Directors state in writing their fundamental policies for management with regard to managing the operations of the company. These fundamental policies include separate items for the basic philosophy, operational goals and dividend policy, medium and long-term management strategies, and issues requiring attention.
1. Management Principle
Our principle is to be a creator of entertainment culture. Through development of highly creative software contents that excite people and stimulate their senses, we have been aiming to offer an entirely new level of game entertainment. Our management objectives are also on strengthening relationships with shareholders, clients and our employees to satisfy demands and to bring about prosperous benefits.
2. Key performance indicator
The Group's objective is to enhance corporate value through the continued expansion of businesses. We set ROE (return on equity) as our key performance indicator and strive to increase our capital efficiency by improving ROE in order to enhance corporate value, while focusing on cash flow management and securing profits.
3. Medium and long-term management strategies
The Company recognizes the development of a corporate structure that can secure stable profits without being influenced by changes in the environment to be a critical management task in promoting its growth scenario and will devote itself to the improvement of its business performance through the implementation of the following measures.
- (1) Promotion of the Single Content Multiple Usage Strategy
The Company has created over 70 million-seller titles, including Resident Evil, Monster Hunter and Street Fighter, both in Japan and overseas and has steadily expanded its fan base, while also accumulating a vast portfolio of content assets.
To this end, the Company will make efforts to increase penetration of the Capcom brand, through various means including proactive sales pitches for "Made in Capcom" that leverage its high-profile game characters. Additionally, in an effort to create synergy with its popular contents, the Company intends to build a value chain based on the promotion of the Single Content Multiple Usage strategy in various global businesses that utilize its contents including movies, animation, publishing, the theater, toys and foods/beverages.
- (2) Expansion of Digital Download Sales
In order to keep up with changing business models amid increasingly diverse distribution methods, the Company will focus its efforts on expanding digital download sales, which promise stable revenues as well as reduced distribution costs and no inventory risk, in addition to stocked package games.
- (3) Strengthening Online Games
While mobile games for smartphones and PC online games are typically "free-to-play," revenues from such games have begun producing more level and stable revenues compared with stocked package software, as they pose no inventory risk or the risk of piracy and it is possible to sell additional items and contents upon watching the reaction of the customers. Consequently, the Company will make efforts to ensure stable and continuous revenues from online games through such means as accumulating optimal operating and management know-how required after the games have been distributed.
- (4) Focus on Pachinko & Pachislo Business
Although the Pachinko & Pachislo Business will continue to face a certain level of uncertainty due to the revision in the pachislo model certification method, this segment will be a new source of profits through the effects of synergy with popular titles. Going forward, the Company will respond flexibly by speeding up the development of compliant equipment and endeavor to expand its business opportunities through strategic business development.
- (5) Improvement of Overseas Sales
Given the maturity of the domestic market as well as the demographic changes in Japan, developing the large overseas markets will become crucial for the Company in order to promote its growth strategy. The Company has many brand titles that are popular overseas including Resident Evil and Street Fighter, both of which have been made into Hollywood movies, and is the world's leading holder of contents. Consequently, the Company will be making efforts to increase its revenues by proactively targeting Europe, the U.S. and Asia.
4. Issues to be addressed by the Company
Major issues to be addressed in consideration of the business environments surrounding the Capcom Group and future market trends are as follows:
- (1) Strengthening priority strategic divisions
In order to ensure its competitive superiority, the Company will concentrate its management resources mainly in the mobile contents development and marketing divisions, in addition to the core business of home video game software.
- (2) Expansion of business domains
In an effort to respond to the changing management environment and expand its business domains, the Company will focus on expanding its contents business by distributing games to devices other than home video game consoles, such as smartphones and tablets, as well as strengthening the Pachinko & Pachislo segment among others.
Additionally, in response to the increasing diversification of distribution channels, the Company will make efforts to expand digital download sales.
- (3) Promotion of overseas business
As the domestic market matures, the Company will need to focus on the overseas markets for its future business expansion. To this end, the Company will engage in strategic global expansion, which will include coordinating with its overseas subsidiaries, such as CAPCOM U.S.A., INC., a core subsidiary, to develop new markets as well as further cultivate the existing markets.
- (4) Selection and concentration of businesses
As part of the effective utilization of development resources, the Company will revitalize its businesses by means of a clear vision and speedy management and make efforts to enhance its corporate value through the concentrated and selective injection of business resources, including investments into growth fields and the withdrawal from unprofitable businesses so that the Group as a whole may demonstrate its comprehensive strengths.
- (5) Strengthening corporate structure
Through management reforms, the Company will strive to achieve flexible business management and enhance its management efficiency while pressing forward with the development of a corporate structure to the end of reinforcing its revenue base.
As part of these efforts, the Company will further improve its management by practicing strategic management of the Group by means of a precise management structure including its domestic and overseas affiliates, as well as reforms of the Group's financial structure.