This page contains materials used in earnings presentations and earnings calls with securities analysts and institutional investors. To ensure the fair disclosure of information to investors and shareholders worldwide, this page includes presentation materials, summaries of presentations by speakers and summaries of question-and-answer sessions. Investors can also view Japanese-language webcasts of Capcom's earnings presentation.
Capcom's earnings presentation for securities analysts and institutional investors is held following its fiscal year-end earnings announcement, while earnings calls are held quarterly.
3rd Quarter in FY2019 Presentation of Financial Results
February 4, 2020
Question and Answer Summary
How is Monster Hunter World: Iceborne performing, and how do you plan to improve upon this performance going forward?
We are aware that our initial sales plan for the game, which was formulated based on input such as the performance of both Monster Hunter: World and what has been traditionally known as the "G" version of titles in the series, was aggressive compared to the game’s current sales. Given the highly positive reception of the game itself, we will focus on growing sales over the long-term by continuing to analyze the purchasing trends and status of players, along with game completion rates and sources of user attrition.
What is your evaluation of and outlook on the Amusement Equipments business, which operates in the amusement machines market?
As the major players in this space have readied their lineup of type 6 machines, we have received a fair amount of orders for our first type 6 model, indicating positive feedback. That being said, we have only released a single model this fiscal year, which is a situation that we’ll look to address. Thus, we aim to make improvements such as bolstering development and personnel resources, reducing costs and increasing the precision with which we handle certification testing.
What factors contributed to growth of sales for catalog titles such as Resident Evil 2 and Devil May Cry 5?
In addition to building steady results during other times of the year, this was driven primarily by promotional sales held during Tokyo Game Show, Black Friday and Christmas. Going forward, we will continue to promote sales while closely watching consumer demand.
Considering MHW:I’s results, how do you plan to sell and grow the Monster Hunter brand, including sequels to MH:W?
While the proportion of units sold in North America and Europe for MHW:I exceeded our expectations for those regions, it is also true that there is still room for us to improve in boosting the attachment rate from MH:W to MHW:I and increasing player motivation in those same regions. Currently we are carrying out analysis of play data, which we will utilize in developing strategies for matters such as how we market expansions going forward.
Why have corporate operating expenses increased in the revised plan?
As a part of the changes to our revenue structure due to the shift to digital, we are forecasting these corporate operating expenses to reflect a changeover to digital operations that extends beyond our Consumer and Mobile sub-segments. This includes building out foundational digital capabilities in our management and administration functions throughout the organization.
When will the first physical shipments of Resident Evil 3 be recognized as revenue?
It depends on the accounting standards of each country, however we expect to recognize revenue for initial shipments of the Japanese version in the fiscal year ending March 31, 2020, while shipments of overseas versions are expected to be recognized in the fiscal year ending March 31, 2021.
Tell me about the timing of booking costs associated with recognizing revenue for your Consumer titles.
Costs are booked in accordance to the amount of net sales at the same time revenue is recognized.
Has the expected lifetime unit sales for MH:W changed since seeing the sales performance of MHW:I?
As unit sales for MH:W continue to grow even now, there have been no notable changes at this time.
2nd Quarter in FY2019 Presentation of Financial Results
October 29, 2019
Question and Answer Summary
How do you calculate unit sales for Monster Hunter World: Iceborne (MHW:I) Master Edition? Are they being double-counted with Monster Hunter: World (MHW)?
They are counted toward unit sales for MHW:I.
Why were Consumer retail sales prices lower in Q2?
This was primarily due to executing pricing strategies such as discount sales for major catalog titles that had been contributing at nearly full price through Q1.
The media has reported that MH:W has been approved for release in China. Is this true?
While we are aware of these news reports, we have not officially confirmed their validity at this time.
I would like a rough estimate of the amount written down in the Mobile sub-segment during Q2.
While we have not disclosed the details, in the range of 1 billion yen would be a fair approximation, which would include certain new titles and cancelled projects.
The amount depreciated for content in Q2 feels small. Why is this?
The cost of sales is lower in Q2 because aside from MHW:I, our other titles have all nearly been completely depreciated, while general costs have been trending downward due to the shift to digital. Also, MHW:I has just been released and we expect it to have a long sales life as well as a long deprecation schedule.
Why did you invest less into esports than initially planned for the first half of the fiscal year?
While there is nothing that merits special mention, our focus on large-scale events scheduled for the second half of the year and onward, such as the Intel World Open and Capcom Cup, could be cited as contributing factors.
What should we look to as performance indicators of growth in esports?
At present, how much we can expect to earn in revenue in the future is still to be determined. We feel that our first priority is increasing the numbers around event attendance and viewership while strengthening the base of people who are interested in Street Fighter as much as possible.
You've launched mobile titles at a consistent pace during FY2019. Please give me an update on the performance of each.
Sengoku BASARA Battle Party performed well at launch but is currently slower in growth. As Gundam Breaker Mobile and Teppen are both alliance titles we will refrain from commenting on their performance, however we are working with our partners to grow each game.
What was the reason for the write-down in the Mobile sub-segment?
Our criteria for evaluating titles has not changed; as with our Consumer sub-segment, we reevaluate all titles in our Mobile sub-segment that significantly deviate from their sales plan. This is not out of the ordinary even for titles in their launch year.
Will Mobile return to profitability next fiscal year?
We aim to return to profitability next year, and to that end will continue to develop and launch both internally-developed and co-developed titles in order to grow the Mobile sub-segment into another revenue pillar.
How will Street Fighter's inclusion in the Intel World Open esports tournament impact revenue?
Through working with Intel Corporation, we believe we can grow awareness of both Street Fighter and esports. We do not expect any significant impact on revenue.
Considering the launch of MHW:I, a massive expansion that was downloadable, what is your future outlook and policy regarding sales of digital download content?
Since the lifecycle of games has grown longer, the question of how best to utilize digital download content going forward is certainly one of significance, especially with the growing need to keep content fresh. As we still have the January 2020 release of MHW:I for PC on the horizon, we feel it is too early to give a summary review.
What is your Mobile strategy going forward?
With the roll-out of 5G on the horizon in the global market, as well as in considering the potential for new kinds of content that goes beyond the traditional scope of mobile games, yet is enjoyed utilizing mobile devices, we are currently discussing our future strategy here.
Has there been a change to your 2H Mobile title release schedule?
There have been no changes. We plan to release both internally- and jointly-developed titles.
What was the unit sales trend for MH:W in Q2?
We successfully executed pricing strategies, leading to growth of primarily the PC version of the game. We also believe that building buzz for the launch of the console version of MHW:I positively contributed to sales of the PC version of the base game.
What is your strategy to grow sales for MHW:I going forward?
Looking toward the holiday shopping season, we are considering a number of measures focused around promoting the content of the game in overseas markets. It is possible that we will evaluate a price drop, however, as this would influence market trends we have not made specific plans at this time. MHW:I is our first massive digital expansion, and we look to stimulating the market in order to grow sales for the title.
How would you evaluate MHW:I's performance at this point in time, and how has it done in each region?
While we would like to evaluate its performance following the launch of the PC version, in Q2 the game shipped 2.8 million units and is overall in-line with our expectations. Further, regional sales of the game have grown in Japan, however this is to be expected considering the domestic fan base is familiar with the "G" versions of past games in the Monster Hunter series, which have included a large amount of additional content.
Please give a breakdown of the sub-segments in the Digital Contents business for which you revised the plan for profit.
Primarily, the revision is in consideration of the write-down in the Mobile sub-segment.
You previously stated that you restructured the development organization of your fighting games. Can you give a status update?
As they represent one of our major IPs, we did carry out a reorganization here, however simply doing so once does not mean the matter is settled; even under the new structure we are continuing game development while carrying out a trial-and-error-based improvement cycle.
1st Quarter in FY2019 Presentation of Financial Results
August 1, 2019
Question and Answer Summary
Catalog sales of Resident Evil 2 and Devil May Cry 5 were favorable in the first quarter. Do you expect these to continue to grow in the second quarter and beyond?
We believe that through carrying out promotions such as discounts for digital versions of these titles that even further sales growth is possible, and have forecasted these titles to sell more than 1 million units each for the fiscal year ending March 31, 2020.
What has been the response leading up to the release of Monster Hunter World: Iceborne (MHW:I)?
We are refraining from making a statement regarding this because, in addition to this being our first attempt at launching a massive expansion digitally, we have no option in place for pre-ordering/shipping this title in digital sales, thus it is difficult for us to give an estimate of the first shipment until after the release date.
Tell me why first quarter same store sales were strong for the Arcade Operations business.
Major factors included the extended national holiday during April and May, in addition to poor weekend weather across the country during June that caused an increase in customers. This resulted in the steady performance of merchandiser machines, our primary genre of games, which drove sales.
What are the details of the one-time revenue recognized in the first quarter?
While this revenue was booked under our Digital Contents business, we are unable to provide further details due to confidential aspects of the associated deals. This revenue is already reflected in our guidance.
Tell me about the amortization of development costs recognized under cost of sales in the first quarter.
We recognized development costs for primarily new small and mid-sized titles, such as ports for Nintendo Switch as well as titles released in the previous fiscal year and earlier.
What drove growth of catalog sales for Monster Hunter: World (MH:W)?
We believe that the announcement of the massive expansion MHW:I as well as strategic discounts of MH:W stimulated sales among new customers, driving sales growth.
What percentage of players have finished MH:W? What is the rate of current active users?
We have not disclosed the rate of active users or the percentage of players who have finished MH:W. However, because it is necessary to have finished MH:W to play MHW:I, we are placing a greater relative importance on the percentage of players who have finished the game.
I believe the retail price for Consumer titles in the first quarter was higher than expected. Will there be any changes in criteria for carrying out discounts going forward?
We maintained higher average prices as our major titles were performing well. We carry out discounts for digital titles taking sales trends into consideration and have no plans to change our criteria regarding this.
Tell me how Sengoku BASARA Battle Party for mobile is performing.
It is currently performing to our expectations. Because we expect this title to serve as an indicator for our future mobile initiatives we are carefully monitoring its daily activity.
You announced TEPPEN for mobile. What led to working with GungHo on this title?
After speaking with a number of companies as potential mobile alliance partners, we decided to work with GungHo because we believe that both companies would be able to leverage their strengths, namely Capcom's IP and GungHo's knowhow and track record in the mobile market. We are coordinating with GungHo on the global rollout for TEPPEN, which has been launched first in the North American and European markets and is scheduled for release in Japan at a later date.
What will the retail price be for MHW:I?
MHW:I alone will cost MSRP $39.99, while the Master Edition version, which includes MH:W, will cost MSRP $59.99.
How much revenue has Capcom earned from esports in the first quarter, and what should we expect for the next two or three years?
The esports business generates an insignificant amount of revenue at present. Over the next few years our focus will be on viewership, audience size and player numbers rather than on monetization, as we are prioritizing growth of the esports ecosystem. We therefore do not have revenue goals that we can share at this time.