(as of February 5, 2021)
This page contains materials used in earnings presentations and earnings calls with securities analysts and institutional investors. To ensure the fair disclosure of information to investors and shareholders worldwide, this page includes presentation materials, summaries of presentations by speakers and summaries of question-and-answer sessions. Investors can also view Japanese-language webcasts of Capcom's earnings presentation.
Capcom's earnings presentation for securities analysts and institutional investors is held following its fiscal year-end earnings announcement, while earnings calls are held quarterly.
3rd Quarter in FY2020 Presentation of Financial Results
January 28, 2021
Question and Answer Summary
What has been the digital sales trend from October for the Consumer sub-segment?
Digital sales have gradually risen from October through December. Looking at progress from January, we are on track to achieve our full-year plan.
What are your current estimates regarding the sales plan for Monster Hunter Rise?
Orders have been going well, however we will continue to monitor progress up through its release while maintaining a realistic outlook.
What impact will there be on Capcom if customers shift over from dedicated game consoles to PC?
We would not expect a large impact to our business, as there is not a significant difference in profitability between console and PC for us in the course of operating our business.
Are you thinking of strategically controlling the average unit price by raising the price of new titles in the Consumer sub-segment?
We set prices for both new and catalog titles while accounting for market conditions including customer price sensitivity, in order to extend the per-title lifetime of our products; as such, average unit prices are not give especial consideration when determining price.
Tell me how the Consumer sub-segment performed over the holiday season. Did H1 COVID tailwinds erode holiday revenue?
As Q3 business results for this sub-segment were up year-over-year, we have made steady progress during the period. While we think we may have somewhat benefited from so-called COVID tailwinds, we do not believe this was a major upside factor in our H1 business results.
Tell me the details of the revaluation of titles carried out during Q3 of FY2020.
This was a reassessment of the value of titles whose development progress differed from expectations and was carried out in the Digital Contents business.
Tell me the reasons for digital license revenue beating your forecast and if we can expect this revenue to continue going forward.
We feel that the demand for content from first-party platform holders is increasing lately, as evidenced by our current digital license revenue beating our initial forecast. While we believe this trend should continue in the near term, as a content holder it will be necessary for us to consider our approach to issues such as balancing revenue from subscription services and traditional full-game sales over the long term.
What are your expectations for the Amusement Equipments business in the next fiscal year and onward?
While the business has performed well following the release of three new models this fiscal year, we must continue to watch the market environment as there have been one-time issues such as the extension of deadlines for the removal of game machines manufactured before recent rules revisions from halls. We will continue to work on challenges such as cost improvement and expanding our sales channels.
What are your expectations for the regional sales breakdown for Monster Hunter Rise?
Our current impression is that initial demand has been strong in the Japanese market. We expect to see growth in the European and North American markets over the medium term. Also, we are paying attention to the differences in purchasing trends between this and Monster Hunter: World in order to facilitate building out future strategies for the series.
When will you book revenue for Monster Hunter Rise?
Development costs will be handled as usual, with an amount commensurate to actual sales booked in the March 31, 2021 fiscal year based on the lifetime sales plan for the title. We plan to book revenue in accordance with each country’s accounting standards, taking into account elements such as shipment delivery and release date timing.
Why is quarterly profit margin lower for Q3 than Q2 in the Digital Contents business?
The profit margin declined due to factors such as the holiday season in Q3, during which we promoted discounts for our back catalog of more than 200 titles.
When will you book promotional expenses for Monster Hunter Rise?
We anticipate booking a large portion of these expenses in the March 31, 2021 fiscal year.
Is it reasonable to benchmark sales expectations for Monster Hunter Rise to data for past handheld titles in the series?
While the market environment has changed since then, as has the digital ratio of sales, such data could be utilized as a general reference.
What are your expectations for the digital sales ratio of Monster Hunter Rise?
While we are unable to share a specific figure, it should not be significantly different from the recent trend seen with new releases.
Can we expect that results in Q1 for the March 31, 2022 fiscal year will increase year-over-year, given anticipated catalog sales of Monster Hunter Rise and the upcoming release of Resident Evil Village?
We are currently in the process of formulating our plan for the next fiscal year and are unable to share anything at this time.
Has the data security incident affected title releases?
There has been no significant impact at this point, and development work has largely returned to normal.
While expected unit sales have been increased by 1 million units from the initial plan in the Consumer sub-segment sales plan, the number of new titles has been decreased. Why is this?
We revised our unit sales plan following an examination of the current sales situation.
January 21, 2021
2nd Quarter in FY2020 Presentation of Financial Results
October 29, 2020
Question and Answer Summary
What is your reasoning for maintaining full-year guidance despite your strong first-half performance?
While we are not aware of any specific risks at this point in time, we are currently not updating our guidance for the full fiscal year because both the performance of Monster Hunter Rise, which is scheduled for release in the second half of the fiscal year, and the outlook for digital sales in the holiday season are yet uncertain.
What impact on results are expected of new Consumer business titles in the second half of the fiscal year?
Since Devil May Cry 5 Special Edition is a re-release title we have not incorporated an especially large contribution for it into guidance. Further, while Monster Hunter Rise is expected to ship over one million units, in formulating guidance we have taken into consideration both its late-March release date and focused platform support.
What can you tell me about profit in the Mobile business for the first half of this fiscal year?
Other than licensing revenue from an overseas alliance title, this business has not contributed to profit. We are considering our approach going forward for this business.
Which titles will comprise sales for new games for the second half of the fiscal year?
In addition to Resident Evil 3, which was released in the first half of the fiscal year, we plan to release both Monster Hunter Rise and Devil May Cry 5 Special Edition in the second half of the fiscal year. The scheduled release window for Resident Evil Village is 2021.
What was the digital sales trend in the Consumer business from July through September?
Sales were soft in July and August compared to those of the first quarter, however September was on par with June.
Going forward, what impact will the spread of COVID-19 in Europe have on business results?
While it’s possible that an increase in time at home could provide a tailwind in terms of digital sales growth, at this point we do not anticipate any special impact because of differences between countries within Europe, including their approaches to COVID-19 and preferences for physical games.
What effect has Demon Slayer: Kimetsu no Yaiba had on the Arcade Operations business?
We are not aware of any significant impact to earnings at this point in time. We hope that it will be a positive factor for Arcade Operations as we aim to return this business to profitability for the full year.
Are you concerned about cannibalization between Monster Hunter Rise and Monster Hunter World: Iceborne?
There is no major concern for cannibalization as both the platforms and concepts for these games differ.
Speak about the impact running proactive price promotions has on revenue. Also, what effect did making Street Fighter V a free trial during September have?
Choosing to discount or not has a significant effect on the unit sales plan for a given month. As September brought Tokyo Game Show 2020 Online, we focused on carrying out digital price promotions. Moving forward, we will accumulate know-how, working to see how actively we can control the business through discounting while maintaining a wholistic view of the overall market, including pricing trends for content. Results for Street Fighter V have been encouraging, contributing to sales of the latest title in the series and building interest in esports.
What are your expectations for Street Fighter: Duel in the Chinese mobile market?
We are currently preparing for a November launch, however aside from booking licensing revenue in the second quarter, we do not expect this title to significantly contribute to revenue during this fiscal year.
Is there a possibility of strategically delaying the release of your new titles?
Our title lineup is built while considering the balance between development progress and progress toward achieving business results. We do not have anything to share regarding launch delays at this time.
What factors drove the strong digital sales of the first half?
It is true that we experienced some, albeit limited, tailwind for demand stemming from an increase in consumer free-time spent at home due to COVID-19; however, as a company with many core-user focused brands, we believe that this effect was smaller compared to what was experienced by competitors in the industry.
The digital unit sales price seems to be higher than in the same period of the previous year. Is this a result of accumulating know-how in pricing?
As a result of releasing Monster Hunter World: Iceborne in the same period of the previous year, which had a lower unit price for a new title, our unit price this year is comparatively higher. We will continue to build knowhow in this area going forward, looking to carry out pricing that meets our game players’ price point levels.
Tell me the background behind Monster Hunter: World becoming a hit in overseas markets. Also, in considering that point, please also tell me your sales strategy for Monster Hunter Rise.
One reason for the success of Monster Hunter: World is that it was created for high-end home video game consoles and PCs. In particular, we have analyzed that releasing it on PC, which has a broad user base, was a significant factor. For Monster Hunter Rise, we plan to market the title after analyzing the tastes and preferences of those who own the platform it will be released for.
What does the licensing revenue recognized in the Digital Contents business indicate? Can we expect this to continue going forward?
This indicates one-off revenue not tied to units sold, including that for providing content to online platforms such as PlayStation Now and Xbox Game Pass. Going forward, we will examine the resources we dedicate to this segment while taking future platform adoption trends into consideration.
Do you plan to offer titles on Epic Games Store?
We are not commenting on specific services at this time. We will continue to evaluate opportunities on a variety of platforms.
Tell me about pricing for next-generation titles.
There is nothing we can share at this time. We ask that you wait for future announcements.
1st Quarter in FY2020 Presentation of Financial Results
August 3, 2020
Question and Answer Summary
Your full-year guidance remains unchanged; tell me about the risk of delays for titles currently under development.
The extent of COVID-19’s impact remains unforeseeable, however at this point in time we believe there are no risks of delay to development that would significantly affect our business results for this fiscal year. In the medium-term, there may be adjustments to our release lineup, however none that we think will cause a major deviation from our medium-term plan.
How has COVID-19 increased demand and how long will this continue?
Growth in digital sales has been driven by numerous factors, making it difficult to measure the individual effect that COVID-19 has had. However, while we may have benefited somewhat from increased demand for digital games, it is likely that the casual gaming audience, who under normal circumstances do not play games as often, has been turning to games with greater frequency as an alternate use of leisure time while restrictions on going outside the home are in place; as a publisher who creates content primarily for the core gaming audience, we believe that any effects to our business will be limited.
How do your Q1 results compare to internal projections?
Results for Q1 have exceeded our internal projections. In our Consumer business, we have made good progress with digital sales of our catalog to the full-year plan. We aim to maintain a similar momentum into Q2 and beyond through tactics such as price optimization, working toward achieving our full-year plan.
Digital sales have continued to be strong in recent years. Is there still room for growth here?
The characteristics for digital game markets differ by region, and we have not yet been able to universally support all markets at this point in time. Going forward we aim to continue expansion, targeting a 90% digital sales ratio.
What is the outlook for the alliance title with Tencent?
As this title represents an out-licensing arrangement, it differs from our in-house titles and will not provide continuous revenue following release. The title is currently being readied for launch.
How do your Q1 results by segment compare to internal projections?
Q1 results for Digital Contents (excluding Mobile Contents), Arcade Operations, Amusement Equipments and Other Businesses exceeded projections, beating our internal plan overall.
Given the progress you’ve made in the Digital Contents business with Q1 results, does the fact that you have maintained full-year guidance mean that expectations for the major new title scheduled for the 2H are not that high?
Regardless of the sales plan for the major title in the 2H, our full-year guidance remains unchanged as we are still contending with the issues brought by COVID-19 and are not at a point where we can clearly foresee business results beyond Q2.
How did the Arcade Operations business perform on a monthly basis during Q1?
Temporary closures were an issue, with business at a low in April and May; however, during June stores in areas less affected by COVID-19 provided contributions, bringing a return to profitability for the single month.
Tell me which catalog titles contributed during Q1 that are not mentioned in the financial results materials.
These included Resident Evil 4 (for current-generation platforms), Resident Evil 6 (for current-generation platforms), Dragon’s Dogma: Dark Arisen (for current-generation platforms), Devil May Cry 5, and Resident Evil 5 (for current-generation platforms).
Tell me about the digital sales ratio trend for new releases.
As this differs by title we are unable to provide specific information for a trend. However, we are monitoring this with interest as it will be a KPI important for sales strategy going forward. The digital sales ratio for Resident Evil 3, released in April 2020, is approximately 60%.
For a quarter in which there was a major new title release, promotional expenses for Q1 of the March 31, 2021 fiscal year seem low. Will this be the trend going forward?
Promotional expenses for Q1 of the March 31, 2021 fiscal year were lower due to the cancellation of events such as E3 following the spread of COVID-19. With consideration given to the wider adoption of digital purchases, going forward we will work to curb expenses through exploring optimal promotional methods.
Give me a breakdown of digital sales by platform and region.
In general, digital sales by platform were: 35% on PlayStation consoles, 35% on PC, 15% on Xbox devices and 15% on Nintendo consoles. Regionally, trends overall remained the same as they had been up to this point. Looking at regional sales of Resident Evil 3 by volume, starting with the region with the highest volume and going downward in order they were: North America, Europe, Japan, Asia.
Tell me about the Monster Hunter title you are developing for teenage children, mentioned at your Annual General Meeting of Shareholders.
There is no information that we can share at this time.
Tell me how Resident Evil 3 has been received, and what pricing strategies there are for the future.
With reference to sales trends for the original Resident Evil 3: Nemesis as well, results have not especially deviated from our internal sales plan. Looking ahead, we will consider pricing strategies targeting the holiday season, starting in autumn and running to the end of the year.
What is your policy regarding pricing for next-generation titles?
We do not have a set policy at this time. We will consider our approach having analyzed both our strengths and weaknesses while closely monitoring industry trends.