Business Performance (Japan GAAP)

Here we breakdown our consolidated business results for the six months ended September 30, 2023 with graphs and diagrams.

During the six months ended September 30, 2023, Capcom Co., Ltd. and its affiliates (hereinafter, the Company) continued to actively pursue growth investments focused on enhancing digital sales to respond to the continuously evolving and expanding global market. Moreover, the Company implemented measures to improve its work environment as part of its Human Resources investment strategy, which is one of management’s priorities. These included strengthening its personnel organization, establishing the new Creative Studio, adopting a system with a more inclusive definition for spouses and partners, and enhancing employee welfare and benefits programs in order to further the steady, sustainable growth of the Company. In addition, the Company acquired a development company as a wholly-owned subsidiary whose strength lies in 3D CG production technologies applicable to consumer game development in order to enhance its corporate value through ongoing reinforcement of its development and technological strengths.

With this management policy, the Company increased its sales volume in the global market through the launch of major new titles in its flagship series and the active promotion of digital catalog title sales in its core Digital Contents business. As a result, the sales volume of the Digital Contents business in the six months ended September 30, 2023, was 22.6 million units, exceeding the 21.3 million units in the same period of the previous fiscal year, and significantly contributing to enhancing the value of the Company. The Company also leveraged the use of its major brands in films, licensed products, and in esports to enhance the brand strength of its intellectual property. Additionally, the Company worked to boost revenues by promoting efficient store operations and opening stores in new formats in the Arcade Operations business, and with sales of existing machines that effectively used the Company’s popular intellectual property in the Amusement Equipments business.

As a result, for the six months ended September 30, 2023, consolidated net sales were 74,934 million yen (up 52.7% year-over-year). In terms of profitability, operating income was 33,835 million yen (up 54.5% year-over-year), ordinary income was 36,164 million yen (up 57.3% year-over-year), and net income attributable to the owners of the parent was 25,287 million yen (up 56.7% year-over-year).

Thanks to the ongoing support from all stakeholders, the Company celebrated the 40th anniversary of its founding in June 2023. To mark this occasion, in addition to opening Capcom Town, a dedicated anniversary website and online destination, the Company is carrying out a variety of celebratory activities.

In June 2023, the Company released Street Fighter 6 (for PlayStation 5, PlayStation 4, Xbox Series X|S, PC), the latest title in the series that leads the Company’s eSports activities, to global acclaim. As a result, the game achieved sales of 2.47 million units, which contributed significantly to earnings.

Further, MegaMan Battle Network Legacy Collection Vol. 1 and Vol. 2 (for Nintendo Switch, PlayStation 4, PC), launched in April 2023, selling 1.42 million units supported by steady popularity. As part of efforts to focus on the creation of new intellectual properties, in July the Company released Exoprimal (for Xbox Series X|S, Xbox One, PlayStation 5, PlayStation 4, PC), a wholly new and fresh online team battle experience, which attracted over 1 million users.

In catalog title sales, Resident Evil 4, launched in March 2023, significantly contributed to sales growth, reaching 5.45 million units cumulatively, supported by ongoing promotional measures including a free title update for PlayStation VR2. Additionally, the Company implemented pricing strategies while conducting proactive promotional campaigns to gain wide recognition for its intellectual property and acquire new fans, focusing primarily on series title sales, such as Monster Hunter Rise and Resident Evil 2. As a result, catalog title sales reached 17.6 million units, exceeding the 16.05 million units in the same period of the previous fiscal year and boosting sales.

In Mobile Contents, Monster Hunter Now (for iOS, Android) was released in September, representing the latest mobile game in the Monster Hunter series. The number of worldwide downloads for the title exceeded 5 million, driving wider recognition of the brand.

At the Tokyo Game Show 2023 held in September, the Company’s booth attracted crowds of showgoers with playable demos of upcoming titles. Also, it was announced during the show that Monster Hunter Rise: Sunbreak won the Grand Award and Resident Evil 4 won an Award for Excellence in the Games of the Year Division of the Japan Game Awards: 2023, while Dragon’s Dogma 2 was selected in the Future Division, giving momentum to the sales of titles going forward.

The resulting net sales were 61,275 million yen (up 69.9% year-over-year) and operating income was 34,503 million yen (up 58.1% year-over-year).

In this business segment, economic activities recovered due to the Japanese government reclassifying COVID-19 as a Class 5 infectious disease (a category that includes the seasonal flu). As such, the Company strived to increase revenues through efficient operations at existing stores and by opening new stores in new business categories.

In April, the Company opened a Kids Banet store in Shizuoka, a facility featuring playground equipment for kids, while in June it opened a Crazy Banet interactive amusement facility at Aeon Mall in Niihama (Ehime Prefecture), bringing the total number of stores to 47 during the first six months of this fiscal year.

The resulting net sales were 9,169 million yen (up 25.2% year-over-year) and operating income was 1,128 million yen (up 66.5% year-over-year).

In this business segment, as the market started to rally driven by smart pachinko and pachislo machines, in August the Company launched its first smart pachislo machine, Sengoku BASARA GIGA, which sold 15,000 units.

The Company also achieved healthy catalog sales due to ongoing demand for Shin Onimusha 2, launched in August 2022, and Monster Hunter World: Iceborne, launched in January 2023, driven by their strong performance in the market.

The resulting net sales were 2,598 million yen (down 14.0% year-over-year) and operating income was 1,781 million yen (up 3.5% year-over-year).

In Other Businesses, the Company continued to focus on pursuing movie and television adaptations of its major intellectual property and developing character merchandise to increase the brand value of its titles, as exemplified by the worldwide release of the feature-length CG-animated movie Resident Evil: Death Island in July.

The Company has also been pursuing the expansion of the global esports fan base. In the Street Fighter League: Pro-JP 2023, a domestic team league game started in July, the Company featured Street Fighter 6, the latest title of the series. Further, in addition to events in Singapore and other areas, the Capcom Pro Tour 2023 kicked off in August worldwide, and the Company is offering its highest-ever prize pool for the tournament, amounting to over 2 million US dollars in total.

The resulting net sales were 1,891 million yen (down 28.8% year-over-year) and operating income was 614 million yen (down 51.2% year-over-year).

Total assets as of the end of the second quarter increased by 9,329 million yen from the end of the previous fiscal year to 226,694 million yen. The primary increases were 20,047 million yen in cash on hand and in banks, and 2,138 million yen in work in progress for game software. The primary decrease was 13,685 million yen in accounts receivable – trade.

Total liabilities as of the end of the second quarter decreased by 11,914 million yen from the end of the previous fiscal year to 44,322 million yen. The primary decreases were 5,123 million yen in accrued income taxes, 4,325 million yen in deferred revenue, and 3,090 million yen in accrued bonuses

Net assets as of the end of the second quarter increased by 21,243 million yen from the end of the previous fiscal year to 182,372 million yen. The primary increases were 25,287 million yen in quarterly net income attributable to owners of the parent, and 4,216 million yen in cumulative translation adjustments. The primary decrease was 8,524 million yen in dividends from retained earnings.

The forecast for the consolidated business results for the current fiscal year ending March 31, 2024, remains the same as what was projected at the financial results announcement on May 10, 2023.