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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.

FY2023

  • Question and Answer Summary

    Balancing the speed of development while maintaining game quality seems to be growing difficult in the industry overall. Is Capcom able to adhere to its title release schedule?
    We have been releasing new titles on schedule, in line with our title map. We have established a development system under which we can continuously and reliably launch major titles by strictly managing launch windows.
    Tell us your thoughts on subscription services. Are you able to obtain the purchasing data of users on an ongoing basis?
    We mainly use such services for the purpose of improving title brand recognition. Regarding user data, we negotiate with platform holders to obtain the most basic data while protecting personal information in accordance with the law.
    Capcom released Dragons Dogma 2 for $69.99 and has seen the results; tell me about your strategy for pricing game software going forward.
    This title was given a moderate reception from players and achieved 2.6 million units in sales as of the end of March 2024. Regarding pricing for future game releases, we will determine prices after carefully assessing user response and considering the rising cost of development.
    Capcom attempted to launch a live service title with Exoprimal, however it seems to have underperformed to plan. Tell us about your thoughts on live service games and further efforts in this genre.
    As a new IP, this title represented a new challenge for us. We believe that we were able to accumulate know-how and carry out technical verification that will be needed on major titles in the future, including for this genre, such as building experience with cross-platform play and server loads.
    Is Monster Hunter Wilds included in your guidance for the current fiscal year? Tell us about your target of 13 million units in sales for new titles.
    Currently, we have announced that Monster Hunter Wilds is scheduled for release in 2025, and we will disclose further details at the appropriate time. Regarding new titles during this fiscal year, we have a new IP Kunitsu-Gami: Path of the Goddess as well as AAA titles in the works.
    In which areas does Capcom expect sales volume to increase in the future?
    We expect that the number of units sold will increase in regions with a high percentage of young people and potential for long-term economic development. Additionally, going forward we plan to develop markets while taking into account PC penetration rates, infrastructure development status, and other factors.
    What are the factors and background behind the asset impairment?
    Many assets are created during the video game development process. Not all of these assets are used in the final product, and the costs for those that are not used are booked as an asset impairment. Additionally, development costs that are not expected to be recovered in a certain period are also included. Over the past five years, asset impairments have been approximately 14% to 25% of development investment, or on average about 20%. However, our focus is on selling games over the long term, because even with reduced prices, after development costs have been recouped the sale of games directly contributes to both revenue and profit. As stated above, asset impairments are inevitable within the creative development process. However, we set and manage target ROI for each title as well as overall development. Currently, we are able to continue selling games long after development investment has been recouped and maintain a high level of ROI.
    Tell us how you will expand catalog title unit sales.
    We aim to maximize the unit sales volume and profit for a title over an approximate 5-year span. While only an outline, our basic strategy for pricing titles begins at launch when games are sold for about $60; over time, we gradually reduce the price according to market value. After about five years, the price is typically reduced to $10 and then finally to $5. Looking at the 2023 fiscal year, unit sales significantly increased for Monster Hunter: World, a popular title from the Monster Hunter series, by offering the game at the affordable price of $9.99 in conjunction with the announcement of the new Monster Hunter Wilds.
    In addition, we have analyzed that our primary target market of console and PC game players is 1.5 billion people. Currently, we have been working on expanding brand recognition, focusing on emerging nations. In time, we expect to grow unit sales in these countries as the local telecommunication infrastructures and PC adoption rates improve.
    Looking at the mix of games that contribute to catalog title sales, does the largest impact come from the newer titles released in the previous fiscal year, or the group of titles from 2017 or earlier?
    The mix of catalog titles varies each year as a result of annual differences in sales volumes for each title. This is driven by the relative strength and price of each title, within our long-term pricing strategy in which we gradually reduce prices. Although profitability for titles from 2017 or later is greater, the updated revivals of past Resident Evil titles and Dragon’s Dogma: Dark Arisen have contributed to increased brand awareness.
    Regarding the Amusement Equipments business, what are your expectations for this market and your strategy for the future?
    Although this market has shrunk from its peak, we utilize our IP in this business as part of our Single Content Multiple Usage strategy. We will continue to analyze the market and organize our lineup to increase our market share.
    Looking at earnings in the previous fiscal year compared to initial guidance, tell us why operating income only had a 1-billion-yen upswing despite net sales having increased 12.5 billion yen.
    Factors behind the increase in net sales compared to our plan were mainly the impact of foreign exchange due to a weakening yen and booking digital licensing deals that had not been incorporated into guidance. On the other hand, the reason why profit did not rise as much as net sales was due to an increase in the amount of asset impairments booked, a decrease in operating income due to certain titles underperforming, an increase in general expenses due to higher volumes of physical catalog unit sales, and long-term strategic investments in human capital and IT.
    Dragon’s Dogma 2 seems to have not been well received by some users. How has this affected unit sales?
    We are generally satisfied with the 2.6 million units in sales for this title and expect it to contribute to catalog sales in the current fiscal year. We take the opinions and requests from players regarding the game’s content seriously and will work to address these while respecting the world and concept of the title.
    Capcom released titles from the Resident Evil series on iOS. As a high-end game maker, tell us about your outlook on the potential for mobile devices.
    We see these devices as having potential for us because, although mobile devices had lower technical capabilities in the past, recent smartphone devices are capable of providing the same high-end gaming content as consoles without making major changes. We are still assessing this development, as its impact on our current business performance is small.
  • Related information

    Question and Answer Summary

    While unit sales of catalog titles increased in the third quarter, the average selling price seems to have increased compared to the same period of the previous year. What factors caused this?
    The main factor was the year-on-year increase in unit sales of catalog titles with relatively higher selling prices, such as Resident Evil 4. We will continue working to maximize earnings by pricing based on market analysis in line with our medium- to long-term strategy.
    What has caused digital license revenue to exceed its annual target?
    The major driver of this has been providing our titles to subscription services. In considering how we provide games going forward, we will assess the needs of players while continuing to evaluate the use of subscription services based on market conditions.
    Tell me about the overall direction of next year’s earnings guidance.
    We are currently formulating guidance for the next fiscal year and are unable to discuss details at this time. In general, we plan to continue our medium-term management objective of 10% or more operating income growth. Also, given that long-term growth of catalog title sales are the foundation of our stable earnings, we will continue to promote increased unit sales volume worldwide. The average selling price of our titles will fluctuate depending on the mix of new and catalog titles, as well as the range of prices for the titles that are currently available for purchase.
    What new major titles do you plan to release in the next fiscal year?
    We have made no announcements regarding this. We will provide more information regarding next fiscal year’s titles at the appropriate time.
    What will your policy be in setting your foreign exchange rate assumptions for the fiscal year ending March 31, 2025?
    We will continue to base our exchange rate forecast on the conditions of the market and as such do not expect to significantly change our policy.
    Work-in-progress for game software has been increasing. What is your outlook regarding development costs going forward?
    The trend in recent years has been that as development cycles grow, work-in-progress for game software increases. However, we see the streamlining of development and enhancement of productivity as priority issues and are continuing to address these on an ongoing basis.
    Will there be any change to your strategy of maximizing profit growth via sales volume if you decrease the selling price of catalog titles in the fourth quarter?
    We will continue our approach of growing profit by increasing overall unit sales, offsetting any impact of reduced prices.
    What are the factors behind the growth in unit sales of catalog titles in the third quarter? Also, is there any change in your strategy to expand the number of sales regions and countries?
    Beyond our long-term pricing strategy, we believe that the factors that drove growth included the nomination of Resident Evil 4 for Game of the Year at The Game Awards 2023 in December 2023, as well as the increase in exposure of this title and the series as a whole due to expanded platform support. In addition, new title announcements for the Monster Hunter and Dragon’s Dogma series spurred an increase in unit sales for both. By region, the Monster Hunter series is gaining brand awareness in Asia, while the Resident Evil series is seeing unit sales growth in emerging markets and Latin America.
    What is the status of preorders for Dragon’s Dogma 2 and what is the outlook for the future?
    Preorders generally tend to increase directly before the release date of a title. This game has been well received by players and we will continue to monitor its progress as we approach its March 22 release date.
    Did the performance of your different business segments during the third quarter exceeded your expectations when compared to internal targets?
    The Digital Contents business was in line with expectations, including the impact of foreign exchange rates, while the Arcade Operations business and Amusement Equipments business slightly exceeded expectations.
    How likely is it that you will achieve your annual unit sales target of 45 million units?
    While the overall mix of new and catalog title sales may vary from initial expectations, we are aiming to achieve our full year target.
    Other companies are increasingly pricing games at $69.99. What is your pricing policy for the next fiscal year?
    Dragon’s Dogma 2, which is scheduled for release this fiscal year, will be priced at $69.99. Industrywide development costs are rising, and we are considering a price review as one option. Ultimately, we intend to take a thoughtful approach in pricing our games while ascertaining user feedback.
    What is your unit sales target for Monster Hunter Wilds? Do you aim to sell more units than Monster Hunter World?
    We do not disclose sales targets for individual titles. In general, we create titles with the intention of surpassing the performance of previous titles in a series.
    You stated that the third quarter results of the Digital Contents business were in line with expectations, including foreign exchange rates. Tell me what offset any foreign exchange tailwinds.
    While catalog sales were strong, impairment losses in the first half of the fiscal year and an increase in various costs were some of the factors that account for this; however, results were in line with our expectations overall.
    In addition to the fact that you are making steady progress against your full-year plan, you also have the upcoming launch of a new major title Dragon’s Dogma 2 in March. Why have you not revised your full-year guidance?
    We expect to make long-term strategic expenditures in the fourth quarter and are therefore focusing on fulfilling our stated full-year plan.
    You have announced that Monster Hunter Wilds will be released in 2025. What factors typically play a role in determining the launch window of a title?
    Ultimately, this decision is based on the progress of development.
    In the Amusement Equipments business, is the reason for the quarter-over-quarter increase in sales due to licensing income?
    The primary driver of this is not due to special licensing revenue, but rather revenue associated with the sales of machines. Also, while we plan to release one new model in the fourth quarter, due to the certification requirements of this business we are still in the process of preparing for release.
    Will EC platform sales become the mainstream sales channel in the Amusement Equipments business?
    EC platforms represent the diversification of sales channels, and we will continue to use different channels as appropriate to the situation.
    Following the launch of Exoprimal, will there be any changes in your development policy for new IP in the future?
    We will not change our policy regarding new IP. We will continue to dedicate a portion of our development investment to the creation of new IP.
    What are your sales expectations for Dragon’s Dogma 2?
    We do not disclose sales targets for individual titles, but we have been communicating that we consider this game to be in the million-selling class.
  • Related information

    Question and Answer Summary

    What factors resulted in the profitability decline between Q1 and Q2 in the Digital Contents business?
    An asset impairment of approximately 3 billion yen in this business during Q2 put downward pressure on profit.
    What impact did the exchange rate have on operating income in the first half of the fiscal year?
    The impact of the foreign exchange rate on operating income in the first half of the fiscal year was approximately 3 billion yen.
    How do you evaluate the performance of Monster Hunter Now at this point in time?
    Monster Hunter Now has surpassed 10 million downloads globally, driven primarily by players in Japan. Going forward, we look forward to the title’s ongoing growth overseas as well in order for it to contribute to raising awareness of the Monster Hunter brand worldwide.
    What impact do you expect Monster Hunter Now to have on earnings going forward?
    Our primary goal for Monster Hunter Now is to increase global brand awareness for the Monster Hunter series. While we anticipate a certain amount of royalty income for this title to accrue through the second half of this fiscal year, we expect the impact on consolidated earnings to be limited in nature.
    What measures will you take to achieve your new title unit sales target for the full fiscal year?
    During the second half of the fiscal year, in addition to the release of Apollo Justice: Ace Attorney Trilogy in January, we plan to release one currently undisclosed major title. Along with these, we intend to achieve our full-year new title unit sales target by continuing to grow sales of new titles released in the first half of the fiscal year, including Street Fighter 6.
    Tell me about the consumer home video game market environment.
    As has been the case to this point, we continue to see healthy growth for Consumer home video games in markets such as North America and have not discerned any significant changes in specific global regions.
    How do you evaluate the market for games on PC?
    As has been the trend in recent years, the market for games on PC is steadily growing and in turn the ratio of our unit sales for the PC platform has continued to rise.
    Tell me your outlook on achieving your full-year unit sales target of 45 million units. Given the situation as of the first half of the fiscal year, will it be difficult to achieve this?
    We aim to achieve our full-year targets with the release of a major new title during the second half of the fiscal year, and in line with our initial plans we will ramp up pricing promotions during the second half of the fiscal year in order to continue growing unit sales, especially for our back catalog.
    Is there any information on new titles you can share in relation to the Monster Hunter series’ 20th anniversary?
    We are unable to share additional details at this time.
    How do you evaluate the performance of Street Fighter 6 and how do you plan to further grow sales in the future?
    The game has received critical acclaim and surpassed 2.47 million units in sales globally by introducing fresh features and modes that appeal to a broader range of users, such as new Modern Type control inputs. However, given the relative size of the versus fighting game market, it is unlikely that the title will immediately achieve results on par with those of titles in the Monster Hunter or Resident Evil series. We look to continue expanding sales for this title over the long term, promoting it in our esports activities in order to grow the fighting game fanbase.
    What impact did Monster Hunter Now have on Q2 earnings?
    While we are unable to disclose specific figures, we recognized a certain amount of licensing revenue in the Mobile Contents business sub-segment.
    I’d like to hear more details about why profitability declined quarter on quarter in the Digital Contents business.
    In addition to the approximate 3-billion-yen asset impairment recognized in Q2, we recognized deferred revenue reversals in Q1, which led to a comparative decline in profitability between the two quarters.
    Is it possible you will recognize further asset impairments in the second half of the fiscal year?
    Not all the investment we make into game development each year will necessarily bear fruit given the creative trial-and-error process of making games. As such, in recent years we have tended to recognize asset impairments of roughly 10-15% of our annual development investment in a given fiscal year. Therefore, it’s possible that we may recognize a certain amount of asset impairments in the second half of this fiscal year as well.
    Compared to Q1, it seems that net sales during Q2 have not grown very much in the Amusement Equipments business despite selling 15 thousand units. Please explain why.
    This is due to a difference in sales channels. We use multiple sales channels concurrently and depending on the channel the unit sales price will change.
    Why has revenue from digital licensing grown so much quarter over quarter?
    This is primarily due to licensing revenue received for providing Exoprimal on Game Pass.
    Tell me what strategies you plan to implement to continue growing catalog title sales.
    We currently distribute our games in approximately 230 countries and regions annually. Going forward, rather than increasing the number of sales territories, we believe that increasing the unit sales volumes in each of these areas will be important. As such, we will promote ongoing pricing strategies while enhancing local marketing efforts. At the same time, we will concentrate on our esports and movie/media efforts with the aim of strengthening both our corporate brand and game brands.
    What is your aim in releasing Resident Evil titles for Apple devices such as the iPhone 15 Pro?
    This is a part of our fundamental multiplatform strategy. We look to maximize our user base by supporting a diverse range of platforms.
    What impact will the Steam Deck have on game sales for the PC platform?
    We do not anticipate this to have a material impact on our PC game sales because of the relative difference between its individual sales volume compared to the overall global install base for PC devices. We will continue to aim for global sales expansion by promoting pricing measures.
  • Related information

    Question and Answer Summary

    How do you evaluate your first quarter earnings performance compared to your plan?
    Overall, earnings for the first quarter were in line with our expectations, excluding the upward swing in foreign exchange rates.
    How do you evaluate the performance of Street Fighter 6?
    Compared to the internal plan for the title, sales are generally progressing in line with our expectations. We believe that its positive critical reception will work as a tailwind in expanding future sales of the game as a catalog title.
    How do you evaluate the performance of Exoprimal and what is your outlook for this title?
    Given that this game is an all-new IP, the situation is not without its challenges; however, we view the fact that the game has amassed over 1 million players to be positive. Going forward, we will continue to release content for the game while monitoring player behavior with an eye toward expanding sales.
    What are your thoughts on the relationship between critical reception and sales performance?
    While the strength of sales directly following launch will vary from title to title, we believe that high critical scores help build the reputation of a game, which can extend its overall life.
    Why is the average price of catalog titles not lower despite discount promotions run during the first quarter?
    The main reasons for this are contributions from Resident Evil 4, which was released at the end of the previous fiscal year, and the fact that we did not introduce any additional heavily discounted titles in the first quarter.
    What were the development costs for Street Fighter 6?
    We do not disclose specific development costs for individual titles.
    How do you see the progress made in the first quarter compared to your full-year plan? Is it possible you will raise your full-year guidance?
    As we have communicated from the beginning of this fiscal year, earnings will be more heavily weighted in the first half of the fiscal year and our first quarter business results are generally in-line with our internal projections. As such, we have not revised our full-year guidance.
    What is your lifetime sales target for Street Fighter 6?
    While we do not communicate specific figures for internal budgets, we look to outperform the title’s predecessor, Street Fighter V, and are aiming for more than 10 million units over the life of the title.
    What is the purpose of acquiring Swordcanes Studio and what is your future policy regarding M&A?
    We decided to make Swordcanes Studio a wholly-owned subsidiary in order to bolster our development organization, as they have exceptional 3D computer graphics production technology. We will continue to pursue mergers and acquisitions in order to strengthen our development organization, with a view to acquire technology or secure human resources that our company currently lacks.
    Looking at the full year, what are some potential risks in the second half of the year?
    We are not aware of any apparent serious risks at this time. However, steadily building catalog sales, which form the foundation of our earnings, is necessary to achieve our full-year earnings target.
    What are your expectations for Monster Hunter Now?
    Many people participated in the beta test, and we feel that expectations from players for this title are high. We see this as a very important title for further growing the Monster Hunter brand globally and driving expansion of video game sales in the Consumer sub-segment.
    What risks are there for Exoprimal being unprofitable?
    As this title was released during the second quarter, earnings from it will be reflected beginning in that period. We do not expect it to be unprofitable at this time.
    Have initial sales volumes decreased in conjunction with the longer product lives brought by selling games digitally?
    In recent years, along with waiting for discounts, we believe there are a certain number of players that also wait to see how well a game is reviewed after it is released. However, because the reputation of a game among players who bought it directly after its release is linked to its sales volume as a catalog title, we feel that the important point here is creating high-quality games.
    With a number of companies shifting their policy toward domestic development, what are your thoughts on the competition for acquiring talent?
    Acquiring superior talent is one of the most important management issues facing our company, and under the direction of the CHO we are continuing to carry out reforms, such as by revising our compensation and human resources systems. We are also focused on hiring talent from outside of Japan and have implemented improvements including systems to facilitate visits home.
    Is it possible for a new release to become a hit in emerging nations?
    While there are some economically advantaged people who will purchase new releases in emerging nations, we believe there are more players who buy games at reduced prices in these areas. Because of this, in such markets, rather than new releases we have made growing brand awareness a priority for expanding sales of lower-priced catalog titles.
    Is it possible you will adjust your full-year earnings for the sake of steady annual growth?
    First quarter earnings were in line with our expectations, however because our full-year earnings will largely depend on the sales performance of new and catalog titles in the second quarter and onward, it is difficult for us to provide an answer regarding our degree of certainty for achieving full-year targets at this time. All of us are working hard to deliver on our publicly announced guidance.
    Is it possible to reduce development costs in the medium term by adopting new technologies such as AI?
    We have been actively working to shrink costs for some time by carrying out technological research internally, including with the introduction of proprietary development engines such as MT Framework and RE ENGINE. That being said, we expect the development process to grow in step with advances in hardware functionality, and therefore believe it is important to continue to work to reduce costs in the future.

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