Here you can find an itemized listing of our directors' fundamental management policies, which include our basic corporate philosophy, management performance metrics, dividend policy, mid- to long-term strategies and challenges faced by management.
1. Fundamental Management Policy
We are creators of entertainment culture who aim to develop software content that excites and stimulates the senses. Management's criterion is mutual prosperity; we work to build trust and improve satisfaction with our stakeholders.
2. Key Performance Indicators
Capcom's objective is to enhance corporate value by expanding our businesses. We measure performance from a capital efficiency perspective and strive to enhance corporate value by improving return on equity (ROE). At the same time, we focus on cash flow management and securing profits.
3. Medium- and Long-Term Management Strategies
Establishing a corporate structure capable of securing stable profits regardless of changes in the environment is a critical challenge facing management in promoting growth. As such, we aim to improve business performance via the following measures.
(1) Promotion of the Single Content Multiple Usage strategy
The Company holds a significant number of popular brands such as Monster Hunter, Resident Evil and Street Fighter, which have been major hits in Japan as well as other markets, and is leveraging them across various sectors and products, including movies, animation, stationery, toys, and food and beverages. The Company will aggressively pursue the licensing business utilizing these intellectual properties given that it promises stable profit and, furthermore, room for growth.
(2) Strategies for operating segments
A. Digital Contents business
- The Company will focus its efforts on the development and sales of software for home video games, which is not only its principal business and core competence but also a growth driver. To this end, by clarifying the development processes and managing revenue with precision, based on medium-to long-term strategic maps, as well as through strategic alliances, strengthening its development structure, enhancing the development team and improving the development environment, the Company will strive to expand the development pipeline and product lineup, working toward being able to produce multiple million-seller titles each fiscal year.
- In order to diversify its sales structure, the Company will focus its efforts on expanding digital offerings, which involve less inventory risk while promising sustained profitability that is comparatively higher than one-time physical product sales.
- Regarding mobile contents, the Company looks to make a breakthrough and capture new customers while further cultivating existing customers via efforts that include bolstering the development structure, carrying out optimal post-launch operations (e.g., identifying customer trends, incorporating data insights into games, etc.), and developing business alliances.
B. Arcade Operations business
Amidst an increasing number of entertainment options and more diversified consumption within consumer segments, the Company will open stores with the aim of being an accessible form of entertainment in large shopping malls, where a certain amount of foot traffic can be expected, and will install prize merchandiser games and medal games that offer experience that cannot be found in home video games. Further, in order to secure stable profits each fiscal eriod, the Company will engage in a scrap and build policy to respond flexibly to changes in the market environment.
C. Amusement Equipment business
The adverse conditions faced in the Pachinko & Pachislo sub-segment are expected to continue for the foreseeable future, as uncertainties remain due to the player population trending downward and customers cutting back on spending. Accordingly, the Company will seek to overcome this impasse by adopting business strategies that are responsive to change and by carefully observing market trends.
(3) Esports business activities
Following the growth of the market overseas, esports have begun attracting attention in Japan as well. In addition to owning Street Fighter, the versus fighting game series that many consider to be the origin of esports, the Company has an abundance of experience and operational knowhow accumulated over the years by organizing the Capcom Pro Tour through its U.S. subsidiary. As such, recent trends provide extremely desirable new business opportunities to develop this new business. To this end, the Company aims to launch its esports business and to achieve profitability at an early date by leveraging Street Fighter and other popular contents to generate synergy. In addition, it will focus its business resources on the segment by allocating human resources, establishing a new, dedicated department and opening a facility specializing in esports.
(4) Expansion of overseas businesses
Development of the larger overseas markets is essential for the achievement of the Company's growth strategy as the domestic market matures and the population continues to age overall. The Company is one of the world's leading IP holders, with many titles and brands that are popular overseas, including Monster Hunter: World, which was a massive hit in the fiscal year under review, as well as Resident Evil and Street Fighter, both of which have been made into Hollywood movies. The Company will aggressively develop its global business by leveraging its well-known, in-house IP to promote the Capcom brand.
4. Our Business Environment and Issues to Address
In terms of future outlook, despite a slowdown in the domestic mobile content market, which has experienced continuous growth, the home video game market is expected to gain momentum from the revitalization of game software, owed in part to the massive success of Monster Hunter: World, and from the greater penetration of new hardware; additionally, the scale of VR (virtual reality) and AR (augented reality) markets is expected to increase as well. What's more, in recent years AI (artificial intelligence) that can play "go" (an Asian strategy board game) and "shogi" (Japanese chess) against professional players and win has emerged; with such advancements, we expect the use of AI in games only to increase, and further, that rapid technological innovation will lead to drastic changes in the external environment while the balance of power within the industry undergoes rapid reversals, where "winners" and "losers" swap positions as swiftly as discs turn in a game of Othello. Meanwhile, it is believed that 2018 will mark "esports year one," the start of a new era, as Japan—which is trailing other markets—begins taking significant steps in promoting esports. These include the establishment of JeSU (Japan eSports Union) in January, which integrated three industry groups, and the announcement by the J League (Japan Professional Football League) in March of its entry into the esports sector.
Under these circumstances, the Company will work to increase its corporate value through flexible business development based on "selection and concentration;" it will allocate business resources to priority divisions and growth areas by restructuring strategies and operations in response to shifts in the business environment, while also conducting a review of unprofitable divisions and revising its business portfolio.
To this end, the Company will implement the following measures for the achievement of sustainable growth.
(1) Securing and developing human resources
For a game software company like Capcom, employees are indeed human capital, and are recognized as important resources for the business. In order to pursue sustainable growth, it is essential to secure and train competent human resources. As such, the Company is enhancing its rank-based training programs, such as new employee training and manager candidate training, while also striving to boost morale and encourage discovery of potential abilities by adopting personnel systems that address changes in the environment and place the right person in the right position. Further, the Company edeavors to seek out progressive and creative human resources, and promotes diversity while carrying out hiring and evaluations without regard for gender, nationality or age in order to engage its diverse human resources.
(2) Promotion of work style reform
As a part of an effort to promote work-life balance, the Company is endeavoring to improve and maintain employee health by encouraging employees to take paid leave in order to reduce instances of long hours of work and by holding a Safety and Health Committee meeting every month. The Company is also working to create an environment that will empower employees to pursue their career actively with child-rearing support and other initiatives, which include on-site childcare facilities. At the same time, it will seek to foster a corporate culture that provides job satisfaction in order to secure and utilize competent human resources.
(3) Basic capital policies
- Dividend policy
The basic policy on the consolidated dividend payout ratio, which is one of the key performance indicators, is to maintain a payout ratio of 30% while continuing to make stable dividend payouts.
- Acquisition of treasury stock
Giving due consideration primarily to the changes in the business environment and financial condition, the Company will acquire treasury stock swiftly and flexibly when it is determined that it will contribute to increasing shareholder value.
- Total payout ratio
The Company is also mindful of the total payout ratio [(dividend paid + treasury stock acquired) ÷ net income], which shows the level of return to shareholders, and will strive to achieve market confidence based on well-balanced capital strategies.
(4) Basic policies on strategic holdings of publicly listed shares
- In order to strengthen and tighten relationships with companies with which there are ongoing business dealings, while eliminating habitual cross-holding and personal favoritism, the Company holds shares deemed optimum for its purposes, comprehensively taking into consideration the relevant advantages and disadvantages from medium to long-term perspectives, including whether the shares contribute to future business relationship and sustainable enhancement of corporate value.
- As regards said holdings, the Company verifies the relevant stock price fluctuation risk and economic rationality on the continuous holding of such shares.
- When exercising voting rights, the Company decides on whether to vote for or against each proposal pursuant to internal procedures, comprehensively taking into account the business conditions, serious scandals, and other factors pertaining to the relevant business partner.
(5) Efforts on corporate governance
The Company is working to strengthen corporate governance in order to achieve sustainable growth and medium-to long-term enhancement of its corporate value. It is doing so based on its corporate philosophy, which is to be a creator of entertainment culture that stimulates your senses, that moves and excites people through entertainment in the form of games. In order to promote sound management and improve business transparency, the Company endeavors to avoid risks and prevent scandals by establishing organizational structures that allow governance to function properly. Such endeavors include the establishment of the Remuneration Committee, the Nominating Committee and the Compliance Committee as voluntary committees. Meanwhile, the Company will be flexible as it engages in aggressive business development and strives to achieve its growth strategy, which includes investing in growth areas, implementing tie-up strategies and conducting mergers and acquisitions.