{"id":9408,"date":"2021-04-30T21:55:44","date_gmt":"2021-04-30T12:55:44","guid":{"rendered":"https:\/\/www.capcom.co.jp\/ir\/?page_id=9408"},"modified":"2026-03-17T17:19:24","modified_gmt":"2026-03-17T08:19:24","slug":"risk","status":"publish","type":"page","link":"https:\/\/www.capcom.co.jp\/ir\/english\/management\/risk.html","title":{"rendered":"Risk Management"},"content":{"rendered":"\n<!-- MENU management -->\r\n  <div class=\"c-navMenu is-sp\">\r\n\t<div class=\"categoryMenu\"><span class=\"menu\">MENU<span class=\"hm\"><span><\/span><span><\/span><span><\/span><\/span><\/span><\/div>\r\n\t<div class=\"c-navMenuCont\">\r\n\t  <ul class=\"navMenuArea\">\r\n\t\t<li><a href=\"\/ir\/english\/management\/policy.html\">Management Policy<\/a><\/li>\r\n\t\t<li><a href=\"\/ir\/english\/management\/strategies.html\">Mid-Term Plan<\/a><\/li>\r\n\t\t  <li><a href=\"\/ir\/english\/management\/disclosure.html\">Disclosure Policy<\/a><\/li>\r\n\t\t<li><a href=\"\/ir\/english\/management\/risk.html\">Risk Management<\/a><\/li>\r\n\t  <\/ul>\r\n\t<\/div>\r\n\t<div class=\"categoryClose\"><span>Close<\/span><\/div>\r\n\t<div class=\"closeBtnWrap\"><\/div>\r\n  <\/div>\r\n<!-- c-navMenu is-sp -->\r\n                \n<div class=\"risk\">\n\n<div class=\"updateBlock mt48\">\n<time class=\"entry-date\" datetime=\"2025-06-23T20:00:00\">(as of June 23, 2025)<\/time>\n<\/div>\n\n<div class=\"c-wysiwyg mb48\">\n<p>The Capcom Group (hereinafter &quot;the Group&quot;) ensures that its risk management system functions across the organization with internal Risk Management Regulations set forth to minimize damages, losses or the loss of trust by carrying out the appropriate measures in preparation to prevent various, foreseeable emergencies or in the event that an unforeseeable situation arises. Of the items relating to the status of its businesses and financial position as listed in its annual securities report*, Capcom is exposed to risks that may affect its operating results, financial status and cash flow, including but not limited to those stated in writing below.<\/p>\n\t\n<p>However, forecasts have been omitted because, should these risks manifest, it will be difficult to make rational forecasts regarding the impact on the Capcom Group\u2019s financial position, management results and cash flow situation. <\/p>\n<p>Further, items listed in the following text regarding the future were judged by the Capcom Group as of the end of the fiscal year ended March 31, 2025.<\/p>\n<p class=\"mB45\">*Available in Japanese only<\/p>\n<\/div>\n\n<div class=\"c-ttl-middleBlock\">\t\n<h2 class=\"c-ttl-middle\">1. Risks Related to Business Activities<\/h2>\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(1) Overseas Business Expansion<\/h3>\n<div class=\"c-wysiwyg\">\n<p>The Capcom Group is focusing on global expansion as one of the key initiatives in our growth strategy. The ratio of overseas sales to the Group&#8217;s consolidated sales is approximately 60%.<\/p>\n\t\n<p class=\"indent1em \">A. Market trends, the presence of competitors, political, economic, legal, cultural, religious, and customary factors, as well as various other country risks in the countries and regions where we sell overseas, as well as the securing of human resources, may adversely affect the Group&#8217;s business strategy, performance, and financial condition.<\/p>\n<p class=\"mL1em\">To address this, Capcom maintains steady communications with our overseas subsidiaries and distributors to understand the market trends of each region and carry out marketing that suits local needs.<\/p>\n\t\n<p class=\"indent1em mT20\">B. As the volume of overseas transaction expands, it is possible that losses or expense burdens will increase depending on regulations or the interpretation of the accounting laws by the customs or taxation authorities. The operating results and financial position of Capcom may be affected negatively by these conditions.<\/p>\n<p class=\"mL1em\">To address this, we work closely with our overseas subsidiaries and distributors to promote legal compliance.<\/p>\t\n\t\n<p class=\"indent1em mT20\">C. There is a risk that our business performance may be adversely affected by the increase in expenses and the failure to recover overseas investment in the event of unforeseeable circumstances which cannot be predicted by feasibility studies.<\/p>\n<\/div>\n<\/div>\n\t\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(2)\tExchange Rate Fluctuations<\/h3>\n<div class=\"c-wysiwyg\">\n<p>In preparing our consolidated financial statements, the Group converts the financial statements of overseas consolidated subsidiaries into yen. Additionally, a significant portion of the Group&#8217;s overseas sales is conducted in local currencies, and we hold a substantial amount of foreign currency-denominated operating receivables. Therefore, if exchange rates fluctuate significantly beyond expectations, it may affect our group&#8217;s performance and financial condition.<\/p>\n<p>As a countermeasure, we strive to minimize the impact of exchange rate fluctuations by utilizing forward exchange contracts to hedge against future exchange rate risks.<\/p>\n\n<\/div>\n<\/div>\n<\/div><!--\/\/c-ttl-middleBlock-->\n\t\n\t\n\t\n<div class=\"c-ttl-middleBlock\">\n<h2 class=\"c-ttl-middle\">2. Risks Related to Each Business<\/h2>\n\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(1)\tDigital Contents<\/h3>\n<div class=\"c-wysiwyg\">\n<p class=\"indent1em\">A. Increase in Development Costs<br>\nDevelopment costs have been rising steeply in recent years for home video games, driven by factors including the introduction of new technologies and functional advancements in devices. As such, there is a risk that we will be unable to recoup the development costs for some titles, such as for those that do not reach their target unit sales.<\/p>\n<p class=\"mL1em\">To address this, Capcom is focusing on maintaining our proprietary development engine, increasing and efficiently allocating development personnel to improve quality and development efficiency, and controlling development costs. Additionally, we are working to secure long-term profits by increasing unit sales volumes and improving profit margins through strengthening global sales.<\/p>\n\n<p class=\"indent1em mT25\">B. Development Technologies<br>\nProducts relating to game machines, including home video games, are subject to rapid technological progress. Therefore, there is a risk that sales opportunities may be lost due to any delays with technological progress, which may have an adverse effect on our business results and financial condition.\n<\/p>\n<p class=\"mL1em\">To address this, we are ceaselessly focused on development enabled by cutting-edge technology and provide a state-of-the-art work environment while employing top-tier developers.<\/p>\n\n<p class=\"indent1em mT25\">C. Obsolescence of Game Software<br>\nBeing a luxury good, video games face intense competition from other industries whose consumer segments overlap with our own, and the purchasing trends for video games can be affected by strong consumer interest in other forms of leisure. Further, long product life for physical, packaged games is not guaranteed. Given this, product obsolescence can occur quickly, and we might face the risk of increased inventories and irrecoverable development costs.<\/p>\n<p class=\"mL1em\">To address this, we are endeavoring to secure long-term revenue streams by aiming to reduce product inventories with stronger digital sales while continuously leveraging our major intellectual property with rereleases of past titles and in spin-off products.<\/p>\n\t\n<p class=\"indent1em mT25\">D. Dependency on Popular Series<br>\nThe Group has released many games, and a portion of these have tended to be more popular than others. Sales for our established franchises show limited volatility and help stabilize our business performance; however, if the market environment changes or if there are any defects or issues with these games, we face the risk of losing users, which could have an adverse effect on our business strategies, performance and financial condition.<\/p>\n<p class=\"mL1em\">To address this, in addition to regularly releasing major titles that utilize our core IP while creating new IP, we are pursuing enhanced revenue by expanding our user base while working to further increase brand value globally and better understand customer needs.<\/p>\n\n<p class=\"indent1em mT25\">E. Violent Scenes and Depictions<br>\nSome of our popular games contain scenes of violence, grotesque imagery, or other provocative depictions. When violent crimes or crimes involving juveniles occur, certain members of the media often claim that games have an effect on or relationship to these incidents. Because of this, we may be subject to defamation in public or possible regulatory action by governing bodies, which may have an adverse effect on our business performance or financial condition.<\/p>\n<p class=\"mL1em\">To address this, Capcom strictly follows the guidelines of age-based rating systems for video game software while working to raise awareness among children, students, schools and guardians through carrying out guest lectures and company visits.<\/p>\n\n<p class=\"indent1em mT25\">F. Seasonal Fluctuations<br>\nThe market experiences peak demand from the Christmas season through the New Year\u2019s holiday. Accordingly, trends in the demand for games fluctuate substantially throughout the year and there is a risk that business performance may substantially fluctuate from quarter to quarter.<\/p>\n<p class=\"mL1-5em\">To address this, we endeavor to extend the product lives of our games and stabilize revenue by strengthening global sales and through flexible pricing strategies.<\/p>\n\n<p class=\"indent1em mT25\">G. Trends in Game Platform Adoption, such as Home Video Game Consoles<br>\nWe provide video game titles primarily for home video game consoles made by Sony Interactive Entertainment Inc., Nintendo Co., Ltd., the Microsoft Corporation (U.S.), as well as on platforms such as the game distribution service provided by Valve Corporation (U.S.). Therefore, depending upon home console and platform adoption trends or the existence of defects or other issues in these, there is a risk that our business strategies, performance and financial condition may be adversely affected.<\/p>\n<p class=\"mL1em\">To address this, in addition to basing estimates for our future outlook on investigation and analysis of each game platform market, we diversify revenue risk by releasing titles on multiple platforms.<\/p>\n\t\n<p class=\"indent1em mT25\">H. License Agreements with Console Manufacturers<br>\nWe take a multi-platform approach, which involves providing home video game software titles on major current-generation game platforms and PC. Accordingly, while they are also our competitors, we have licenses for manufacturing and distributing game software from Sony Interactive Entertainment Inc., Nintendo Co., Ltd., and the Microsoft Corporation (U.S.), as well as a license to sell and distribute game software from Valve Corporation (U.S.). However, there is a risk that amendments to the licensing agreements and new terms and conditions of the agreements may have an adverse effect on our business strategies, performance and financial condition.<\/p>\n<p class=\"mL1em\">To address this, in addition to home video game consoles we are also focusing on sales of games for the PC platform while pursuing revenue growth globally.<\/p>\n\t\n<p class=\"indent1em mT25\">I. The Home Video Game Platform Cycle<br>\nIn the past, new home video game platforms have been released every three to eight years. Consumers tend to be reluctant to purchase new game software during transitions between hardware generations. Therefore, there is a risk that our business performance and financial condition may be adversely affected by sluggish sales during these transitional stages.<\/p>\n<p class=\"mL1em\">To address this, Capcom aims to increase sales volume by strengthening the provision of games that are not dependent on specific hardware, lengthening the life cycles of our games via digital sales ratio improvements, and bolstering catalog sales and flexible pricing policies.<\/p>\n\t\n<p class=\"indent1em mT25\">J. Mobile Market<br>\nThe game market has been expanding following the wide adoption of smartphones and other mobile devices; however, failing to adapt to new technology quickly enough has been known to disrupt IP holders\u2019 ability to provide content. Further, in-game purchasing systems have become a social issue, introducing the risk of government regulation. In addition to this, if the number of users were to decline due to more diverse entertainment options or consumer needs, there is a risk that our performance and financial situation could be adversely affected.<\/p>\n<p class=\"mL1em\">To address this, we are working to provide games that utilize our popular IP and capture new customers through monetization methods that do not pressure players for in-game purchases.<\/p>\n\t<\/div>\n<\/div>\n\t\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(2)\tArcade Operations<\/h3>\n<div class=\"c-wysiwyg\">\n<p>The earnings of the Arcade Operations business can be significantly affected by the popularity of machines, the diversification of entertainment options, the declining birthrate, intensified competition, changes in market conditions, and other such factors. Additionally, this business is regulated by the &#8220;Act on Control and Improvement of Amusement Business, etc.&#8221; and related laws. Future amendments or enactments of these laws may narrow the scope of business activities or increase the strictness of pre-screenings and inspections by supervisory authorities. As a result, there is a risk that the Group&#8217;s business plans may be hindered, potentially adversely affecting our performance and financial condition.<\/p>\n<p>To address this, we are working to attract new fan demographics and increase awareness by developing new business formats such as experiential amusement facilities, capsule toy specialty stores, and stores that sell character merchansise, as well as by installing original VR corners and kids&#8217; corners and holding events. Additionally, we strive to collect information from the police and administrative authorities, ensure compliance with laws and regulations, and maintain safe and sound store operations.<\/p>\n<\/div>\n<\/div>\n\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(3)\tAmusement Equipments<\/h3>\n<div class=\"c-wysiwyg\">\n<p>Regarding sales of Pachislo machines, under the provision of The Entertainment and Amusement Trades Rationalizing Act, we are allowed to sell only those machines that meet Security Electronics and Communications Technology Association requirements. Performance in this business segment may be significantly affected by the aforementioned systemic industry factors. As a result, there is a risk that our performance and financial condition may be adversely affected.<\/p>\n<p>To address this, through our membership in Nichidenkyo, we have worked to build a structure where we are able to ascertain the movements of the regulatory authorities and quickly adapt to changes in regulations.<\/p>\n<\/div>\n<\/div>\t\n\t\n<\/div><!--\/\/c-ttl-middleBlock-->\n            \n\n\n\t\n<div class=\"c-ttl-middleBlock\">\t\n<h2 class=\"c-ttl-middle\">3.\tRisks Relating to Financial Status and Operating Results<\/h2>\n<div class=\"c-ttl-smallBlock\">\n<div class=\"c-wysiwyg\">\n<p class=\"indent1em \">1. Although digital downloads have grown, our principal business of home video games is exposed to the risk of short product life for some titles, which hastens obsolescence and drives increased inventories. There is a risk that our business results and financial condition may be adversely affected by this.<\/p>\n\t\n<p class=\"indent1em mT25\">2. Our business performance may substantially fluctuate from quarter to quarter, as the market environment may change throughout the year in our industry. Also, we may not be able to generate cash flows as originally planned due to declines in sales, changes in management strategies and other factors, which may have an adverse effect on our business results and financial condition in the years following.<\/p>\n<p class=\"mL1em\">To address this, we strive to secure adequate funds by setting the level of cash and deposits required for activities such as ongoing development investment.<\/p>\n<\/div>\n<\/div>\n<\/div><!--\/\/c-ttl-middleBlock-->\n\t\n\t\n<div class=\"c-ttl-middleBlock\">\t\n<h2 class=\"c-ttl-middle\">4. Risks Relating to Sustainability<\/h2>\n<div class=\"c-ttl-smallBlock\">\n<h3 class=\"c-ttl-small\">(1)\tDevelopment and Retention of Human Resources<\/h3>\n<div class=\"c-wysiwyg\">\n<p>The mobility of personnel is relatively high in the game industry, and it is possible that our business activities will be disturbed if our talented employees decide to resign or move to our competitors. As such, these factors may negatively affect the business results and financial condition of Capcom.<\/p>\n\n<p>To address this, in addition to continuing initiatives to facilitate direct communication between management and employees by strengthening our human resources operations under the direction of the Chief Human Resources Officer (CHO), we are striving to readjust the working environment by securing and developing future talent, enhancing welfare programs, promoting diversity, expanding support for childcare and caregiving, and improving the development environment and facilities that support our development system.<\/p>\n<\/div>\n<\/div>\n\t\n<h3 class=\"c-ttl-small\">(2)\tIntellectual Property Rights<\/h3>\n<div class=\"c-wysiwyg\">\n<p>The development and distribution of products including game software and pachislo machines involves intellectual property rights such as patent rights, trademark rights, utility model rights, design rights, copyrights, etc. Because of this, it is probable that the development and distribution of game software will become difficult if we cannot acquire intellectual property rights. Additionally, we cannot deny the risk of the Group infringing on the intellectual property rights owned by third parties. These factors pose a risk that may adversely affect our business results and financial condition.<\/p>\n\t\n<p>To address this, we aim to protect our intellectual property by carrying out management of intellectual property rights in each country or region in addition to raising awareness of preventing infringement internally.<\/p>\n<\/div>\n\n<h3 class=\"c-ttl-small\">(3)\tInformation Security<\/h3>\n<div class=\"c-wysiwyg\">\n<p>There is a possibility that unauthorized access to our systems, computer viruses, or other unforeseen events using technology beyond the Group&#8217;s expectations could impact our hardware, software, and databases. If this results in the leakage of confidential information such as personal information or game development information, it could lead to liability for damages, a decline in corporate image, or the suspension of game development, potentially adversely affecting our performance and financial condition.<\/p>\n\t\n<p>To address this, we recognize the importance of the impact of information on corporate activities and are working to strengthen compliance with personal information protection laws  and laws protecting minors established in various countries. Additionally, recognizing the necessity of responding to various cyber risks both domestically and internationally, we are committed to strengthening our information security system in compliance with relevant cybersecurity laws and regulations. To this end, we take advice from the Security Oversight Committee, an external advisory organization, and strive to continuously operate and monitor our systems with the aim of building a system that can quickly respond to and recover from security risks if they materialize. Moving forward, we will continue to maintain and strengthen our information security and cyber risk management system based on the PDCA cycle.<\/p>\n<\/div>\n<\/div><!--\/\/c-ttl-middleBlock-->\n\t\n<div class=\"c-ttl-middleBlock\">\t\n<h2 class=\"c-ttl-middle\">5. Risks Relating to Lawsuits<\/h2>\n<div class=\"c-ttl-smallBlock\">\n<div class=\"c-wysiwyg\">\n<p>As we expand our business domain, it is possible we may be taken to court in the future over product liability, labor or intellectual property rights related issues. As a result, depending on the type of lawsuit and the amount claimed in the lawsuit, there is a risk of this adversely affecting our business results and financial position.<\/p>\n<p>To address this, we have been taking a variety of measures to reduce the risk of litigation globally.<\/p>\n<\/div>\n<\/div>\n<\/div><!--\/\/c-ttl-middleBlock-->\n\t\n<div class=\"c-ttl-middleBlock\">\t\n<h2 class=\"c-ttl-middle\">6. Risks Relating to Unforeseeable Events<\/h2>\n<div class=\"c-ttl-smallBlock\">\n<div class=\"c-wysiwyg\">\n<p>In the case that an unforeseeable event arises, either in Japan or overseas, it is possible that it may negatively affect the Capcom Group\u2019s business performance and financial position. Some examples of these events include: social unrest due to natural disasters such as typhoons, earthquakes and tsunamis; sudden changes in the climate; the outbreak or unchecked spread of disease and pandemics; economic crises due to unstable financial and asset markets; political disorder due to violence or terrorism, etc.<\/p>\n<p>To address this, we are working to prevent crises and minimize any impact should an unforeseeable event occur with measures that include crisis management regulations and an organization-wide risk management system.<\/p>\n<\/div>\n<\/div>\n<\/div><!--\/\/c-ttl-middleBlock-->\n\t\n\t\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(as of June 23, 2025) The Capcom Group (hereinafter &quot;the Group&quot;) ensures that its risk management sy [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":11942,"parent":9379,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"template\/ir_page.php","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-9408","page","type-page","status-publish","has-post-thumbnail","hentry"],"acf":[],"aioseo_notices":[],"lang":"english","translations":{"english":9408,"ja":152},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/pages\/9408"}],"collection":[{"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/comments?post=9408"}],"version-history":[{"count":11,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/pages\/9408\/revisions"}],"predecessor-version":[{"id":54615,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/pages\/9408\/revisions\/54615"}],"up":[{"embeddable":true,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/pages\/9379"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/media\/11942"}],"wp:attachment":[{"href":"https:\/\/www.capcom.co.jp\/ir\/wp-json\/wp\/v2\/media?parent=9408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}