CAPCOM INTEGRATED REPORT L ead 2017 i ng Wo rld Cr ea to rs Code Number: 9697 CAPCOM INTEGRATED REPORT Get to Know 03 Business Model itm omm ent Capcom C / 05 Capcom Strengths P1 EO 9 C 11 Capcom History 13 Financial and 2017 Non-Financial Highlights 17 ESG Digest Management 19 CEO Commitment iscussion Strategy ’s D of 29 The COO’s Discussion of O trategies / O S P2 C th 9 e w Growth Strategies h o T r G 35 The Head of Development Discusses Development Policies and Foundation Building Editorial Policy 39 Financial Strategy According to the CFO Capcom’s Integrated Report conveys initiatives aimed at improving corporate value over the medium- to long-term to shareholders, investors and all other stakeholders. This report is issued with the intent of Business Activity 41 Business Segments Highlights creating opportunities for further dialogue. Achievements This report was created according to the 43 Digital Contents “International Integrated Reporting Framework” 47 Arcade Operations announced by the International Integrated Reporting Council (IIRC). 49 Amusement Equipments Furthermore, we aim to express ideas in a simple 51 Other Businesses and easily understood manner and visually represent important items to aid understanding. Details are available online. m Scho pco ol V Ca is ESG-based Value 53 Sustainable Development l ( it) a / Period and Scope ci P o 5 Creation Goals (SDGs) S 6 This report reviews the fiscal year ended March 31, 54 Environmental 2017 (April 1, 2016–March 31, 2017). When necessary, it also includes references to fiscal periods before and 55 Social after this timeframe. 61 Corporate Governance Unless otherwise indicated, the scope of data presented in this report is on a consolidated basis. 61 Directors 63 Principal Discussions at Board of Subject Index for Reference Directors Meetings Held in Fiscal 2016 External Environment PP43–52, P71, P75 65 Features of Capcom Corporate Governance Senior Management Perspectives 67 Corporate Governance Structure and Initiatives PP19–28, PP29–34, PP35-38, PP39-40 71 Risk Management Growth Strategy PP22–24, PP29–34 Performance and Financial Condition Financial and 73 11-Year Summary of PP13–14, PP39–40, PP41–52, PP73–85 Corporate Data Consolidated Financial Indicators Business Details PP03–04, PP41–42, P76 75 An Analysis of the Market and Capcom Relationship with Stakeholders 77 Financial Review PP17–18, PP25–26, PP54–60 81 Consolidated Balance Sheets Governance Merits 83 Consolidated Statements of Income / PP09-10, PP65–66 Consolidated Statements of Comprehensive Income External Assessments P56, P60, P70, P76 84 Consolidated Statements of Changes in Net Assets World-Class Development Capabilities 85 Consolidated Statements of Cash Flows PP35–38, Separate volume: The Latest 86 Stock Data Development Report 2017 87 Corporate Data Market Data Game market Diagram 18, 20, 22, P75 Arcade facilities market Diagram 24, 25, 26 Separate Volume: The Latest Development Report 2017 Amusement equipments market Diagram 27, 28 UNIVERSAL EXCITEMENT 01 CAPCOM INTEGRATED REPORT 2017 hs trengt Inte m S llec co tu p al Ca P ro p e rt ie s / 7 P P 0 o 0 T l P 5 i h c / e i e s H s e e a i a t n i d l d i o b F a f o p u D a n e C d v t a e n t l e i o o m p p n m t lo B e n C ve u n e ap e il t m co D d D op m S s in iscu vel trength g / sses De P35 iscussion ’s D of O trategies / O S P2 C th 9 e w h o T r G F 9 i n 3 a P n / c Contents i O tal / P a igi 43 F D l S C t e ra h te t gy to Corporate Philosophy According “Capcom: Creator of Entertainment Culture that Stimulates Your Senses” Our principle is to be a creator of entertainment culture. Through development of highly creative software contents that excite people and stimulate their senses, we have been aiming to offer an entirely o Region s t al new level of game entertainment. Since Capcom’s establishment in 1983, ion Re t vi u ta we have developed numerous products with world-class development ib l tr iz n a t capabilities as our strength. o i C o ( n Game content, an artistic media product that fascinates people, l ) a i / c P consisting of highly creative, multi-faceted elements such as characters, o 5 S 6 storyline, worldview and music, makes use of a variety of media that supports the development of an enriching society. Going forward, opmen Capcom aims to become a unique company recognized by society as evel t Env r D iro having the most entertaining content in the world. ou nm g e n n ti t t / fi P t 3 u 8 O ngths Gov Stre ern m anc co e ap / P C 09 Businesses her / P5 Ot 1 rin P cipal D Direct isc ors M us e sio et n in s g a s t H B e o l d a r i d n Photo by: Robert Paul o F f i s c a l 2 0 1 6 / P 6 3 CAPCOM INTEGRATED REPORT 2017 02 Business Model Leverage our three strengths to create popular content and generate value to society In line with our corporate philosophy, Capcom aims to improve its economic value; we do this by engaging in risk control through governance, while also creating original content (intellectual property) with our advanced development capabilities and fully leveraging the intellectual properties we’ve created. By providing the value generated through these activities to society and engaging in a series of activities to reinvest in the future, while also living up to the expectations of our stakeholders and society at large, we are growing our corporate value. Three Strengths Single Content Multiple Usage Strength Intellectual Properties (IP) Home Video Games PC Online Strength Develop games Development Create popular for multiple platforms content User base expanded through spread capabilities of smartphones (Human resources and technology) Net sales as of March 31, 2017 58.7billion yen Digital Download Strength Contents Mobile Contents Governance 03BusinessCAPCOM INTEGRATED REPORT 2017 Model Net sales as of March 31, 2017 87.1billion yen OUTPUT Social (Non-financial Results) Contributions 2 titles achieved Provided joy and stress relief Movies million-seller status Hollywood movies, animated movies, CG movies Hired 150 new graduates Arcade as developers Stimulated communication Game Machines between generations Token games Pachinko and pachislo Operations began at new R&D building Publishing Strategy books, illustrated compilations, comics Advanced technology 5 local revitalization projects spurred new industries Multimedia development of content 58 educational Accelerate roll-out of content to support activities Contributed to various forms of media and cultivate non-game user segment local revitalization Senior tours at 26 arcades Net sales as of March 31, 2017 Transitioned to a company 28.4 billion yen Provided space for with an audit and senior citizens to interact supervisory committee Events Created inbound effect from Concerts, theatrical productions raising consciousness Arcade Operations around gaming culture Facilities at shopping centers, big-box store locations Secured human resources Character in the IP industry Merchandising Figures, T-shirts, Food, etc. Business Model CAPCOM INTEGRATED REPORT 2017 04 Capcom Strengths Resident Evil series Total number of units sold 77million (As of March 31, 2017) Street Fighter series Total number of units sold 39million (As of March 31, 2017) Strength Capcom Intellectual Properties Characters (IP) Continue to Be Loved Around the World We have continued to create a wealth of popular content (intellectual properties) since our founding, 34 years ago. Today, our IP are loved the world over, and we are working KPI to maximize profitability by expanding from games (Fiscal year ended March 31, 2017) into movies, animation, stage productions and other works. Cumulative million-seller titles 79titles Number of units sold in fiscal year Key Points ended March 31, 2017 Numerous intellectual properties that are popular worldwide 19.4 million units Multiplatform strategy for publishing to maximize number of units sold Cumulative number of Single Content Multiple Usage strategy to Hollywood movies using our IP roll out intellectual properties into wide range of fields, including movies and merchandise 8 titles 05 CAPCOM INTEGRATED REPORT 2017 Increasing brand awareness Appreciation from Society and growing our fan base Using our IP to contribute to Brand value further society increases Our Strengths Reinforce ESG Growing our fan base and Mega Man series contributing to society with our IPs Total number of units sold We actively use our intellectual properties to contribute to society. Capcom characters 31 million are highly popular among the youth (As of March 31, 2017) demographic, so we utilize this brand awareness to support things like the development of the tourism industry, cultural promotion and the improvement of public order. Not only do these activities provide social value, but they can also be expected to introduce our content to a wider audience, further improving our brand value and growing our fan base. Monster Hunter series Total number of units sold 40 million (As of March 31, 2017) CAPCOM INTEGRATED REPORT 2017 06 Capcom Strengths 3D Scanning Please refer to page 38 RE ENGINE Please refer to page 38 The Source of Our Creativity Is Our Strength Outstanding Development capabilities Creators and (Human resources and technology) Cutting-Edge Technology Our roughly 2,000 in-house developers work daily to improve quality in the aim of delivering top-level entertainment.