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FY2018

    • Consolidated Financial Results for the year ended March 31, 2019

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    Tell me how you devised the unit sales plan for Monster Hunter World: Iceborne (MHW:I, below) for FY3/2020.
    For unit sales in Japan, we have looked to the sales performance of so-called “G-versions” of past titles in the series. For overseas, we have taken into account the performance of competitors’ titles in our formulation. We aim to maximize unit sales through analyzing the accumulated preorder and sales trends for our series, including series other than Monster Hunter, against indicators such as preorder rates and player feedback at events going forward.
    Can we expect any changes for future Street Fighter titles, considering the games’ usage in esports?
    We would like to explore ways to provide added value to players, such as features that heighten their sense of immersion. However, we have nothing specific to share at this time. We will examine this issue based on the data we gather through upcoming league play.
    Tell me about Capcom’s strengths relating to the next generation of hardware.
    The games we developed using the RE ENGINE during this current hardware generation have received critical acclaim, and from the early stages of building this engine, we kept the ability to augment it for next-generation development in mind; as such, we view the RE ENGINE as one of our strengths that will contribute to next-generation game creation.
    Will the release of MHW:I impact the catalog sales of Monster Hunter: World?
    Sales of both the digital and physical versions of Monster Hunter: World grew steadily in FY3/2019. We plan to further grow these sales in FY3/2020 through linked sales activities and promotions with MHW:I.
    Your guidance shows a 36% OP margin in the Digital Contents business for FY3/2020. Will this level be sustainable in FY3/2021 and beyond?
    In recent years, coordinating the digital sales of catalog titles with new releases in a given series have effectively contributed to earnings through improvements to our digital sales ratio and the accumulation of marketing data. We expect the ratio of digital sales in the market to continue to rise, and think it possible to anticipate the same level of profitability.
    What is your policy on shareholder returns going forward?
    Our basic policy of targeting a consolidated dividend payout ratio of 30% while providing a stable dividend remains the same. Our FY3/2020 dividend forecast calls for an annual dividend of ¥35, though we strive to pay a suitable amount based on the progress of our business results. We remain committed to providing returns to all of our shareholders, and in addition to the share buyback carried out in November 2018, boast an average total return ratio of more than 60% for the past ten-year period.
    Tell me what titles currently in your pipeline are being developed with the RE ENGINE.
    While we are unable to comment on the specific number of titles or release windows, there are numerous titles currently being developed internally with the RE ENGINE.
    How have fans reacted to the more detailed MHW:I announcement?
    The announcement was made just this morning (May 10 JST), and as such, we plan to collect and analyze feedback from each of our subsidiaries over the coming week.
    Exactly how much fan feedback and comments are you able to gather from the market?
    While we are unable to provide specific details, we feel that collecting information globally and categorizing and analyzing that data by attribute is what is important. We strive to ensure that player impressions of Capcom and our games are aligned with what we have intended. We do so by integrating feedback gathered from fans into our games as much as possible, and by honestly communicating our policies and way of thinking when this is not possible.
    What role will the newly established Master Planning Office play?
    The Master Planning Office’s primary role is to develop a structure for the next generation. It will develop forward-looking strategies for the long term, addressing how Capcom should approach a market where it is believed the digital ratio will only further grow. Currently, its activities are primarily in the information gathering stage.
    Why is MHW:I the only major new title planned for FY3/2020?
    It is a reality that development cycles are trending longer for games developed to a world-leading standard. As such, it is possible that there will be a single major new title release in a given fiscal year due to the composition of our title pipeline. However, the profitability of the Digital Contents business is rising, with widespread digital sales driving longer sales lifecycles for games as well as multifaceted revenue opportunities, which includes catalog sales.

    • Consolidated Financial Results for the 3rd Quarter of FY2018

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    Why has Capcom executed a Letter of Intent with Universal Entertainment Corporation in the gaming machines business?
    Among the many corporations involved in the pachislo business, we believe that Universal Entertainment Corporation’s leading sales force and technological capabilities compliment Capcom’s strength in creating content, making possible the development of highly competitive gaming machines. However, while we have executed a Letter of Intent, the scope of our business cooperation is still being discussed.
    How is Resident Evil 2 performing?
    As of January 28, 2019, three days following its release on January 25, 2019, Resident Evil 2 had shipped 3 million units, and at this point it is performing well.
    How are orders for Devil May Cry 5? What is your impression at this point in time?
    With the title’s release one month away we are currently working on management and sales activities, however, at this point orders are largely in line with internal forecasts and we believe the title will have a strong start toward achieving its budget.
    Is Capcom preparing for the rumored next-generation of hardware?
    We cannot comment on next-generation hardware at this point in time. As a software developer, Capcom must always be conscious of the hardware cycle, while working to provide entertaining games suited to the needs of our target customers and matched to the characteristics of each platform, regardless of what sort of hardware is released.
    How will Capcom approach 5G (the 5th generation telecommunication standard)?
    Our Mobile department’s proactive approach to developing for the next-generation telecommunication standard has not changed. We are very interested in the evolution of this standard to 5G, and further on to 6G, and are carrying out discussions internally regarding our approach.
    Please tell me the FY18 third quarter (October – December, 2018) unit sales for Monster Hunter: World by hardware and region.
    Of the 1.2 million units sold during that period, most were for the PC version sold outside of Japan.
    Why did catalog sales of Resident Evil 7 biohazard grow during the third quarter of FY18 (October – December, 2018)?
    Our analysis shows that promotions for Resident Evil 2 and the holiday shopping season worked to spur latent demand for the title.
    Tell me how your other titles are performing.
    Our other titles performed well during the first nine months of FY18 (April – December, 2018), with cumulative sales of 920 thousand units for Mega Man X Legacy Collection and related titles, 870 thousand units for Mega Man 11 and 800 thousand units for Street Fighter 30th Anniversary Collection. While only sold in Japan during the third quarter of FY18, Onimusha (a rerelease title) was off to a fair start.

    • Consolidated Financial Results for the 2nd Quarter of FY2018

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    Tell me about your promotional plan for Monster Hunter: World (MHW, below) as well as those for your other upcoming major releases in the second half of the fiscal year.
    For MHW, we plan to retain existing users through future updates to the title, while aiming to capture new players by carrying out pricing strategies. We will also work toward developing the player community through holding real-world events overseas, similar to those held in Japan. For our major titles, such as Resident Evil 2, in addition to traditional promotions, we will focus on bolstering digital marketing in order to promote sales. This is carried out through centralizing management of sales data such as preorders and sales trends, and via analysis of various data points, including distribution of age, the repeat purchase rate, as well as feedback from comments on social networking sites.
    Tell me the details regarding the PS impairment loss booked in the first half of the fiscal year, as well as your outlook on the PS plan for the second half of the fiscal year.
    In light of the current market environment, we feel the revised plan is not conservative. Further, this is not only an issue of the market, as there is room for improvement within our development organization; as such, we will strengthen our organization and develop machines to be released in the next fiscal year and onward. Additionally, in the first half of the fiscal year we did a write down for machines scheduled to be released in the second half, recorded to cost of sales. However, we have not disclosed the specific amount of this.
    How much room for growth remains for MHW?
    We typically develop two- to three-year sales plans for major titles. For MHW’s second year, we have planned for a reasonable sales figure given the 7.9 million units it sold in the first year of its release. We will endeavor to grow sales further in the second half of this fiscal year with a focus on the PC version of the game.
    What are your thoughts regarding your title portfolio for the next fiscal year?
    As has been the case up to now, we are managing and developing our titles using our 60-month map, which looks five years into the future. As such, we are preparing games, which includes utilizing our back catalog of titles, in order to achieve our medium- to long-term goal of sustainable growth for the next fiscal year as well.
    Specifically, which catalog titles grew in the second quarter?
    In addition to MHW, specific titles include Monster Hunter Generations Ultimate, Resident Evil 7 biohazard and Okami HD.
    Tell me the current situation for MHW.
    As of September 30, 2018, the title has sold a cumulative 10.7 million units, with approximately 70% of that total from sales outside of Japan. Also, within Japan the increase in the number of players aged 10 to 19 years old has exceeded our expectations.
    What impact has censorship in China had on Capcom?
    Because we fundamentally carry out business expansion in China through Tencent, we are not in a position to comment on this. We will continue to actively approach this massive market going forward; however as it does carry a degree of country risk, we would like to proceed one step at a time while ascertaining the situation.
    What specifically did you do when you examined your esports investment amount in Other Businesses?
    When laying out our plan at the beginning of the fiscal year, we had budgeted a larger amount for investment because our eSports Group in Japan was in its startup phase at that time. However, during the process of planning specific activities we refined our investment plan to be more precise. Our enthusiasm for esports remains the same and going forward we will continue to actively promote activities to expand the esports market.
    In your full-year plan for Mobile, there has been a downward revision of 2 billion yen in net sales. What is the proportion of this between the first and second halves of the fiscal year?
    The performance of existing titles was weaker than our expectations, and thus there was a downward revision for both the first half and the second half of the fiscal year; however, the amount for the second half is slightly larger.
    What is your current situation as well as your future outlook on developing for cloud gaming?
    While we did release a certain title supporting cloud gaming in the first half, this was done primarily for technological research purposes and did not have a significant impact on earnings. Based on the results of this research, we will internally consider further expansion into cloud gaming.
    Tell me more regarding how your PS machines were out of line with the user perspective.
    In analyzing the operations of machines at pachislo halls following release, we ascertained that our machines had been removed from the floor after a shorter period than we had expected. In order to fulfill our concept of creating pachislo that can be enjoyed for a long time, going forward we will adjust our internal development organization.
    Will you change your basic strategy in accordance with changes in the Mobile market environment?
    While we have revised our mobile title lineup in light of the market environment, there will be no fundamental change in strategy.
    Tell me about development progress on Type 6 pachislo machines. Also, what is your outlook on Type 6 machines?
    While we are unable to discuss details at this time, we have gathered positive reviews from the market regarding the change from Type 5.9 to Type 6 machines, and are continuing preparations for development of Type 6 machines. Going forward, our development will essentially focus on Type 6 machines, with the goal of releasing them during the March 2020 fiscal year and onward.

    • Consolidated Financial Results for the 1st Quarter of FY2018

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    Capcom announced a price drop for the home console version of Monster Hunter: World (MHW, below) timed to take effect at the launch of the PC version. Was this measure a part of Capcom’s plan for the title? Also, what is the status of orders for the PC version?
    Both the release timing of the PC version and the price revision to the home console version were included in our plan for this title. Regarding the status of preorders of the PC version, we are currently analyzing a variety of information that we have gathered, and wish to continue with promotional activities in order to arrive at a final, actual sales figure.
    What is your outlook for the Pachinko & Pachislo sub-segment from Q2 onward?
    The market conditions here remain severe, with future events being all but impossible to read. We will continue to monitor our progress to the full-year plan going forward.
    You have stated that Q1 results were progressing favorably to your plan. What factors contributed to outperforming your expectations?
    This was due to growth in catalog unit sales of MHW while maintaining the title’s initial, full price, as well as to recording shipments of Street Fighter 30th Anniversary Collection (which had a relatively lower development cost) in excess of our plan, and cumulative contributions from catalog titles released in past fiscal years.
    What progress have you made in Mobile Contents?
    While we are presently unable to disclose specific details, such as the release timing for new titles, steady progress is being made. We are currently in talks with our alliance partners, and are looking into the timing of an announcement. However, because the alliance titles will be released during the current fiscal year, the period of time they contribute to full-year earnings will be limited. As such, we do not expect significant contributions from these titles this fiscal year.
    Tell me the expected unit sales for the recently announced Resident Evil 2. Also, do you have plans to remake other titles?
    This title is one of our major Consumer releases for this fiscal year, and accordingly we expect it to be in the “million-seller” class of titles. It was received very well at E3, and in order to tie this first success to actual sales we are working out our promotional strategy. Further, regarding remakes and rereleases of titles in our back catalog, we expect to explore these further with a variety of properties as a part of our strategy to utilize our library of IP.
    I understand that Resident Evil 2 is a remake. Tell me about its development costs and expected profitability.
    While the base story and setting did exist, we have made the most of our cutting-edge game development environment to re-create the content, and are developing it with a budget appropriate for a Resident Evil title targeting the global market.
    PC Others has returned to profitability, however will Capcom be able to maintain this level of profitability in the future?
    We have been able to return PC Others to profitability because the initial development costs of existing titles were fully depreciated at the end of the previous fiscal year. We expect to be able to maintain a similar level of profitability overall if we are able to maintain the current level of net sales for existing titles going forward.
    You have stated that the sales growth for a title released two years or more ago has been favorable. Which title specifically?
    This growth was not limited to the sales of a single title, but rather was the cumulative result of multiple titles.
    Did the announcement of the new Resident Evil 2 and Devil May Cry 5 have an effect on previous titles in these series?
    We are beginning to see signs of customers purchasing previous titles in these series, including DmC: Devil May Cry. We plan to execute a number of marketing strategies to stimulate sales of these catalog titles in order to further build out the fan base of each series in the future.

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