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(as of February 2, 2016)

This page contains materials used with information meetings and telephone conferences with securities analysts that Capcom conducts for each quarterly earnings announcement. 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 periods. Investors can also view Japanese-language webcasts of Capcom's information meetings.


3rd Quarter in FY2015 Presentation of Financial Results

January 28, 2016

Presentation materials
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Question and Answer Summary
What is the achievement ratio of your original business plan as of the end of the third quarter?

Consolidated business results surpassed our previous forecasts due mainly to contributions from "Monster Hunter X (Cross)". Supported by this title, business results of the Consumer sub-segment in the Digital Content business also surpassed initial forecast. However, performance of other business segments was somewhat weak.

Why did "Monster Hunter X (Cross)" record sales higher than forecast and what is your forecast of unit sales for the full fiscal year?

We feel that the introduction of Hunting Techniques, Hunting Styles and other new features combined with the world view and gaming styles of the preceding series have earned popularity among game players. While it is difficult to precisely forecast the volume of sales, we expect total sales to exceed 3.2 million units as sales continue to be favorable.

How confident are you about delivering on plans you have set for "Street Fighter V"?

As we are in the midst of booking orders, it is difficult to answer whether we will be able to reach our targets. We have forecasted current fiscal year sales for this title at 2 million units. Now, we are only a month away from the end of the fiscal year. As this is a very popular brand in the U. S. and Europe, we will continue to monitor progress in sales.

What are the factors behind the significant increase of sales of PC and other products in the Digital Contents business?

Strong sales of "Dragon's Dogma Online" and contribution from "Monster Hunter Online" in China lifted sales in this category.

What are your thoughts about the current status of "Monster Hunter Online"?

Given the nature of PC online games, we feel that it will take a while for the number of players to increase. However, player growth is off to a smooth start exceeding our expectations. We look forward to improvement in ranking. Trends during the Lunar New Year period will be the key point. We will draw up plans for the next fiscal year after reviewing the trends during this period.

What are your thoughts about the PS Business (Pachinko, Pachislo) for the next fiscal year and onward?

On the whole, effects of rule changes have started to surface. But, we will stick with our policy stable supply on a quarterly basis. Plans for the next year will be based on current market conditions. The breakeven point of individual models has come down as we have managed to lower manufacturing costs and enhance development efficiency.

Profit margins in the Digital Contents business spiked in the third quarter (three months)? Are there any factors other than "Monster Hunter X (Cross)" for this jump in profit margins?

The primary reason is favorable sales of "Monster Hunter X (Cross)". Higher sales of digital catalog titles are also a factor.

Please explain why you revised the fiscal sales forecast of the Mobile Contents sub-segment and PC and Other sub-segment?

Sales of "Monster Hunter Explore" and "Dragon's Dogma Online" are on target. We revised plans downward in view of the actual performance of other existing titles.

Why did you decide to review your development organization and what effect did it have?

We felt that the twin-organization system — Capcom and Beeline — needed changes in view of the changing market environment. Midori Yuasa, CEO of Beeline Interactive, Inc., will oversee the entire Mobile Business. Development of titles using CAPCOM IP will be under one single roof.

Are impairment losses likely to crop up in the fourth quarter?

At this point, I do not see any impairment losses surfacing in the fourth quarter. The volume of work-in-process is on the rise because we are expanding the lineup of our titles. Looking at the development situation, we feel that work-in-process is at a satisfactory level.

What are the reasons behind the expected decline in sales of PC and others in the Digital Contents business in the fourth quarter?

This decline is due to a reactionary drop from the spike in third-quarter income as we booked a part of the royalty income related to the launch of "Monster Hunter Online". We expect to start booking running royalty income from the next fiscal year.

Why is the Amusement Equipments Business expected to plunge into the red in the fourth quarter (3 months)

No new products launches are scheduled for the fourth quarter. But there are up-front fixed costs.

Please explain how confident you are about achieving your medium-term targets going forward from the next fiscal year.

We have not altered our medium-term targets announced in May 2015. We will continue toward these goals. I am not in a position to give you any concrete information on plans from fiscal years March 2017 and March 2018.

Please explain your long-term strategies after the March 2019 fiscal year?

We are discussing this issue internally. At this point, I am not in a position to elaborate further on this point.

2nd Quarter in FY2015 Presentation of Financial Results

October 30, 2015

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Question and Answer Summary
Please explain your progress toward your medium-term goals and your level of confidence concerning growth in the next few fiscal years.

Our current medium-term goals are not based on ambitious plans for every title in the Digital Contents business. Furthermore, titles under development those are on our balance sheet as work in progress will contribute to more than just our Consumer business during the next two fiscal years. We also expect to launch these new titles in the Mobile Contents and PC Online business, which are markets with good prospects for growth. We believe that we can reach the targets in our plan if these activities go well.

Please provide information about the current performance of "Monster Hunter Online" and your expectations for this title.

Currently, Tencent Holdings Limited (Tencent) is carefully examining market conditions and preparing for the official start of services. We believe that Tencent has high expectations for this title and is working hard on its launch. The Tencent Games Carnival will take place starting on November 13, 2015. At this event, an announcement about the current status of "Monster Hunter Online" is planned.

What is your strategy for Mobile Contents starting in the next fiscal year in response to the good performance of "Monster Hunter Explorer"?

Our analysis of "Monster Hunter Explorer" indicates that casual users who enjoy games on mobile devices are slowly beginning to grow accustomed to full-scale games. Starting in the next fiscal year, we will study ways to use titles that incorporate our own content while utilizing experience gained from "Monster Hunter Explorer".

Do you plan to increase the number of developers in the Mobile Contents sector?

Mobile Contents and PC Online are important business segments where we foresee more growth. As a result, we believe that we need to increase the number of employees in these areas.

What are your plans involving new platforms (NX, PlayStation® VR and others) and the timing of launches of Capcom titles for these platforms?

Our R&D operations are working on technologies for many types of hardware. We will consider the possibility of creating technology demonstrations and making versions of titles under development for these new platforms. At this time, we have not announced any plans for specific products or the timing of a product launch.

What are you doing in the field of e-Sports?

e-Sports are very popular in Europe and North America. We plan to use e-Sports as part of our promotional activities. For "Street Fighter V", which we plan to start selling in February 2016, we expect to utilize the e-Sports infrastructure we have created around the Capcom Pro Tour, in order to maintain the popularity of this new title for a long time.

When will you launch the next "Resident Evil" title?

We have not made any announcements about a new "Resident Evil" title.

Please explain your medium-term strategy for China.

China is an enormous market where a high percentage of game users enjoy PC online games. Many Chinese game companies, including Tencent, are currently seeking well-known global content. As a result, we believe that our IP as well can be very attractive to game players in China. We will take actions only after carefully studying market conditions in China and will not aim for short-term earnings.

Do you plan to continue increasing the number of developers? If so, how will you allocate the new people among your business units?

We plan to continue to recruit large numbers of developers. The new people will be assigned mainly to Digital Contents business. We plan to enlarge the lineup of games under development in the Consumer business, and we also need to establish a 24-hour infrastructure for the operation of our PC online games and mobile games. We need more people than when our operations were only in the home video games. Additionally, there is a critical need to establish a framework for the efficient deployment of developers.

Please explain how advances in the performance of mobile devices are altering the game development environment.

The performance of mobile devices will probably advance at some point to the same level as the capabilities of home consoles (for consumer games) and PCs. The different environments of mobile, PC and consumer categories mean that people play games in different ways and for different lengths of time. As a result, we believe that the method and approach used to develop games will have to continue to match the characteristics of each device.

Do you plan to continue operating the Amusement Equipments business despite the significant associated risks, including stricter regulations?

We will continue operating this business. Amusement Equipments is a source of earnings as well as part of our single content multiple usage strategy. We would like to increase synergies for IP developed in our consumer operations in order to maximize earnings.

What are you plans for mobile platform operations in China?

China and Japan use different types of mobile devices and likes and dislikes of users in the two countries are different. This is why selling Japanese apps in China with no revisions may not be successful. In Asia, we plan to work with partner companies in other countries in order to study local markets and meet the needs of consumers.

What are your thoughts about cloud games?

We will utilize our multi-platform strategy for cloud games, too. We are currently studying various technologies. In addition, we are performing extensive studies of cloud games that include examinations of the status of platform holders, determining which titles are suitable for cloud games and other activities.

1st Quarter in FY2015 Presentation of Financial Results

July 30, 2015

Presentation materials
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Question and Answer Summary
Regarding the decreases in Mobile Contents and PC Online sales, are there any signs of an improvement in the second quarter? Also, how is "Monster Hunter Frontier G8" performing after the update?

We anticipate a continuation of the decline in current titles in the Mobile Contents business. But we expect to offset this with the upcoming launches of "Monster Hunter Explorer" and other titles. "Monster Hunter Frontier G8" has just been updated, so there are no specific details we can provide at this time.

Do you expect to receive additional orders in the second quarter for the "Resident Evil 6" pachislo machine?

We sold 19 thousand units in the first quarter and at this time expect sales to surpass our plan of 30 thousand units.

What is your sales plan for the pachislo model that will follow "Resident Evil 6" and how confident are you of reaching your goal?

We plan to sell 15 thousand units. We will use private viewings for prospective buyers and many actions in order to reach this goal.

Repeat sales in the Consumer sub-segment seems to be strong in the first quarter. What is your outlook for the second quarter?

First quarter repeat sales (digital download versions) include not only some major titles but also catalogue titles and others, almost 100 titles in all. We foresee firm sales of these previously released titles in the second quarter, too.

What is your outlook for the digital download sales ratio from the second quarter onward?

In the Consumer sub-segment, we do not anticipate a big change in this ratio from the first quarter. We believe this ratio will remain above 30%.

Capcom is continuing to cut costs, as in the previous fiscal year. Were there cost-cutting measures in the first quarter?

First quarter selling, general and administrative expenses were about 800 million yen higher than one year earlier. Of this amount, 600 million yen is variable expenses, including sales promotion expenses for new products like the "Resident Evil 6" pachislo machine and "Devil May Cry 4 Special Edition" in the Consumer sub-segment. The remaining 200 million is fixed expenses caused by growth of our workforce. But the selling, general and administrative expense ratio has decreased because first quarter sales are higher than one year earlier. Outsourced development expenses were about 30% of total development expenditures, about the same as the same term last year.

In Digital Contents, were Mobile Contents and PC Other unprofitable?

Mobile Contents and PC Other did not contribute to earnings in the first quarter.

Please provide information about full game download sales volume for each platform.

The share of sales is about 40% for PC, 30% for the PlayStation Network, 20% for Xbox Live Arcade and 10% for Nintendo platforms. Japan accounts for less than 10% of these sales.


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