Quarterly Reports (Japan GAAP)
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.
Presentation of Financial Results in FY21
Question and Answer Summary
- Why are you increasing your workforce?
- In addition to expanding our development pipeline in the future we are carrying out research into new technologies with the aim of providing even higher quality content. Further, in recent years the importance of staff who gather and analyze sales data has increased and as such we will continue to increase our workforce going forward.
- Catalog sales have shown favorable growth, however going forward what is your image for annual unit sales and your pipeline strategy?
- In the long-term, we aim to achieve 100 million units in annual sales volume, keeping in mind the global game hardware installation base with a focus on the PC platform. In aiming for 100 million units in annual sales, we will continue to expand our development pipeline in order to steadily release high-quality new titles that will contribute to earnings continuously going forward.
- Beyond licensing, tell me what you hope to achieve with in-house production of motion pictures in the Media business.
- With the recent adoption of streaming services, the distribution channels for movies, television series, etc. have increased. By leveraging our Media business, it has become possible now to globally grow awareness of a game’s universe or brand. Going forward we will strengthen our brands and expand our annual sales volume by actively working on our Media business in conjunction with selling game software.
- Tell me about your digital marketing strategy for future sales expansion.
- We are analyzing user demand by region, including factors such as price sensitivity, based on the global sales data we’ve collected via digital sales. Additionally, we want to bring our games to even more customers around the world by taking full advantage of synergies with our Media business.
- What do you view as important in growing unit sales globally?
- With its large global install base, we believe carrying out support for the PC platform is important. We will continue to grow unit sales and our user base by pursuing expansion on each platform, including the PC.
- What plans do you have for utilizing your dormant IP?
- We are currently putting together plans for our pipeline based on demand data from the market. Going forward, we will continue to take customers’ wishes into consideration while devising our title lineup.
- What is your outlook for the video game market 10 years from now, and what sort of technology will you require to address this future environment?
- We believe that in the market 10 years from now, content that utilizes virtual game spaces will be popular, with more real and active communication between players being carried out there. We will continue to closely monitor user demand while pursuing research for developing high-quality content that can capitalize on virtual spaces.
- You have stated that you believe PC to be an important platform. What measures do you have planned to grow your PC user base?
- While producing high-quality content is a given, we believe that pursuing the Media business in parallel to game software sales will be effective in further raising brand awareness with users globally. We look to expand our PC user base by working to enhance brand value through the synergetic effects of games and movies.
- What are your thoughts regarding future organizational structure following the increase to your workforce?
- While we currently carry out game development primarily in Development Division 1 and Development Division 2, we believe there may be room to expand our development organization in the future following further enhancement of our workforce.
Annual Financial Results Announcement
FY21 Q3 Financial Results
FY21 Q3 Financial Results Presentation
Question and Answer Summary
- What are your thoughts on the performance of catalog title sales in the third quarter of the March 2022 fiscal year?
- We have executed strategic pricing in stages based on our plan and performance has been in-line with our expectations.
- It looks like Monster Hunter Rise has contributed to catalog sales growth in the fiscal year ending March 2022. Will there be a title that makes similar contributions in the fiscal year ending March 2023?
- We are finalizing our plan for the next fiscal year and are currently unable to share specific details. For the Monster Hunter series, we believe contributions may come from sales growth of Monster Hunter Rise following the upcoming release of Monster Hunter Rise: Sunbreak, as well as from long-running sales of Monster Hunter: World, etc.
- Tell me about what measures you have in store for growing sales of Monster Hunter Rise on PC in conjunction with the upcoming release of Monster Hunter Rise: Sunbreak.
- Expanding the platforms on which we sold the title from only Nintendo Switch to also include the PC as well is a new endeavor for us, and as such we are continuing to closely watch sales trends. Further, we intend to take a long-term perspective in our approach to promotion of sales by carrying out strategic pricing in stages, as there are many consumers who use the PC as a gaming device in developing countries.
- What is the importance of your film and media business?
- Its primary goal is to increase brand value, toward the end of expanding sales in the Consumer sub-segment. While in the long-term we are keeping the standalone profitability of this business in our sights, we believe it will require a certain amount of time to realize.
- How confident are you that you will achieve your Consumer sub-segment unit sales volume guidance for the full fiscal year ending March 2022?
- We believe it is possible for us to achieve our target unit sales for both new and catalog titles through various promotional measures, such as discounts, etc.
- Tell me about the title pipeline for the fiscal year ending March 2023.
- We are finalizing our plan for the next fiscal year and are currently unable to share specific details.
- Given issues such as regulatory changes and the effect of parts shortages, what is your outlook on the Amusement Equipments business?
- We are currently unable to share specific details regarding our plan for the fiscal year ending March 2023. While we are putting together a plan that takes into account issues such as the regulatory environment and other external factors, we do not believe the plan will reflect a drastic turnaround at this time.
- What are your thoughts on the profitability of the Digital Contents business going forward?
- We have continued to maintain a high level of profitability in the Digital Contents business due to the shift to digital sales; however, going forward there is the possibility of a certain amount of variation as we proceed to strengthen investment in our personnel, with the aim of securing and training creative talent.
- Will there be any impact to your future development schedule due to platform hardware shortages?
- We believe there will not be any significant impact as we support a wide variety of platforms based on our multiplatform strategy.
- What approach are you taking to the metaverse?
- We believe providing high-quality content is more important than the merits of necessarily being at the forefront. As such, we are considering our approach while making progress on future research toward the end goal of creating content that can best exhibit our company’s strengths.
- Do you plan to offer medal-less smart pachislo machines?
- We are currently considering our approach, however, are unable to share specific details at this time.
- Has there been any impact from game restrictions in China, or from Covid demand?
- Most of our activity in the Chinese market takes the form of licensing out brands for mobile titles, and as such its impact on our business results should be small. While we currently do not believe that game restrictions in China will significantly affect us, we will continue to closely monitor market trends. Regarding Covid demand, while we may have received a certain, limited tailwind from this, we believe the primary cause of sales growth in our Consumer sub-segment has been our measures to shift to digital sales and not demand spurred by Covid.
- Tell me about the impact on revenue from unit sales growth of catalog titles in developing countries.
- While North America and Europe remain our primary markets, and therefore comparatively the impact is not large, going forward we expect the ratio of sales in developing nations to improve with greater adoption of the PC platform and will continue promoting its growth.
- How would you evaluate the Meta Quest 2 (Oculus Quest 2) edition of Resident Evil 4 and what are your plans for future development of VR games?
- Resident Evil 4 for Meta Quest 2 was a licensed-out project and as such its impact on revenue will be limited. We will take into account factors such as our accumulated know-how and the market environment in considering our approach to VR going forward.
FY21 Q2 Financial Results
FY21 Q2 Financial Results Presentation
Question and Answer Summary
- 3 billion yen was booked during this second quarter causing temporary pressure on operating income. In which business segment was this booked?
- This 3 billion yen is broken down into a write down and deferred revenue, both of which occurred for accounting purposes, as well as expenses accompanying investment in personnel. The write down and deferred revenue were in the Digital Contents business, while investment in personnel was carried out in all of our businesses. Both digital and global sales in our Consumer sub-segment continue to trend well, and there are no concerns regarding our steady growth going forward.
- What was the ratio of PC game unit sales during this second quarter?
- Approximately 40% of digital unit sales were for the PC version of games.
- Tell me about the digital sales trend for this second quarter.
- While the second quarter was relatively quieter than the first quarter, results were in line with our plan. As it will be difficult to quantify the impact of COVID demand going forward, we will continue to monitor customer behavior.
- How do you evaluate the decline in prices for catalog titles in this second quarter?
- We believe that growth in sales of lower priced titles due to expanding our sales regions is the cause of this. Many of our older titles enjoy high margins, and as such a decline in the average sales price will not significantly affect profitability.
- What caused the balance for work in progress for game software to decrease at the end of this second quarter?
- While we have been building up our lineup of titles in development, this decline is due to the release of major titles Resident Evil Village and Monster Hunter Stories 2: Wings of Ruin, as well as a revaluation of unreleased titles.
- Was the 3 billion yen booked during this second quarter that caused temporary pressure on operating income factored into your plan?
- The amounts for the write down and deferred revenue were mostly factored in, however the investment in personnel was not.
- Regarding catalog sales for titles other than Monster Hunter Rise, which regions are driving sales?
- North America and Europe are driving sales, however the market has extended into developing regions in recent years due to sales growth of the PC version of titles.
- I’ve heard that Netflix will enter the video game industry; do you have any plans to collaborate with them on projects other than movies and animation?
- Other than adapting our IP in movies and animation, there is nothing to announce at this time.
- What drove the year-over-year increased sales and profit in Other Businesses in this second quarter?
- The primary driver was licensing revenue from using our IP in film adaptations and in collaborations with popular overseas apps.
- Do you expect the revenue contributions for Monster Hunter Rise: Sunbreak to be on par with those of Monster Hunter World: Iceborne?
- While the two cannot be directly compared as they are for different platforms, we feel the title has potential given the growing popularity of the Monster Hunter brand.
- Tell me why profitability in the Digital Contents business declined during this second quarter as compared to the first quarter.
- This is a temporary decline due to a rise in costs from factors such as the launch of new titles including Monster Hunter Stories 2: Wings of Ruin, deferred revenue, and a revaluation of unreleased titles.
- Why have unit sales for physical packaged games at the end of this second quarter already surpassed their target for the full year plan?
- This is due to both the launch of new major titles Resident Evil Village and Monster Hunter Stories 2: Wings of Ruin, as well as growth in physical packaged sales for catalog title Monster Hunter Rise.
- What are your thoughts on profitability levels for the Arcade Operations business once the pandemic is over?
- While the business environment is trending toward recovery, it is currently difficult to predict what the market situation will be after the COVID-19 pandemic. We will continue to monitor customer trends and take the appropriate measures.
- What is your outlook for the Amusement Equipments business for the second half of the fiscal year ending March 2022?
- While we cannot disclose details regarding orders, external environmental factors related to certification for new machines has stabilized and we are working toward achieving guidance for the year.
- While I presume you are working to keep costs down in the Arcade Operations business during the pandemic, is it safe to assume this will facilitate profitability improvements once the pandemic is over?
- At this point it is difficult to predict the level of expenses or costs associated with an increase in customer traffic. We will continue to monitor customer trends and take the appropriate measures.
- What is your new release sales plan for the second half of the fiscal year ending March 2022?
- The PC version of Monster Hunter Rise, scheduled for a January 2022 release, is being treated as a catalog title, and our new title releases for this fiscal year, Resident Evil Village and Monster Hunter Stories 2: Wings of Ruin, have both already been released. We will work to expand volume through initiatives such as limited-time discounts, focusing efforts primarily on Resident Evil Village.
FY21 Q1 Financial Results
FY21 Q1 Financial Results Presentation
Question and Answer Summary
- Is the strong performance of catalog titles attributable to industry-wide factors, or factors unique to individual companies?
- In the first quarter of the fiscal year ending March 31, 2022 our strong catalog performance was primarily due to Monster Hunter Rise. We have not carried out comparisons with other companies.
- What is your policy regarding support for the PC platform going forward?
- In following our core strategy of multiplatform development, we continue to provide our content on a variety of devices, including PCs, in order to maximize our user base. As with home video game consoles, we feel that PCs are an important channel.
- Is demand for PC versions of games exceeding that for console versions?
- While demand for PC versions of games did not exceed that for console versions in the fiscal year ended March 31, 2021, we feel that the gap between the two is shrinking.
- How far along are you to achieving your fiscal year targets in each business segment?
- Overall, we are making satisfactory progress in all our business segments.
- Do you think there will be a drop off in COVID demand?
- At this point we have not seen a drop in demand. However, we believe any effects from COVID demand on us will be small, as many of our titles target core game players.
- Do you feel that video games have penetrated the mainstream market?
- In evaluating market trends in recent years, we believe that games, as a form of entertainment, have gained wider traction in the market.
- What can you share regarding the amount of the write down in work in progress for game software?
- We have revalued some unreleased titles by a certain amount, which falls within our internal estimates.
- Tell me the details regarding how much deferred revenue will impact net sales.
- We have recorded a variance of 500 million yen between the reversed portion of revenue for titles released in the fiscal year ended March 31, 2021 and the portion of deferred revenue for new titles in the current fiscal year.
- How do you judge the performance of Monster Hunter Stories 2: Wings of Ruin?
- At this point, the title has only recently been released. We are therefore waiting to evaluate its performance for the entire second quarter. We feel that initial sales have been favorable.
- You have yet to disclose your pipeline for next fiscal year onward. Are you certain you can achieve annual double-digit operating income growth?
- In the interest of our business, it is our policy to make title announcements after we have made certain their release. We believe it is possible for us to achieve double-digital operating income growth annually through leveraging means such as digital marketing while continuing to regularly release multiple major titles each fiscal year.
- What impact has COVID-19 had on development?
- While we are carrying out initiatives suitable to our development structure, such as staggered working hours, there has not been any major impact to the development progress on each of our titles.
- How will the resurgence of COVID-19 affect your Arcade Operations business going forward?
- We will be closely watching trends in the number of guests while adhering to the infection prevention policies of the property owners.
- What is your thinking on the increase in PC gamers worldwide?
- We are conscious of marked growth in emerging markets, as well as existing markets.
- What is your thinking regarding pricing for AAA titles on the new generation of consoles?
- For new titles, we would like to set prices that are appropriate, based on market data.
- Why have technical R&D costs increased year-over-year?
- This is due to booking incentive pay for members of R&D. Further, our policy going forward will be to invest in business infrastructure, beginning with introducing new technologies, in order to be prepared for the drastic changes that we anticipate in the market.
- Your cash balance is soon likely to exceed 100 billion yen. How do you intend to use this cash?
- We carry out approximately 30 billion yen of R&D investment each fiscal year; as such, given the hit-driven nature of the game industry, in the event that the market undergoes drastic environmental changes we feel it is reasonable for us to maintain about 100 billion yen in cash on hand in order to stably continue business operations for a three-year period. Further, we intend to continue investing in new technologies and business infrastructure improvements in order to manage changes in the market going forward.
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