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The COO's Discussion of Growth Strategies

Aiming for Medium- to Long-Term Growth through Opportunities in the Changing Business Environment

New Sales Strategy Based on Digital Distribution

Games connected to the internet played with multiple people are already commonplace, and in recent years, even more online innovations are taking place in the game industry.

The biggest transformation is the "distribution revolution" spawned by the digital distribution of games. For the past several years, this trend has accelerated substantially, as can clearly be seen in Capcom's operating results. As the ratio of digital download contents sales increases, inventory return ratios improve and operating margins expand. Also, in line with the growth of digital distribution, performance has improved in Asia, where package sales had been virtually impossible until now due to the flood of pirated games.

In terms of game sales strategies going forward, the key to success will be the degree to which we are able to utilize digital distribution. The ability to distribute games throughout the world without the significant labor and costs involved in overseas sales networks is paving the way for an environment in which we are able to compete with major overseas game companies on an equal footing.

Furthermore, support for multiple languages is another critical point. At present, games can be purchased online almost anywhere. There are many developing markets that can suddenly transform into promising opportunities. In anticipation of such developments, new games released in the fiscal year ended March 31, 2016, were available in 14 different languages.

In light of these new trends, Capcom will strengthen digital download contents in the Consumer business and implement measures to set the Online business on a growth trajectory.

Investing 80% of Management Resources
in the Digital Contents Business

The Digital Contents business is our core business, accounts for 68% of net sales and generates original content, which is the source of our corporate value. We are allocating approximately 80% of management resources in this business, which I believe is the key to achieving our medium-term business goals. For the Digital Contents business to grow, in addition to further expansion of the Consumer business, we must overhaul the struggling Online business and establish a growth trajectory. On the following pages, I will explain our strategies for achieving these goals.

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