Earnings Transcript for CCOEF - Q4 Fiscal Year 2022

Haruhiro Tsujimoto: I'm Tsujimoto, President of Capcom. Thank you for joining us today for Capcom Full Year Financial Results Presentation despite your very busy schedule. Firstly, I would like to go over Capcom's corporate philosophy once again. Capcom is a creator of entertainment culture that stimulates your senses. And since our founding, we have provided games and other high-quality content to create smiles and move hearts around the globe. Our purpose is to contribute to building richer, more fulfilling lives for people through games and other content. We will bring joy and emotion to the world and work to create an environment where games can be enjoyed while providing the energy for people to push forward in their lives. And through these efforts, going forward, we will contribute to addressing important societal issues while building a sustainable society. June 11 marks the 40th anniversary of our founding. To celebrate, we will open Capcom Town, a website built to be a digital destination that fans around the world can enjoy. We will also plan to release an anniversary video over our social channels and many other global-facing activities from different businesses. Through the activities, we'd like to express our gratitude for your support over the past 40 years, while also enhancing branding for further growth in the future. Moving on, I will discuss our mid-term management objectives and our plans for FY '23. First, I would like to go over our medium-term management objectives. Our current medium-term goal is annual operating profit growth of least 10%. In FY '22, we continued to pursue enhanced digital sales in our consumer business subsegment while steadily building up global software sales and profit. As a result, we achieved our 10th consecutive year of profit growth since FY '12, as well as our sixth consecutive year of record profit. In FY '23, we are aiming to grow further to JPY56 billion in operating profit. Unit sales growth in the consumer business is supporting this ongoing profit growth. Unit sales volume has increased since FY 2014 for eight consecutive years due to promoting digital sales and the steady release of major hit titles in recent years. Further, following the shift to digital sales, both the volume and ratio of our catalog title sales has increased, thanks to expanding demand for catalog titles globally. We will continue to aim for sales volume growth to support stable earnings growth. Beyond that, considering that the current population of game players is set to be 3 billion, I believe our long-term goal of 100 million units of annual sales is possible. Next, I would like to explain our activities to further expand unit sales volume. First is expanding our sales regions by actively supporting the PC platform. As shown by this map, we have widened our sales regions in recent years, thanks to greater adoption of digital sales on PC, which has enabled us to sell our games even in countries and regions where dedicated game consoles are not available. In the prior year, including our back-catalog of games, we sold 307 different products in 230 countries and regions, with more than 40% of volumes sold on the PC. Further, per country sales volume has also grown compared to five years ago. Looking ahead, we will raise the level of sales volume in lower-performing countries and regions by executing price strategies and bolstering our brand. At the same time, we look to build synergistic effect between our pricing strategies and communications by utilizing digital events, such as Capcom Showcase and Capcom Spotlight. The second effort is releasing high-quality titles on a regular continuous basis. In recent years, following the release of our new game, we've been able to continue selling that same game over the long term as high-margin catalog title by carrying out digital discount in stages. This is evidenced by the results since the FY 2016 results when we began to accelerate our focus on digital sales. For example, Resident Evil 7 was released in FY 2016 and it has sold over 1 million units each year for seven consecutive years with cumulative sales now over 12 million units. Similarly, Monster Hunter