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FY2011

    • Consolidated financial results for the year ended March 31, 2012

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    • Business Divisional Strategies and Projections

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    • Consolidated Financial Statements

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    • Chairman’s Statement

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    • Presidential Statement

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    • Question and Answer Summary

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    • Video & Audio of the Presentation

      Webcast (Length: 29 minutes)
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    Question and Answer Summary

    Your planned advertising expenses in the current fiscal year have increased significantly to 10.6 billion yen. Please explain the reasons for this increase, including increasingly fierce competition.
    In recent years, some major titles have posted solid growth in sales volumes in the global market. On the other hand, there is a tendency for new titles as well as midrange and small titles to face difficulties. Overall, the environment for marketing activities is challenging. After taking into consideration the importance of proactive sales promotion activities, we established a plan to make the expenditures required to achieve our sales plans for major titles in this fiscal year.
    Regarding the outlook for the fiscal year ending in March 2014, isn’t there a possibility of declines in sales and earnings in the wake of contributions from major titles in the previous year? Or is your policy to maintain steady growth every year?
    We are unable to say anything specific about our performance in the March 2014 fiscal year at this time. We cannot deny the possibility of ups and downs in our performance in individual fiscal years amid rapid changes in our markets and changes in game platforms. However, in the March 2014 fiscal year as well, we aim to fulfill the targets in our five-year medium-term management plan: 1) place priority on achieving an operating margin of at least 15% every year; 2) accumulative sales of 500 billion yen and operating income to 75 billion yen over the five-year period ending in March 2015.
    What is your view of the social game Complete Gotcha?
    We believe that some rules must be established so that people can enjoy social games properly.Capcom has no social games that incorporate Complete Gotcha at present. Furthermore, with respect to the global use of social games, business models like the one used by Complete Gotcha are rarely used.Capcom wants to use a different approach to be a source of fun for our customers.
    If you become confident of reaching your operating income goal of 15.8 billion yen in the current fiscal year, is there a possibility of pushing back launches of titles planned for late in the fiscal year to the next fiscal year?
    Our forecast for performance in this fiscal year reflects a variety of risks involving the operating environment as well as investments for future activities and other items. Since we believe this is a suitable forecast, we do not foresee any launch postponements at this time. To maximize our sales volume, we select the best timing for launches with respect to both our development and sales operations.
    In the Mobile Contents business, are there any geographic areas in which you are particularly interested?
    We are not placing priority on any particular market. Due to the increasing use of smartphones, it is possible to distribute content worldwide, particularly for iOS by using the App Store. We believe that the major strength of this business is that there is no need to view North America, Europe and Asia separately. Our goal remains to increase awareness of the Capcom and Beeline brands on a global scale.
    Do you believe that the gross average revenue per paying user (ARPPU) is suitable in overseas markets (Beeline)?
    The gross ARPPU for Beeline users is about 25 US dollars. We believe that we are maintaining prices that are both suitable and high.
    Please provide a breakdown of your 30 billion yen target for online sales in the fiscal year ending in March 2015.
    We are unable to disclose more information about this target. We foresee different rates of growth in three categories: DLC (downloadable content), mobile contents and PC and others. We plan to reach the 30 billion yen target due to the steady growth of all three of these categories.
    What are the major titles that will contribute to your DLC sales plan of 3.5 billion yen in the current fiscal year?
    Our basic stance is to use DLC for major titles, but we cannot name any specific titles at this time. Furthermore, we will also continue to introduce as DLC the titles that we launched in prior years.
    What is the division between sales in Japan and overseas in the Mobile Contents business?
    We expect that sales will be approximately evenly divided between Japan and overseas. But we are unable to provide you with any more information.
    Are you making progress regarding sales of PC online games in Asia?
    We continue to consider starting these sales because Asia is a major market for online games. We have nothing specific to say at this time, but we can say that we are moving ahead with various preparations in Asian markets, including China.
    Please provide a breakdown of online content sales in the fiscal year that ended in March 2010.
    We will answer this question later.
    *FY3/10 online content sales: DLC 2.5 billion yen, mobile contents 3.5 billion yen, PC and others 4.8 billion yen
    Why do you expect a large increase in Mobile Contents sales to 12 billion yen in the current fiscal year?
    We expect sales to grow in Japan and overseas because of the increasing number of newly launched social games.
    Are there any money-losing titles in the Consumer Online Games business?
    Some titles become unprofitable when sales are weaker than we anticipated. But the percentage of money-losing titles is very small because we carefully manage costs and schedules.
    What are your thoughts about the realignment of the game software industry and what is Capcom’s M&A strategy?
    We are unable to make a comment about the M&A activities of other companies. Capcom has acquired software development companies for the purposes of creating content that will be successful worldwide and expanding our development lineup. Our fundamental policy is to aim for organic growth through aggressive recruiting and training activities.
    What is your view of the performance of “Monster Hunter 3 (Tri) G”?
    Sales volume of this title has surpassed our initial plan. Furthermore, this title has created a new community in the Nintendo 3DS market, a development that is extremely beneficial for the Monster Hunter series. We therefore believe that this title has been at reasonable success level.
    How do you assess the performance of titles that were introduced in the fourth quarter of the previous fiscal year?
    Sales of “Street Fighter X Tekken” have fallen short of our plan. We believe one of causes is cannibalism because of the large number of other games in this genre that were launched within a short time. “Resident Evil: Operation Raccoon City” has reached shipments of 2 million units (as of May 10, 2012). This shows the success of our decision to try the new approach of using an alliance with an overseas development company.
    Have you succeeded in reducing the time needed to develop games? Please tell us about the current game development environment?
    For “Resident Evil 6”, we improved efficiency by using a new alignment of internal developers. For “Lost Planet 3”, we are using an alliance with an overseas development company with the goal of launching this title 2.5 years after the previous title in this series. So we have succeeded in greatly reducing the development time compared with prior titles. Overall, we believe that we are making steady progress in shortening development times by efficiently utilizing our own workforce and making effective use of external development companies.

    • Consolidated Financial Results for the 3rd Quarter of FY2011

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    Question and Answer Summary

    What were sales of “Monster Hunter 3(Tri) G” as of the end of December and please provide information about repeat sales.
    Sales totaled 1.2 million units at the end of December 2011 and increased to about 1.3 million units at the end January 2012.
    Why were sales higher but earnings down in the Amusement Equipments business?
    Earnings fell because we launched highly profitable new titles in the previous fiscal year.
    What impact will the delay in the launch of “Dragon’s Dogma” have on your performance?
    We expected sales of about 5 billion yen from this title. However, there is no revision to our fiscal year forecast because of the strong performances of “Monster Hunter 3(Tri) G” and the Mobile Contents business.
    How is Beeline performing thus far relative to your fiscal year target and what is your outlook for this brand?
    Beeline is performing as planned. Regarding “Snoopy’s Street Fair”, we expect this title to start making a meaningful contributing to earnings in the fourth quarter following an update that reflects the preferences of users in Europe and North America.
    How did foreign exchange rates affect third quarter performance?
    Third quarter non-operating expenses include a net foreign exchange loss of 911 million yen. A one yen movement in the U.S. dollar/yen and euro/yen exchange rates combined changes our sales by about 340 million yen and operating income by about 80 million yen.
    Have you revised the exchange rates used as the basis for your fiscal year plan?
    We have made no changes since the beginning of the fiscal year.
    How is the online business performing and what are your strategies for this business?
    We cannot supply any numbers but we can say that this business is generally performing as expected. In addition, sales and earnings are higher than one year earlier. We are moving quickly with regard to our plan for growth of the online business in Asia.
    How much did the delay in the “Dragon’s Dogma” launch raise the cost of developing this title?
    We cannot provide a specific figure, but there was a small increase.
    Did shifts in market conditions, such as concerns about cannibalization of the social game market, play any role in your decision to postpone the title launch?
    Changes in market conditions were not the reason for the postponement. We pushed back the launch because we selected the timing that we believe will maximize sales volume.
    How much of sales in the Mobile Contents business are in Japan and overseas?
    Overseas sales are about 60% and Japan is about 40%.
    Why is the overseas sales ratio so high in the Mobile Contents business?
    We believe the reason is that we were the first to start operations on a global scale in the social game category. Big hits like “Smurfs’ Village” allowed us to establish our brands in overseas markets ahead of competitors.
    Please explain the life cycle of a social game.
    It is too premature to ascertain the life cycle at this time but we assume that it is about two years.
    For social games sold in Japan, what is your stance for development activities and what is the division between tasks performance internally and externally?
    Our basic policy is to develop these games internally. Nevertheless, we outsource the development of some titles because of the recent shortage of development resources and our increasing expertise in operating social games due to our collaboration with partner companies.
    What is the status of measures to establish an organization in Europe for developing Beeline games?
    We are progressing as planned.
    Can you reach the fiscal year target for the Mobile Contents business?
    We believe the target can be reached because titles introduced in the third quarter will make a meaningful contribution to earnings in the fourth quarter.
    Will there be any changes to your title lineup in the next fiscal year in response to your performance in this fiscal year?
    We are unable to provide any specific information at this time because we are working on our plan for the next fiscal year. Our basic policy is to constantly perform studies to determine the best timing for introducing new titles in order to maximize sales volume. In the next fiscal year, we plan to launch “Dragon’s Dogma” in May and “Resident Evil 6” in November. We plan to announce launch dates for other titles in April at “Captivate 2012”.
    How much earnings growth do you foresee from downloadable content?
    Content that is downloadable can contribute to earnings only after we release packaged software that becomes a hit. Our basic stance is to consider the use of networks for the distribution of a variety of content with regard to all of our major titles. We believe that downloadable content earnings will increase along with the upcoming introductions of major new titles.
    Why did you revise the price of “Resident Evil Revelations” in overseas markets?
    We changed the price to a more affordable level to the customers based on current market conditions and our goal of selling this title over an extended period of time.
    Why did you decide to announce the “Resident Evil 6” launch date more than 10 months in advance?
    One reason was that progress with development of this game had reached the point where we could make this announcement. In addition, we made the announcement now in order to heighten expectations leading up to the launch of the latest title in Capcom’s most prominent game franchise.
    Why did short-term borrowings increase 5,000 million yen over a three-month period?
    Our policy is to procure funds while preserving the proper balance between debt and equity in order to maintain a sufficient level of yen-denominated funds.
    Your medium-term goal is to increase online content sales to 30 billion yen by the fiscal year ending in March 2015. What genre has the highest growth rates?
    We believe that the Mobile Contents business has the most growth potential. We expect the second-largest source of growth to be the online console category, which includes downloadable content.
    Will you launch an updated version of “Snoopy’s Street Fair” for Europe and North America in the fourth quarter?
    We are unable to provide a specific date, but we will introduce this version at the proper time.
    Please explain how you plan to establish a prominent position in Japan’s social game market.
    We will acquire expertise in operating social games by continuing to collaborate with social game service providers and game developers. We will also establish a team of workers with social game operational skills through training and recruiting activities.
    What percentage of people who purchased “Monster Hunter Freedom 3” also purchased “Monster Hunter 3(Tri) G”?
    We do not have any figures, but we believe that a large number of Monster Hunter fans have purchased “Monster Hunter 3(Tri) G”.
    In the Mobile Contents business, why was the third quarter sales growth rate lower than in the previous quarter?
    There are two reasons. First is the negative impact of foreign exchange rates on overseas performance. Second, we started distributing new titles late in the third quarter, so they did not make a significant contribution to this quarter. We believe that the fiscal year target can be reached due to the substantial contribution from these new titles starting in the fourth quarter.
    In the Mobile Contents business, what is the share of sales from social games in Japan?
    We would like to decline disclosing this information. In the Mobile Contents business, social games and content for smartphones account for about 80% of sales worldwide.

    • Consolidated Financial Results for the 2nd Quarter of FY2011

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    By section

    • Business Divisional Strategies and Projections

      PDFHTML format

    • Consolidated Financial Statements

      PDF

    • Chairman’s Statement

      PDF

    • Presidential Statement

      PDF

    • Question and Answer Summary

      PDFHTML format

    • Video & Audio of the Presentation

      Webcast (Length: 30 minutes)
    Related information

    Question and Answer Summary

    Why did you change the timing for the release of “Resident Evil: Operation Raccoon City”?
    As our policy we are always seeking the best possible timing for the release of new titles by taking into account market conditions and all other applicable factors.
    Capcom plans to introduce several major titles in the fourth quarter. Are you concerned about competition among your own titles?
    Naturally, we will determine the proper timing for these introductions after studying market conditions and other items to prevent competition among our own titles.
    What are your overseas plans for “Monster Hunter 3 (Tri) G”?
    Our stance for the overseas distribution of this title is the same as for the entire “Monster Hunter” series. We are selling the preceding title “Monster Hunter Tri” overseas so we will consider launching this title overseas, too. But no decision has been reached yet.
    Please explain why you selected the Nintendo 3DS as the platform for “Monster Hunter 3 (Tri) G”
    First, we believe that using the Nintendo 3DS will allow us to offer new types of expressions, game play action and enjoyment for the “Monster Hunter” series, which has attracted a broader range of user segments. In addition, we selected this platform with the goal of reaching a diverse spectrum of customer segments, including current users of the “Monster Hunter” series as well as people who have portable game consoles.
    Please explain the framework you are using for the development of “Monster Hunter 3 (Tri) G” and “Monster Hunter 4 (tentative title)”?
    Our basic policy is to develop games internally. However, to improve efficiency, we use a hybrid approach that combines internal development programs with outsourcing. So we may outsource portions of development work for some titles. I cannot provide information about our development framework for specific titles.
    Is there a possibility that Capcom will reexamine its strategy for the social game business in response to changes in communication formats, such as fixed charges due to increase of data volume, for cell phones?
    Our priorities at this time are to accumulate know-how about social games and expand this business. We will respond quickly to changes in market conditions.
    What percentage of your game development staff is in each segment?
    At the end of September 2011, our development staff was about 1,400, and its break-down are approximately 1,000 for home video games, 170 for consumer online games, 100 for mobile content and 130 for amusement equipment.
    What is your goal for “Snoopy’s Street Fair”, the new Beeline social game?
    We want this game to outperform “Smurfs’ Village”.
    What is your outlook for package game software in the fiscal year ending in March 2013?
    I cannot provide any information about specific titles. We are making steady progress regarding alliances with overseas development companies. I believe that we will be able to introduce titles in the fiscal year ending in March 2013 that will demonstrate the benefits of these alliances.
    How confident are you about reaching your “Monster Hunter 3 (Tri) G” sales volume target?
    We believe that our target can be achieved because of the favorable response to the content and other aspects of this game.
    In the Mobile Contents business, including social games, what percentage of growth do you expect to come from Japan and overseas markets?
    We will strengthen the lineup of content that we distribute in individual markets in Japan and other countries. Overseas operations currently account for a large share of this business. But we are making steady progress in raising the profile of the Capcom brand in the social game market in Japan. For example, the number of registered members for “Resident Evil: Outbreak Survive” on the GREE social networking service has surpassed one million. To make the Capcom brand even more powerful in this market, we will start introducing many games for the Japanese social game market starting in the next fiscal year.

    • Consolidated Financial Results for the 1st Quarter of FY2011

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    Question and Answer Summary

    How did your first quarter consolidated performance compare with your plans?
    First quarter performance was strong and surpassed our internal plans.
    In the Mobile Contents business, how many developers do you have and how many development lines are there?
    We have about 100 developers, about 60 in Japan and about 40 overseas. In this fiscal year, we plan to start distributing at least 10 Capcom brand titles and eight Beeline brand titles. This is the number of developers needed to fulfill our plans for new titles.
    When will you start distributing major new titles of the Beeline Brand?
    We are making steady progress with the development of new titles to be introduced in the second half of this fiscal year and afterward. We will announce when distribution will start at the proper time with respect to our sales strategy.
    What was the sales composition of the Mobile Contents business in the first quarter?
    SNS and smartphones together accounted for about 70% of sales and content for feature phones for about 30%.
    Is there a possibility of a revision in your fiscal year plan for the Mobile Contents business?
    The first quarter performance of this business exceeded our forecast. But we do not plan to change our fiscal year plan at this time because we will have to monitor the performance of titles introduced in the remaining quarters.
    How is the Japanese version of “The Smurfs’ Village” performing?
    Performance is generally in line with our expectations. The number of downloads is increasing, too.
    The premiere of the “The Smurfs” movie is scheduled for July. Is this premiere giving any effect at this time on downloads of “The Smurfs’ Village”?
    There is currently no significant effect.
    Although the number of social game downloads is increasing steadily, it appears that the first quarter growth rate was lower than in the past fiscal year’s fourth quarter. Why is growth slowing?
    Mobile Contents sales decreased from last fiscal year’s fourth quarter to this year’s first quarter mainly because the fourth quarter included the receipt of a one-time royalty payment. Although we do not disclose fee revenue and other items, we do not believe that the rate of growth is slowing.
    For iPhone titles, there is a large gap between when users are billed and the revenues are recognized as sales. Does this have an effect on earnings?
    There is no effect in particular at this time.
    What areas are you focusing on in the Mobile Contents business?
    We are working hard on Beeline-brand social games for overseas markets. Another priority is creating many Capcom-brand social games that originate from packaged software. For example, we started “Sengoku BASARA Mobile” and “Resident Evil: Outbreak Survive” services in the first quarter.
    You have announced a number of new titles, including “Monster Hunter Freedom 3 HD Ver.” Will there be any changes in your fiscal year sales plan?
    There are no changes at this time. We introduce new titles whenever we believe the timing is right.
    What is your plan for sales volume of “Monster Hunter Freedom 3 HD Ver.”?
    We have not announced a volume of sales plan for this title.
    Do you plan to create HD versions of titles for the PlayStation Portable (PSP)?
    The first HD version will be “Monster Hunter Freedom 3 HD Ver.” We will retain a flexible stance concerning our plans for additional HD titles.
    Why did you decide to terminate development of “Megaman Legend 3”?
    While we regret the decision to terminate development of “Megaman Legend 3”, we concluded that it would be the right step after an overall consideration of various factors.
    What are your game development plans for next generation game hardware?
    There is no change in our basic policy. In accordance with our multi-platform strategy, we will continue to develop games to provide enjoyment that takes advantage of the capabilities of game hardware.

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