI companies like Heroz and Miobashu Analytics, as well as in streaming service SHOWROOM, indie game production, and avatars.

However, although collaboration with some of the invested companies was progressing, it is true that there were skeptical opinions within the company about startup investments, as they often lead to cash outflows initially. Therefore, the fact that several of our investments went public around 2018, making financial returns a reality, was a significant milestone.

As my interactions with startup entrepreneurs grew, the management team at our company also began to feel a real sense of stimulation from their business insights, and expectations for startup investments, both from a financial and strategic perspective, began to rise. This led to the creation of a more agile decision-making framework with the establishment of the 021 Fund in 2022.

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- As a capital investor in the 021 Fund, what are the key aspects of your approach to creating new businesses and your specific activities?

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When exploring investments in the entertainment field and building relationships with startups, I focus on the idea that both the startup side and our side should “first enjoy the process ourselves”.

• Can we envision an exciting future together?
• How can we create initiatives that both sides can genuinely say "that's great" about?
• By acting as a catalyst, can the 021 Fund help build a win-win relationship between startups and Bandai Namco?

These three points are what I consider important in our investment activities within the entertainment sector.

It’s not necessarily about immediately starting synergy-creating activities from the time we invest. I approach it from a long-term perspective, thinking that when the invested company grows, we can work together on new things.

That said, since these are for-profit activities conducted by a publicly listed company, in order to continue the activities in the medium-to-long term, there is a need to show some short-term returns or outputs. This is one of the difficult aspects of CVC activities.

For this reason, we are also considering visible, steady outputs, such as bringing startup executives and talented individuals in as technical advisors for Bandai Namco. By acting as a catalyst for CVC, we work daily on aligning perspectives with entrepreneurs and involving the business side of the company through constant communication.

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The Position of "CVC Capitalist" After Continuing to be Involved in New Business Development

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- Can you share any experiences from your childhood that shaped your current way of thinking?

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I was born in Kiryu City, Gunma Prefecture, and spent my high school years there.

I was a child who enjoyed working on things by myself at home. In my early childhood, I would play with clay, and once I entered elementary school, I started drawing manga and making board games. I loved creating things on my own, and I was more of a shy child. My father ran a car parts sales and maintenance business, and I remember him telling me frequently, “Don’t take over my business. You need to see the bigger world.”

Around the time when the manga "Slam Dunk" became incredibly popular, I joined the basketball club in middle school after being invited by friends. I had been a bit on the heavier side due to staying indoors, but after playing basketball for three years, I grew 20cm taller by the time I graduated, even though I lost weight. I continued playing basketball in high school, but after injuring my knee, I switched to the literature club, where I wrote novels. Outside of club activities, I would draw pictures, create manga, and even make games.

The typical path for students in my local area was to aim for a higher-ranked university by studying hard, but I didn’t feel that path suited me.

At one point, I heard that “if you go to an art university, you can get in as long as you are good at drawing,” and “if you graduate from an art school, you can become a designer.” I thought, this path fits me! So, I enrolled in an art university in Tokyo that offered a design course.

The four years in an environment filled with creative people were a lot of fun. I remember most vividly playing drums in a band and performing in front of an audience of over 100 people. The courses were split into theory and practice; in the theory courses, I learned color theory and human anatomy, and in the practical classes, I learned graphic design, product design, and other skills.

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- What motivated you to join Bandai Namco?

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When I first started job hunting, I was focused on a career in music and wanted to work in “instrument design” where I could utilize my design skills. I initially got an offer from a musical instrument manufacturer. However, after discussing with a friend, I was told, “Instruments have a set structure for producing sound, so their basic design hasn’t changed and won’t change,” and “I think you’ll get bored with this type of design quickly.” I thought about it and realized, “That’s true.”

From there, I decided to focus my job search on the game industry, which involved design and creation but had a much faster pace and offered more potential for change and growth.

In the early 2000s, the gaming industry was dominated by consoles like the PlayStation and Nintendo DS, with many games being sold for these systems. At the same time, there were innovations like trading card games combined with network games, and game centers were experiencing a revival. During my delayed job search, I applied for a game designer position at Namco, which was one of the few companies hiring at the time, and was successfully hired.

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- Could you share with us your career journey at Namco, from joining the company to where you are now?

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Since joining the company, I’ve been involved in various game development projects. It was incredibly exciting, and I worked tirelessly throughout my 20s, even skipping sleep. The first 2-3 years were focused on developing arcade games, and after that, I worked on games targeted at overseas markets like the U.S. and China.

Around 2007, I was involved in the effort to introduce Japanese-made games to Chinese game centers, and starting in 2011, my work shifted to business development through the aforementioned “Game Method Consulting”, followed by startup investments starting in 2015.

In 2019, I was seconded to the company that owns the “Shimane Susanoo Magic” basketball team as part of an M&A project. I served as the business development director for three years, driving the expansion of the team’s business, including ticket sales, fan clubs, merchandise, and more.

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- How did you transition from startup investments to managing a professional basketball team?

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Actually, within Bandai Namco, there has long been a broad recognition that “professional sports are one of the ultimate forms of entertainment”, and there had been ongoing discussions at the management level about entering the professional sports business.

At the same time, while engaging in startup investments with an eye on business partnerships, I was gathering information on mergers and acquisitions (M&A) to enter new business areas. It was during this period that I came across the “Shimane Susanoo Magic” basketball team as a potential investment opportunity.

This team was in the early stages of establishing itself in the B-League, located in Shimane Prefecture, with ongoing financial struggles, including consecutive years of losses and being on the brink of insolvency. Since this was a business recovery case, I initially thought it would be rejected outright. However, I was surprisingly told, “If you, Iwasaki, go to Shimane and personally take charge of the team’s growth, we’ll approve it.” (laughs)

Of course, there was a logical reason behind this decision. With indoor sports like basketball, we could leverage our expertise in music, visuals, and games to enhance the pre-game event experience, which would align well with Bandai Namco’s strengths. I felt a great sense of purpose in revitalizing a team from one of Japan’s least populous regions by applying our entertainment know-how, and thus decided to participate in managing the team.

As business development director for three years, I was responsible for everything from building a solid management foundation to improving event operations, boosting ticket and merchandise sales, managing fan clubs, and collaborating with local governments. One of the unique initiatives we introduced was using Bandai Namco’s capabilities for in-game visual productions, promotions using characters like Pac-Man, and creating videos that helped explain basketball rules in an easily understandable way to grow the local fan base. We did everything we could, and successfully turned the business around.

Afterwards, the 021 Fund was launched, and my secondment ended in April 2022. However, the team continues to operate as one of our group’s subsidiaries and is still doing well.

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- What do you find fulfilling and exciting about venturing into new business areas, such as game method consulting, professional sports management, and startup investments?

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Since I was a child, I’ve always enjoyed creating things, whether it was drawing comics or making games. I think “I love making things that bring joy to people.”

Looking at my career, it may seem like a chaotic list of unrelated jobs, but I believe there’s a common thread: every role I’ve taken on has involved creating something that brings joy to others. That’s probably why I’ve been able to enjoy my work.

Startup entrepreneurs, too, create products and services based on their ideas and technologies and want to spread them to the world, so I find a lot of common ground with them in that sense.

Not only in my work, but also in activities like playing basketball, immersing myself in music, learning product design, and engaging in game development, I’ve found that seemingly unrelated experiences have gradually come together, connecting the dots to form a bigger picture. It’s been a fascinating and fortunate journey.

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- As a CVC (Corporate Venture Capital) investor, do you have any goals or things you want to focus on moving forward?

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I’m the type of person who prefers to live fully in the moment rather than setting goals and focusing on the process to achieve them. So, I want to continue focusing on solving the challenges in front of me with all my energy.

Both startups and the corporate partners that support them have aligned big goals of growth through investment. However, the startups that want to scale their businesses often focus on “vertical growth” (expanding what they can do), while corporate partners who want to expand their coverage tend to focus on “horizontal growth” (increasing the range of what they can do).

CVC is about being mindful of both of these growth vectors—vertical and horizontal—and finding ways to maximize their combined impact. By balancing the strengths of both sides and solving challenges together, I believe we can create new business stories in the entertainment sector through CVC activities.