To Our Stakeholders (From the CEO & COO) Capcom’s Value Message from Growth Strategy Business Activity ESG Information Financial and Creation Activities Management Achievements Corporate Data Promoting Growth Strategies and Governance Reforms Aimed at Enhancing Corporate Value Creating Entertaining Games that Continue to Excite People Around the World –––– This is the cornerstone of Capcom’s business activities and the source of our corporate value. Through our business activities, we bring the Company economic benefits while providing society with new value. We believe the value of a corporation stems from shared value creation. As the game market expands globally, in addition to pursuing short-term profit, Capcom is promoting growth strategies from a medium- to long-term perspective in order to continue enhancing corporate value into the future. Going forward, we will transform our fundamental revenue model from a one-time sale “transactional model” to an ongoing “recurring revenue model,” while at the same time thoroughly executing our Single Content Multiple Usage strategy and constructing a portfolio to achieve stable earnings. We will also engage in governance reforms to control risks that increase proportionally with the acceleration of our growth strategies, thoroughly implement management visualization and systemization and create a structure enabling rational management decisions based on an institutional design with external directors at its core. Furthermore, we will make an effort to strengthen non-financial capital not reflected in quantitative data. In addition to enhancing Capcom’s highly original content, the source of our competitive edge, and the development structure that creates it, we will build positive relationships with business partners, regional communities, employees and a variety of stakeholders among other important “capital” comprising Capcom corporate value. Through these various initiatives, we believe we can contribute to shareholder and investor profits by becoming a company of sustainable growth. Corporate Value Enhancement Increase Financial Capital Increase Non-Financial Capital • Achieve medium-term business goals • Enhance development structure • Increase ROE • Increase stock of IPs • Increase net cash • Build relationships with stakeholders Promote Growth Strategy Promote Governance Reforms Kenzo Tsujimoto Haruhiro Tsujimoto Chairman and President and Chief Executive Officer (CEO) Chief Operating Officer (COO) 11 CAPCOM INTEGRATED REPORT 2016 CAPCOM INTEGRATED REPORT 2016 12 Capcom’s Business Model Capcom’s Value Message from Growth Strategy Business Activity ESG Information Financial and Creation Activities Management Achievements Corporate Data Contributing to the Creation of a Rich Culture and Society through Game Development and Multiple Usage The use of advanced development capabilities to create original contents for branding is the source of Capcom’s long-term earnings. Capcom pursues high added value through business activities making use of abundant capital (inputs) within and outside the Company, regularly developing and releasing products (outputs) for multiple game platforms and media. The value (outcome) generated from these activities is provided to society and reinvested for the future. Through these activities, we make an effort to respond to social issues while expanding corporate value. Social Issues INPUT Business Activities OUTPUT/OUTCOME Impact on Society Use games to invigorate Generational and Human Capital New Title Production Flow Company-wide communications going interregional World’s top game Planning Development Quality Assurance Sales and Promotion Increase intellectual beyond location and communication gaps development human property (technology & generation resources new series) New technological Expand global fan segment development structure Stable (VR, etc.) structure for series Contribute to VR and New industries development simulation technology created from new Projects are started after Necessary tasks are allocated, Checks are conducted from Online promotions and user 60-Month Title advances and technologies Intellectual Capital a two-step approval process. including the creation of the user’s perspective by events conducted to ensure Once concepts and plans are a proprietary development a team comprising several the game world is always top Development Plan industry creation Product brand power refined, the project is engine and arrangement of hundred people. This involves of mind. approved for trial by planners, designers, not only a bug check, but also 52-Week Map Cumulative total of 71 management before full programmers and sound verification of game quality development. creators. Efforts are made to and ease of game play. million-seller titles improve quality and ensure Digital Contents Overconcentration development efficiency. Expand new titles in large cities Export Japan game Production Capital Increase catalog sales Declining regional Growth Strategy culture globally 1 Increase digital populations Cutting-edge Popular Capcom content Consumer Business download ratio development environment Expansion Expand Mobile and PC Games Utilization of assets Please refer to pages 37–38 previously purchased Increase collaborations Game with companies in Asia Utilize characters to Contents industry from other companies multi-platform Growth Strategy 2 stimulate interest in promotion [Canada] Net sales as of March 31, 2016 CAPCOM GAME STUDIO development Overhaul the regional communities VANCOUVER, INC. New users increase as Home video Digital download PC Online Mobile BEELINE INTERACTIVE Online Business online content grows games contents Contents billion CANADA, INC. Please refer to pages 39–40 yen [Japan] 52.5 K2 CO., LTD. Utilize arcades Senior citizen Single Content as a place where social isolation Multimedia Social Capital development Multiple Usage seniors can meet Core fans of content Create a variety of content derived from a single hit title Overseas affiliate Multimedia deployment Movies Arcade game Publishing Arcade Operations Events Character accelerates as users increase Net sales as of March 31, 2016 publishers Hollywood movies, machines Strategy books, Shopping centers, Concerts, merchandising Shortage of human animated movies, Video games, illustrated compilations, large-scale facilities theatrical productions Figures, T-shirts, Domestic cooperating Increase the number of resources involved CG movies pachinko and pachislo comics Food, etc. companies billion young people who want to with intellectual yen become game creators property Single Content Multiple Usage 24.4 13 CAPCOM INTEGRATED REPORT 2016 CAPCOM INTEGRATED REPORT 2016 14 Capcom History Capcom’s Value Message from Growth Strategy Business Activity ESG Information Financial and Creation Activities Management Achievements Corporate Data From Capcom of Japan 77,021 to Capcom of the World million yen Capcom Sales Note: 1983–1988: Fiscal years ended December 31 1989–2016: Fiscal years ended March 31 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Genesis Big Hits Drive Business Expansion Going Global Multimedia In 1983, Capcom Co., Ltd., was established in Osaka. The Nintendo In the 1990s, the arrival of Super NES prompted Capcom to formally In 2000, Capcom listed its shares on the First Section of the Tokyo Stock With the adoption of smartphones and tablets, the market for game Entertainment System (NES) came out that same year, but it was enter home video game development. Numerous hit titles were created Exchange. In the 2000s, Capcom created one hit title after another that apps not requiring consoles is growing rapidly. Capcom established difficult to create high-quality arcade-level content for, so Capcom that drew on Capcom’s arcade game development expertise. The Single gained popularity overseas. The Hollywood movie version of Resident Evil Beeline, a development company for smartphone game apps, which focused business development on the creation of arcade games using Content Multiple Usage strategy was launched in 1994 with the release earned 102 million dollars globally, part of a five title hit series that created hits including Smurfs’ Village. In recent years, Capcom has the proprietary high-spec circuit board “CP System.” of a Hollywood movie and TV animation series based on Street Fighter. continues to spread the Capcom brand throughout the world. focused efforts on PC online games and digital download contents. 1983 1992 2001 2010 Released our first originally Released Street Fighter II Released Onimusha for Distribution of app developed coin-op Little League. for Super NES. PlayStation 2. The first game for Smurfs’ Village for iOS began. PlayStation 2 that becomes It became the top download in a million-seller in Japan. approximately 100 countries around the world. 1984 1993 Released Devil May Cry for PlayStation 2. Released our first arcade Released Breath of Fire video game Vulgus. for Super NES. 2013 2005 Released Monster Hunter 4 for Released Sengoku BASARA for Nintendo 3DS. Return of the 1985 1996 PlayStation 2. “Monster Hunter Craze” selling Released our first home video Released Resident Evil for more than four million units. game 1942 for Nintendo PlayStation, a long selling title Released Dead Rising 3 the first Entertainment System (NES). which had record breaking sales, 2006 title in this series for Xbox One. and established the genre