Capcom announced that net sales for the six-month period ended September 30, 2015 were 31,638 million yen (up 22.1% from the same term last year). However, due to an increase in cost of sales ratio, operating income was 2,844 million yen (down 35.1% from the same term last year), ordinary income was 2,891 million yen (down 36.3% from the same term last year), and net income attributable to owners of the parent amounted to 1,951 million yen (down 34.4% from the same term last year).
1. The progress of the consolidated business results including related qualitative information
During the six-month period ended September 30, 2015, the employment situation and public investment were steady, but the Japanese economy remained at a standstill because of a fall in exports and sluggish consumer spending with the effect of the decelerating Chinese economy.
In our industry, although the game contents market for home video games has continued to show signs of maturity, the mobile games market mainly led by smartphone applications experienced fierce competition to acquire as many customers as possible. While companies fought over market share by grabbing customers in a back and forth situation like an Reversi game, such competition contributed to the expansion of each company's power, thus driving the growth of the overall market size.
Under such circumstances, the Company pushed forward with promotion activities to respond to market trends and marketing efforts in close coordination with development and sales. The Company also focused on improving the development process and revenue management by increasing the ratio of internally produced titles through a reduction of the volume of outsourced operation, so as to reduce development costs and shorten the development period. The Company also presented a collaborative stage play of "Devil May Cry vs. Sengoku BASARA" in Tokyo, which attracted interest even from the non-customer group of those titles. This play thus resulted in increasing the recognition of both titles.
Furthermore, the Company began a "stamp rally" using the characters of the popular "Sengoku BASARA" series in collaboration with Kofu City. It also hosted a special exhibition called "Sengoku (warring states) Guide - Cool Basara Style –" at the Saitama Prefectural Museum of History and Folklore featuring the characters of the series. These collaborations with local municipalities helped the Company to come to the forefront in public, thus enhancing its corporate image and recognition.
At the same time, "Monster Hunter X (Cross)", which is one of the major titles of the fiscal year under review, was so popular at the Tokyo Game Show 2015 that long queues were formed by interested attendees at the trial play section. This title was the center of attention among attendees, which will give an impetus to the Company toward the launch on November 28, 2015.
The resulting consolidated net sales for the six-month period ended September 30, 2015 were 31,638 million yen (up 22.1% from the same term last year). However, due to an increase in cost of sales ratio, operating income was 2,844 million yen (down 35.1% from the same term last year), ordinary income was 2,891 million yen (down 36.3% from the same term last year), and net income attributable to owners of the parent amounted to 1,951 million yen (down 34.4% from the same term last year).
Status of each operational department
1. Digital Contents business
In the Digital Contents business, while sales of "Sengoku BASARA 4 SUMERAGI" (for PlayStation 4 and PlayStation 3) were solid thanks to the well-established brand power, "DAIGYAKUTENSAIBAN" (for the Nintendo 3DS system) remained slow. On the other hand, sales of repeat titles and digital download sales were firm, particularly in overseas markets.
In terms of online games, "Dragon's Dogma Online" (for PlayStation 4, PlayStation 3 and PC), an online open-world action game where players can freely experience a host of adventures, had a good start. The Company also started distributing the new mobile title, "Monster Hunter Explore" (for Android and iOS).
The resulting net sales were 14,304 million yen (up 6.2% from the same term last year), and operating income was 1,533 million yen (down 28.7% from the same term last year).
2. Arcade Operations business
In the Arcade Operations business, with the market continuing to be weak, the Company strived to expand its customer base by attracting customers through diverse measures such as holding various events and service days for the middle-aged and seniors by offering "free game experience tours" and the setting up of "Asobi Okoku peekaboo" sites and "Kids' Corner" sections targeting younger children.
Nonetheless, the segment results were soft, partly because of the lack of a high-performance product and the decentralization of the entertainment industry, resulting from the overlapping of arcade game players with smartphone users.
During the fiscal year under review, a new arcade was opened while one arcade was closed, bringing the total number of arcades to 33.
The resulting net sales were 4,405 million yen (down 8.6% from the same term last year), and operating income was 355 million yen (down 46.2% from the same term last year).
3. Amusement Equipments business
In the Pachinko & Pachislo sub-segment, unit sales of the long-awaited "Resident Evil 6" strongly increased with the support of loyal fans, which has backed the improvement in revenue as it contributed to the increase in sales. In September, "Asura's Wrath" was also released.
In the Arcade Games Sales sub-segment, the Company launched "Luigi Mansion Arcade" and started the operation of the first music game "crossbeats REV." for arcades.
The resulting net sales were 12,132 million yen (up 76.3% from the same term last year), and operating income was 2,551 million yen (down 19.2% from the same term last year).
4. Other Businesses
The net sales from Other Businesses, mainly consisting of publication of game guidebooks and sale of related goods, were 795 million yen (up 5.8% from the same term last year), and operating income was 253 million yen (up 12.5% from the same term last year).
2. Explanation of the consolidated financial position
Analysis of assets, liabilities and net assets
Total assets as of the end of the second quarter increased by 8,001 million yen from the end of the previous fiscal year to 108,774 million yen. Primary increases were 5,040 million yen in work-in-progress for game software and 1,722 million yen in notes and accounts receivable, trade.
Total liabilities as of the end of the second quarter increased by 7,484 million yen from the end of the previous fiscal year to 36,926 million yen. Primary increases were 5,065 million yen in electronically recorded monetary liabilities and 2,083 million yen in long-term borrowings.
Net assets as of the end of the second quarter increased by 516 million yen from the end of the previous fiscal year to 71,847 million yen. Primary increases was 1,951 million yen in net income attributable to owners of the parent. Primary decrease was 1,405 million yen in cash dividends.
3. Qualitative information regarding the consolidated business forecasts
The forecast for the consolidated business results current fiscal year ending March 31, 2016 remains the same as what was projected at the financial results announcement on May 7, 2015.