CAPCOM Investor Relations

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Integrated Report 2018

Aiming for the Top
Top page > [ESG-Based Value Creation] Risk Management

Risk Management

Capcom is driving its growth strategies forward in order to achieve our medium-term business goal of increased operating income every fiscal year. Pursuing our growth strategies, however, inevitably entails business risks. We implement measures for each expected risk, thereby mitigating or avoiding risks, and promote risk management that allows for generating new growth opportunities.

Business Opportunities Shown in Market Data

Major Risks, Countermeasures, and Opportunities

Digital Contents business

Risks Capcom's response measures Opportunities
Surge in development costs due to increasingly complex/diverse functionality in CG, VR, and artificial intelligence (AI) technologies as well as Internet operations Build an in-house development engine; increase and efficiently place development personnel to improve both quality and development efficiency, while focusing on containing development spending
  • Expand the VR game market
  • Grow earnings in the global market
Rapid obsolescence of game software Remake previous titles and/or make derivative products from them in order to continue effectively utilizing IP, while securing long-term earnings
  • Develop new regions
  • Attract new users
  • Boost brand strength
  • Stabilize earnings through a recurring/cumulative revenue model
Expansion of the used software market and a flood of pirated copies in Asian markets Boost the DLC ratio in order to restrain supply to the used game market, suppress pirated copies, and expand sales of genuine products
Loss of user interest in our popular IP due to changes in the market environment Boost brand strength by rolling out products on multiple media platforms
Allocate a certain percentage of development investment toward new IP development
Arguments claiming a connection with / influence on violent incidents and other criminal cases due to depictions of violent scenes and similar content in games Comply with rules on the ratings system for game software
Educate schools and parents/guardians by conducting on-site classes
Fluctuations in the proliferation of, or any problem with, home video game consoles Use surveys and analysis of home game console market trends to predict future trends, while diversifying earnings risks by releasing products on multiple game platforms
Fluctuations in supply and demand for games due to seasonal factors Deliberate on optimal timing of launches based on market analysis
Create more long-term sales through flexible pricing strategies
Sluggish sales growth in the transition stage ahead of next-generation home video game console launches Lengthen the duration of game sales and strengthen recurring sales by boosting the DLC ratio
Increase sales units through flexible pricing strategies
Inability to keep up with new technologies Utilize a cutting-edge development environment and talented developers to continually strive for development that leverages new technologies
  • Boost brand strength
  • Expand new sources of earnings
Decrease in users due to diversifying entertainment options, diversifying consumer needs, etc. Deliver mobile games, etc. that leverage our popular IP by releasing games on multiple platforms and thereby gaining new user segments
Market fluctuations outside Japan and intensification of competition among companies Closely share information with overseas subsidiaries and sales companies; assess market trends in each country; respond to local needs
  • Grow earnings in the global market
  • Boost performance by strengthening human resource capabilities
Country risks outside Japan, including political, economic, legislative, cultural, religious, and custom risks Have in-house specialist teams carry out localization without losing the feel of the game world and while keeping regional politics, economics, laws, culture, religion, and customs in mind
Unfavorable legal interpretations/rules by regulatory authorities addressing tax rates, customs duties, etc. accompanying expansion of overseas transactions Collaborate with overseas subsidiaries and gather information related to legal systems in the countries of sale so that we can strive for preemptive measures
Retirement/transfer of development personnel Devote effort to aggressively hiring and training personnel so that we can secure talented developers
Promote systems for shortened working hours and usage of paid leave, in addition to building daycare centers near our offices

Arcade Operations business

Risks Capcom's response measures Opportunities
Reliance on the popularity of installed machines Roll out multi-faceted projects such as character-themed food shops, shops dedicated to selling character-themed products, and special corners targeting younger demographics, in order to attract customers without focusing on specific, popular machines
  • Attract new customers
Changes in the market environment, such as diversification of entertainment, falling birth rates, intensified competition Create new earnings opportunities and customers by holding various events for families and women, and other events aimed at middle-aged to senior citizens
  • Boost brand strength at Company arcades

Amusement Equipments business

Risks Capcom's response measures Opportunities
Only models that obtain Security Communications Association certification can be sold By joining the Japan Pachislo Machine Industry Association (Nichidenkyo), get an understanding of trends with regulatory agencies and build a framework for immediately responding to regulatory changes
  • Enhance lineup of titles
A decline in facility operators' purchasing power, changes in the business environment, and uncertainties regarding growth Develop cabinets that utilize our wealth of popular IP in multiple ways
Grasp market trends by collaborating with company-owned arcades
  • Cultivate the VR game market
  • Enhance lineup of titles

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