INTEGRATED REPORT 2018 Code Number: 9697
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CAPCOM CO., LTD. INTEGRATED REPORT © CAPCOM U.S.A., INC. 2016, 2018 ALL RIGHTS RESERVED. Photo by: Carlton Beener 2018 CAPCOM INTEGRATED REPORT 2018 Code Number: 9697 Code Number: 9697 CAPCOM INTEGRATED REPORT Capcom’s Value Creation: Past, Present, Future 05 Value Creation Model 2018 07 History of Value Creation Past 09 Major Intellectual Properties (IP) Present ESG-Based Value Creation 11 Financial and ESG Highlights Present 49 The Head of Development Discusses 15 Business Segments Highlights Present Human Resources Strategy 17 Medium- to Long-Term Vision Future 53 Social 58 Environmental 59 Corporate Governance Medium- to Long-Term Growth Strategy 59 Directors 19 CEO Commitment 62 Features of Capcom Corporate Governance 29 The COO’s Discussion of Growth Strategies 63 Corporate Governance Structure and Initiatives 35 Case Study: Analysis of a Global Hit 69 Major Discussions at Board of Directors 37 Analysis of Successful PDCA Examples Meetings and Audit and Supervisory 39 Financial Strategy According to the CFO Committee Meetings Held in Fiscal 2017 71 Risk Management The Heart of Value Creation Financial Analysis and Corporate Data 41 The Passion and the Prowess to Compete Globally 73 An Analysis of the Market and Capcom 43 Resident Evil 2 75 Market Analysis 45 Devil May Cry 5 77 11-Year Summary of Consolidated 47 Mega Man 11 Financial Indicators 79 Financial Review 83 Segment Information 89 Consolidated Financial Statement 94 Stock Data 95 Corporate Data Editorial Policy 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 creating opportunities for further dialogue. Furthermore, we aim to express ideas in a simple and easily understood manner and visually represent important items to aid understanding. Details are available online. Period and Scope This report reviews the fiscal year ended March 31, 2018 (April 1, 2017–March 31, 2018). When necessary, it also includes references to fiscal periods before and after this timeframe. Unless otherwise indicated, the scope of data presented in this report is on a consolidated basis. Subject Index for Reference External Environment P73,PP75–76 Esports marketSenior Management PerspectivesCapcom Pro PP19 Tour–28,PP29 official–34,PP39 tournament–40,PP49–51 areas Growth Strategy PP17–18,PP23–24,PP29–34 USDPerformance and Financial Condition PP11 –territories12,PP39–40,PP77–93 900 Business Details PP05–3206,PP15–16,P74,PP83–87 The global esports market continues to grow year after Tournaments are held in not only the advanced gaming year, and by 2021 it is expected to exceed 1.6 billion markets of North America, Europe, and Japan but also Relationship with Stakeholders PP13–14,PP53–57 US dollars. in Central and South America, the Middle East, and Southeast Asia. Company and Market Analysis PP35–38,PP73–76 World-Class Development Capabilities PP41–48,PP49–52 01 CAPCOM INTEGRATED REPORT 2018 Corporate Philosophy 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 new level of game entertainment. Since Capcom’s establishment in 1983, we have developed numerous products with world-class development capabilities as our strength. Game content, an artistic media product that fascinates people, consisting of highly creative, multi-faceted elements such as characters, storyline, worlds and music, makes use of a variety of media that supports the development of a rich society. Going forward, Capcom aims to become a unique company recognized by society as having the most entertaining content in the world. © CAPCOM U.S.A., INC. 2016, 2018 ALL RIGHTS RESERVED. Photo by: Carlton Beener CAPCOM INTEGRATED REPORT 2018 02 A Global Esports Movement is Here in Anticipation of Official Olympic Adoption The esports market is expanding rapidly worldwide and is expected to grow to a scale rivaling that of real sporting events. The Japan Esports Union (JeSU) was established in 2018 in response to this trend. Leveraging the esports know-how we have been cultivating in North America, Capcom will contribute to the global advancement of esports. Global esports player population Esports market More than100million 900 USD The global esports player population has been growing The global esports market continues to grow year after rapidly since the 2000s, and is said to have ballooned year, and by 2021 it is expected to exceed 1.6 billion into a massive market of more than 100 million US dollars. people. 03 A Global Esports Movement is Here in Anticipation of Official Olympic Adoption The esports market is expanding rapidly worldwide and is expected to grow to a scale rivaling that of real sporting events. The Japan Esports Union (JeSU) was established in 2018 in response to this trend. Leveraging the esports know-how we have been cultivating in North America, Capcom will contribute to the global advancement of esports. Esports market Capcom Pro Tour official tournament areas million countries and 900 USD 32 territories The global esports market continues to grow year after Tournaments are held in not only the advanced gaming year, and by 2021 it is expected to exceed 1.6 billion markets of North America, Europe, and Japan but also US dollars. in Central and South America, the Middle East, and Southeast Asia. 04 Value Creation Model Amount invested in Financial Strategy According 29.0 to the CFO / P39 BusinessSocial Issues development billion yen Model Generational and Number of The Heart of Value Creation developers 2,141 / P41 interregional people communication gaps Intellectual Major Intellectual Properties Properties (IP) (IP) / P09 Million-seller19 series New industries created from new technologies INPUT Home Video Games Business Activities Overconcentration in large cities Declining regional populations Create Develop- Quality Sales and Planning ment Assurance Promotion Popular Content Senior citizens social isolation Improvement of Japan’s appeal Foundation for Sustainable Growth as a travel destination Digital Download The Head of Development Education and Discusses Human Resources Contents Utilization of Developers Strategy / P49 Shortage of human resources involved with intellectual Relationship with Society property Employees, Regional Communities, Customers, P53 Business Partners, Shareholders Corporate Governance P59 KPI Changes in Fiscal Year Ended March 2018 Human Capital Governance Game Market (Billions of dollars) Content Developers (People) Meetings with Shareholders and Investors (meetings) billions 13 7.4 dollars 2,141 people 420 meetings UP 12.4 % UP 147 people UP 58 meetings 137.4 2,141 420 2,052 1,994 122.2 1,808 1,902 355 352 370 362 100.7 85.8 68.8 2014 2015 2016 2017 2018 (Years) 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (Plan) (Years ended March 31) (Years ended March 31) Source: International Development Group Market Analysis / P75 ESG Highlights / P13 Corporate Governance / P59 Note: Number of media stories on investor relations meetings + number of visits with foreign and domestic investors 05 CAPCOM INTEGRATED REPORT 2018 Single Content Net sales for the year ended March 31, 2018 Multiple Usage 94.5 billion yen OUTPUT (Non-financial Social Contributions Business Modelresults) Publishing Strategy books, Arcade Game Machines illustrated compilations, comics Token games, 2 titles achieved Stimulated communication Pachinko and pachislo million-seller status between generations Built new Innovation through sound studios gaming technology Movies Home Video Games Hollywood movies, animated movies, CG movies PC Online 40 educational Contributed to Develop games for Multimedia development support activities local revitalization multiple platforms of content Net sales for the year ended Net sales for the year ended March 31, 2018 March 31, 2018 billion billion 210 senior tour Provided space for 7 4.1 yen 20.4 yen participants senior citizens to interact Boosted inbound tourism Hired 145 by raising consciousness new graduates Arcade Operations around gaming culture Mobile Contents Facilities at shopping centers, big-box store locations Trained human Established onsite resources in daycare center the IP industry Character Merchandising Figures, T-shirts, Esports Events food, etc. Concerts, theatrical productions Social Capital Net Sales (Billions of yen) Business Segment Sales Ratio (%) Cumulative number of regional vitalization projects (projects) Digital Contents 78.4% 94.5 billion yen Arcade Operations 10.8% 19 projects Amusement Equipments 8.3% UP 8.4 % Other Businesses 2.5% UP 4 projects 102.2 19 94.5 2.5% 87.1 77.0 8.3% 15 64.2 10.8% 10 78.4% 5 3 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (Years ended March 31) Fiscal year ended March 31, 2018 (Years ended March 31) Financial Highlights / P11 Segment Information / P83 Social / P53 CAPCOM INTEGRATED REPORT 2018 06 History of Value Creation Past From Capcom of Japan to Capcom of the World Trend in Operating Income Note: 1983–1988: Fiscal years ended December 31 1989–2017: Fiscal years ended March 31 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Genesis Big Hits Drive Business Expansion 1983, Capcom Co., Ltd. was established in Osaka. The Nintendo In the 1990s, the arrival of Super NES prompted Capcom to formally enter Entertainment System (NES) came out that same year, but it was difficult home video game development. Numerous hit titles were created that to develop high-quality arcade-level content for, so Capcom focused drew on Capcom’s arcade game development expertise. The Single Content business development on the creation and sales of arcade games using Multiple Usage strategy was launched in earnest in 1994 with the release the proprietary high-spec circuit board “CP System.” of a Hollywood movie and animated movie based on Street Fighter.