カプコン（9697） – CAPCOM_Integrated Report2021_2/3

The Head of Development discusses strategyCreativeReportGenerating andcultivating popularIPsPromoting an enhanced digital strategyYoichi EgawaDirector and Executive Corporate Officer in charge of Development Divisions and Pachinko & Pachislo Business Divisions of the Company47CAPCOM INTEGRATED REPORT 2021*Background: The Foley Stage is where the various sound effects for games are recorded and produced. The diverse floor surfaces and myriad recording tools make it possible to recreate any number of scenes. Using the same techniques that are used in recent Hollywood movies, we are able to produce high quality game sound offering an even more immersive experience.CreativeValue Creation StoryLatest Creative ReportMedium- to Long-TermGrowth StrategyFoundation forSustainable Growth (ESG)Financial Analysis andCorporate Data1Overall development policy2Development strategyAs we usher in the age of cloud computing and 5G, the global trend of being able to play games anytime, anywhere is accelerating. Furthermore, with the spread of social media, anyone can be an influencer, and the formula for turning a game into a hit is also changing. In this environment, it is essential that we develop games while taking into consideration expanding online services and coordinating with marketing divisions. Meanwhile, it remains crucial that we continue to produce one-of-a-kind content that can be successful in the global market. Capcom aims to be the world’s best game content company. It goes without saying that we are putting great effort into producing games of world-class quality, but we are also striving to create fans via ongoing services that continuously stimulate user interest with strategic digital sales and the steady release of additional content to support that quality. On top of the know-how we have amassed thus far, looking to the future, we are challenging ourselves to create games that will pioneer the next generation of Capcom quality with visual technology that produces impactful graphics and improved network technology that supports various devices and cross-platform play.3Cooperative technology approachI believe that hit titles are not the product of chance, but that they are the result of the entire development organization’s collaborative efforts. Game development at Capcom takes place on a large scale. One team can consist of more than 300 people. That is why we need an organization that is optimized for sharing knowledge and technology. In that respect, the division of Capcom that performs technology research, which is the foundation for title development, is the key to our success. RE ENGINE, which was created by the R&D Foundational Technology Department, made its debut with Resident Evil 7 biohazard, and most recently it was utilized in Monster Hunter Rise. These two brands are different in terms of both game characteristics and user demographics. In order to fully express the respective characteristics of each title while adapting them for multiple platforms, those in charge of technical development transcend departmental boundaries in their engagement with title development teams to provide the optimal development environement for each title. One of the biggest advantages of using a proprietary engine is that it provides an environement that allows our development team to focus on high quality game creation. Monster Hunter Rise, which was developed in this environment, exceeded expectations in sales and has been well received among users. Going forward, we will continue to create high-quality titles that win over players across the globe by maximizing and evolving the use of RE ENGINE in our world-class development environment. Based on our medium-term goals, as the head of development, I am striving to fulfill my revenue responsibilities by allocating 80% of the development investment budget to steaily developing popular IP series such as Resident Evil and Monster Hunter for various platforms. At the same time, we are also working on creating new IPs utilizing the talent pool we have expanded through our proactive hiring efforts. Most recently, we announced the action adventure title PRAGMATA for the new generation of consoles, and we are making steady progress on its development.Our proprietary game development engine, RE ENGINE, is an integral part of Capcom’s content development. RE ENGINE is an outstanding game engine that not only makes it possible to develop high quality games while reducing development costs, it maximizes the performance of each piece of hardware. For example, in Monster Hunter Rise it enables seamless cooperative play without interuptions due to data loading. We will continue to evolve this proprietary engine while promoting Capcom’s unique approach to game creation. Further, we will drive our customer management to understand the playing trends and preferences of users while also building a business model for online operations, taking into account the situation of our free additional DLC for titles such as Monster Hunter Rise and Resident Evil Village. 4Training developersThe starting point for creating an interesting game is people. At Capcom, we believe game development is the development of people, so we focus a lot of effort on hiring, training, and advancing our human resources. In terms of hiring, since 2013, we have strategically hired approximately 100 developers each year, and we soon plan to have 2,500 people in our ranks of developers. Newly hired young employees are given the chance to acquire know-how and skills through hands-on experience in the field as they are assigned to the development of popular IPs and major titles. PRAGMATA is just one such endeavor for our young employees. I feel that incorporating the youthful sensibilities of digital natives adds a new appeal to IP. In addition, the framework we have introduced ensures that that our highly capable younger employees are supported and trained by their teams so that for the next title they work on, they can take on the role of a core member leading its overall development. In this way, we are steadily training the next generation of leadership candidates. Development amid the COVID-19 pandemic continues to be a series a of trials and errors, as it was last year, but the pursuit of something through trial and error is also the very essence of craftsmanship. We will never give up on our commitment to create entertaining games so that even more people around the world can experience Capcom’s content. Home video game software sales trends (units in ten thousands)(Years ended March 31)Total unit sales2,4402,5302,5503,0103,2002018201920202021 (Actual)2022 (Plan)Monster Hunter: WorldResident Evil 7biohazard (catalog title)Marvel VS. Capcom: Infinite790160100Monster Hunter: World (catalog title)Resident Evil 2Devil May Cry 5450420210Monster HunterWorld: IceborneMonster Hunter: World (catalog title)Resident Evil 2 (catalog title)520320240Monster Hunter RiseResident Evil VillageResident Evil 3Monster Hunter World: Iceborne (catalog title)Monster Hunter Stories 2: Wings of RuinMonster Hunter Rise (catalog title)480390240CAPCOM INTEGRATED REPORT 2021 48Monster Hunter RiseWhether solo or with friends, it’s easy to pick up and play,and will leave you wanting more.Get ready to rise to a new hunting ground.Managing Corporate OfficerHead of Consumer Games Development Division 2Ryozo TsujimotoHe has served as the series producer since the release of Monster Hunter Freedom 2 in 2007. As producer for the latest title, Monster Hunter Rise, he oversees all aspects of production.A new “Mon-Hun,” perfect for playing anywhereBalance between graphics and action achieved with RE ENGINEThe concept of Monster Hunter, which has not changed since the first title in the series, is an action game that can be played cooperatively with others. When it was decided that we would develop a title for Nintendo Switch, which is highly portable, it inspired a strong desire in me to create a Monster Hunter game that was different from the record-breaking hit Monster Hunter: World (MH:W herein) that also took into account the portability of the platform. Game devices that can be taken on the go require a unique tempo and an “anytime, anywhere” playing style. I decided to create an entirely new title that allowed players to effortlessly invite friends to go hunting, providing a different feel from MH:W, which was created to sit back and enjoy playing on a stationary console. Mr. Kadowaki serving as producer and Mr. Ichinose serving as director took the lead as we began development on Monster Hunter Rise (MHRise herein). In order to give the hunting action in MHRise a new feel, we made use of our proprietary development engine RE ENGINE. Based on the concept of “anytime, anywhere, effortlessly,” new additions were introduced to the game, such as the Wirebug hunting actions that allows players to freely traverse over terrain and Palamutes, which are dog-like hunting Buddies that players can ride to move between the seamlessly connected locales at high speed. We were also able to achieve both the highest standard of graphics for the Nintendo Switch and a short loading time. All of these innovations are the result of our efforts to provide stress-free play even without a TV or other large screen. I feel that RE ENGINE played a large role in our ability to achieve this new hunting experience. The development team and engine are the two pillars expanding the possibilities for expression and action in MHRise.49CAPCOM INTEGRATED REPORT 2021Value Creation StoryLatest Creative ReportMedium- to Long-TermGrowth StrategyFoundation forSustainable Growth (ESG)Financial Analysis andCorporate DataFuture strategyPC version to be released in early 2022! Aiming to increase fans worldwideIn response to the needs of users who want to play on PC, we are currently developing the PC version utilizing the RE ENGINE.Sales Strategy SummaryPre-release strategyTitle announcement September 2020 Shared information on social media,free demo releasedFully utilized online promotionSales expansionstrategySurpassed 5 million unitsone week after releaseWe stimulated purchase intention with offers such as pre-order bonuses, as well as special editions containing in-game items and two copies of the game to encourage users to invite their friends to play. There was ample downloadable content available from the day the game was released.Strategy fordeep engagementSurpassed 7 million units globally Collaboration with new RPG, Monster Hunter Stories 2: Wings of RuinWe released a challenge quest and item pack to celebrate reaching 7 million sales. Cross-over bonus content was also developed with Monster Hunter Stories 2: Wings of Ruin.Digital promotion• Free demo release1st demo January 8 / 2nd demo March 12Released a free demo featuring both single and multi-player• Social media promotionWe could not hold live events due to the COVID-19 pandemic, so we recorded one, localized it, and broadcast it around the world simultaneously. We communicated large volumes of information using social media. • Special programs broadcast directly prior to releaseSpecial programs were broadcast live simultaneously around the world on YouTube. Domestically, Japanese celebrities appeared as guests in special live broadcasts. • Capcom Collabs Collab 1 JuneMonster Hunter Stories 2: Wings of Ruin collaboration Collab 2 JulyOkami collaboration Collab 3 August Street Fighter collaboration• Collaboration with Izu Islands in July• Playable demos of the PC version scheduled to be at Tokyo Game Show 2021 OnlineMonster Hunter R-Izu and Monster Hunter Stor-Izu 2: Wings of Ruin online stamp rally promotionThe joys of hunting—now and in the futureDevelopment was a series of challenges made even more difficult by the COVID-19 pandemic, but our team members overcame these obstacles and took great pride in developing this title. The staff members who will be responsible for the next title are making steady strides in their training. I am also happy to see synergistic effects, like users who enjoyed MHRise now purchasing MH:W. The series has now grown into a brand that has sold a total of 75 million units (as of June 30, 2021), but we are not yet satisfied. There are still people out in the world who are unfamiliar with “Mon-Hun,” and there is still plenty of room for further expansion in game development. New ways of playing games and new environments to play them in await. We will continue striving to create a Monster Hunter Craze throughout the world that will continue to rage 10 and 20 years down the line. Akihito KadowakiProducer, Management DepartmentConsumer Games Development Division 2Oversaw production on Marvel Vs. Capcom 3 and Sengoku BASARA 4. He became a member of the Monster Hunter development team on Monster Hunter Generations and now serves as a producer on this title.The latest title in the series, MHRise was announced for Nintendo Switch in September 2020, along with the release date, price, and purchase bonuses, with preorders kicking off as well. Unlike traditional title announcements, our strategy was to announce all of the information relevant to players right from the start to grab the interest of as many people as possible. We then focused on increasing the frequency of user interactions with game information simultaneously worldwide by using social media to share game elements in videos and images spread over several posts. We continued to stir interest among users by releasing two free demos online that allowed cooperative play prior to launch. As we aim to acquire fans globally, we will continue honing our operational know-how with downloadable content, such as event quests, even after the game’s release and transform MHRise into a new pillar for the series.CAPCOM INTEGRATED REPORT 2021 50Monster Hunter RiseMHRise brings authentic hunting actionDirectorYasunori IchinoseManagement Section 1, Management DepartmentConsumer Games Development Division 2ProgrammerKotaro MiyabeEngine Development SectionR&D Foundational Technology DepartmentTechnical Research DivisionI want each and every user to have more fun playing “Mon-Hun” than they ever imagined Wowing players with just how far we can push the portable game console experience!When I heard from the producer, Ryozo Tsujimoto, that he wanted to position the new title different from MH:W, I started to think about how to establish MHRise as a new brand. The answer we came up with was an action-oriented hunting game developed for the Nintendo Switch. Using our in-house game development engine, RE ENGINE, we took on the difficult challenge of strengthening the action aspects with seamless locales while maintaining the quality of the visuals. This hunting environment is the first Japanese-themed world since Monster Hunter Portable 3rd. We created the game to incorporate new characters featuring more in-depth characterizations and new elements, such as the Wirebug and Palamutes, while also developing carefully selected quests to satisfy even those players with a limited amount of time to play. We will continue to provide players with moments they can truly enjoy. I think you will love it. The decision was made to develop MHRise using RE ENGINE, and I participated on the title’s development team as an RE ENGINE engineer. I connected the creators with the technical department in charge of engine development, and our mission was to achieve both stable performance on the Nintendo Switch and the highest quality possible. I was mainly in charge of selecting and implementing graphics technology and optimizing the overall performance of the game. It was a real challenge to make online cooperative play among a maximum of four players, four Buddies, three large monsters, and numerous smaller monsters and environmental creatures all operate on a seamless locale. On top of that, we devised ways to leverage the hardware to its limits in order to provide a satisfying game experience with beautiful visuals and short loading times. It was my great honor as an engineer, to be able to focus on the seemingly unexciting aspects that underpin this game.51CAPCOM INTEGRATED REPORT 2021Value Creation StoryLatest Creative ReportMedium- to Long-TermGrowth StrategyFoundation forSustainable Growth (ESG)Financial Analysis andCorporate Datainfused with Capcom’s DNA to the world Sales StrategyAyaka SegamiConsumer Games Sales Strategy Team 2Sales Strategy Section, Marketing Strategy DepartmentPublic RelationsHana YajimaInteractive PR TeamMarketing PR DepartmentNow a global brand, “Mon-Hun” has turned the digital shift into an opportunity to reach fans worldwide Using Instagram to convey the development team’s passion and allure of the game with the goal of acquiring new fansWith the pandemic limiting our ability to go out, I want as many people as possible to enjoy playing MHRise. With that desire in mind, we developed the strategic proposals and formulated a roadmap that would provide the framework for promotions and sales, in addition to coordinating with each country. As 80% of sales of the previous title, MH:W, came from overseas, the global market was key in our strategy. We did our best to ensure a promotion where everyone would win, not only in Japan, but globally. As all live events had to be cancelled, the entire promotion immediately shifted to digital. It was difficult to coordinate each measure while incorporating the demands from each country and region, such as release times and languages, but we worked in close cooperation with the leads in each area as we progressed. Globally we worked together as one, and we were overcome with joy when we succeeded in selling more than 5 million units in the first week after the game was released. Our team will continue working together to expand globally. The mission of the Interactive PR Team was to increase awareness of MHRise by conducting PR activities using publicity tools such as social media for communicating information and the internet to broadcast online programs. My job in particular was setting up and running an official Instagram account. Young people and women are the largest segments on Instagram, and our goal was to tap into new target demographics. I actively exchanged opinions with the development team and posted the most up-to-date information as it was happening. Every Friday, we posted cute illustrations of the Buddies and comments to arouse interest in users, striving to attract new MHRise fans. I’m grateful of the corporate culture that allowed me to be in charge of the game’s social media in my first year of employment, and I hope to grow along with MHRise as it spreads its wings and soars around the world. CAPCOM INTEGRATED REPORT 2021 52Training human resources and environmental improvementsHuman resources strategyand our propriety programtraining the peoplewho will lead Capcom’s futureThe world’s mostentertaining gamesBolstering developmentpersonnelTop core membersRepeated achievementsCore membersSelected to direct rereleases or other titlesMid-career and younger employees(core member training)Training programsSupport from more senior membersNew graduatesEnhancing our development studiosConcentrate development divisions,increase mobility and leadershipProprietary development toolsRE ENGINE enhances qualityand development efficiencyAdoption of latest technologiesWorld-class, cutting-edge 3D scanning,motion capture and VROutfitting our development environmentBolsteredtitle lineupCapcom boasts the latest in creative development equipment53CAPCOM INTEGRATED REPORT 2021Value Creation StoryLatest Creative ReportMedium- to Long-TermGrowth StrategyFoundation forSustainable Growth (ESG)Financial Analysis andCorporate DataThree human resource development policies to strengthen employee capabilitiesOur three human resource policies are early development of talent, putting the right person in the right place, and self-learning. First, regarding early development of talent, when we hire new graduates, upon joining the company they attend a short-term concentrated program based on their job type, and we teach them specialized skills to develop talent early. Later, they are assigned to actual projects, and under the guidance of those in charge of training, they develop their skills and individuality by experiencing Capcom’s craftsmanship firsthand. Next, our policy to put the right person in the right place is an effort to strengthen the training of managers so that they can manage human resources appropriately while we make efforts to centralize and analyze personnel information to be used in human resource development and strive to ensure strategic talent management. And finally, the most important policy is self-learning. We propose and implement human resources training measures based on an approach which holds that people cannot grow on the basis of coercion from others, but rather only through their own aspirations. This is embodied by our Virtual Muchaburi Dojo (roughly meaning, “virtual audacious training ground”), which is a program for training mid- level development personnel. This hands-on educational program was developed jointly by the human resources and development departments that clearly defines the thinking and behavioral characteristics common to model employees and allows participants to experience simulated situations that mimic development situations. The goal is for participants to gain awareness autonomously through this program. It has been well-received among participants who have said that the level design is wonderful and that they were completely engrossed and enjoyed it immensely. Our unique program encourages autonomous learning while honing awareness. Transforming employee insight into customer delight, all around the world!“I want to devote my life to the pursuit of fun.” Capcom is looking for people with such ambitions. I am happy to say that we are receiving an increasing number of applications from students who specialized in AI, networks, data analysis, and other areas essential to next- generation game development in their studies. We have high expectations that they will make Capcom’s craftsmanship even more robust. Capcom has the potential to be the best game company in the world. We can turn the insights of each of our employees into pure joy for players across the world! The human resources department will do everything we can to support our employees and provide a place where they can shine.Keiko IchikawaSenior Manager of HR Development Section Human Resources Department, Administration DivisionAiming for stable growth with a staff of 2,500The path Capcom has chosen to ensure stable growth into the future is consolidating game development technology and knowledge within the company and steadily passing Capcom’s DNA to the next generation. There are some titles that are developed by smaller sized teams, but these days hundreds of people are needed during the peak development of a major title. We are actively hiring and training human resources ourselves. By doing so, we are able to improve quality and expand our lineup in addition to making games even more interesting by incorporating the sensibilities of the younger generation in each title. That is the aim of our human resources strategy to create a development team 2,500 people strong.World-class 3D scanner and motion capture capable of reproducing realistic movementDynamic Mixing Stage, a 3D sound boothrecreating reality! Our 3D scanning studio is one of the world’s largest equipped with approximately 130 cameras. Photographing objects from 360°, enables us to scan them as 3D objects. This significantly shortens the CG modeling process and allows to pursue an even higher level of precision and quality. We have built one of the largest motion capture studios in Japan, boasting a 7-meter-high ceiling, which is equipped with infrared cameras to detect and film humans performing and then converts the footage into computer data. This enables us to pursue action that incorporates different heights and other realistic movements of characters.We use a cutting-edge Dolby Atmos system, which can also be found in movie theaters, and which uses binaural technology capable of reproducing sounds with such reality you feel as if you are right there. It also supports aural changes that are happening in real-time and can reproduce any sound or voice from the front or back, or left or right sides, enhancing visual experiences with more realistic acoustics. Capcom’s continuously evolving propriety development engine,RE ENGINEIt not only enables expressions that appear to be live action, but it is also compatible with the latest technologies, such as VR. In addition, it has dramatically reduced the time required for each process in game development. Another advantage of our proprietary development engine manufactured in-house is that we are able to constantly evolve its specifications with the cooperation of the game development team. It is an important element in the foundation of our ability to achieve world-class quality. CAPCOM INTEGRATED REPORT 2021 54ESG InformationEEnvironmentalSSocial GGovernanceInformationInformationCapcom is building a better relationship with society by focusing on our stakeholders and making social contributions through our businessESG Initiatives and Future ChallengesMaterial IssuesGreen : Securing and Training Human Resources Pink : Promoting DiversityBlue : Developing Healthy Relationships Purple Enhancing Corporate GovernanceInitiativesContribution to Business/ManagementFuture ChallengesEEnvironmentalSSocialGGovernance• Reduced CO2 emissions by switching to LED lighting• Constructed new environmentally-friendly buildings• Reduced exhaust gas and resources used via distribution network sharing with other companies in the industry• Reduced paper resources used through the • Reduced resources consumed through the digitization of instruction manualspromotion of digital salespositionsRelationship with Employees• Actively employed non-Japanese citizens• Improved the ratio of women in management • Held Health and Safety Committee meetings• Implemented staff training• Implemented discretionary work system• Implemented working from homeRelationship with Customers• Compliance with the CERO ratings system• Formulated guidelines with industry groups• Supported community building by promoting the • Monetized without high-pressure microtransactionsspread of esportsRelationship with the Regional Community• Welcomed children participating in Company Visits to our offices / held Guest Lectures at schoolsefforts• Developed online educational support activities• Leveraged Capcom content in regional revitalization • Supported senior citizen community formation • Donated to various support organizationswith video game arcade tours• Reduced costs (used less electricity, cut distribution costs)buildings through renovation• Increasing energy conservation at existing • Further conserving energy in amusement facility operationsdevelopment based on a diverse set of values• Expanded global reach through game • Acquired competent creators• Improved creator productivity• Fostered a commitment to legal compliance• Increasing the percentage of women in • Enhancing employment of a global workforcemanagement positions• Improved customer satisfaction by creating stress-free environments for play• Reduced social risks posed by games• Education of users, consumer groups, government entities, etc.company and IP name recognition• Expanded profit opportunities by improving • Promoted understanding of the Capcom • Expanded revenue opportunities in step with approach to businesslarger percentage of populations gaining access to entertainment options following the stabilization of social environments• Further promotion of regional revitalization using Capcom contentsupervisory committee• Increased dialogue with shareholders• Transitioned to a company with an audit and • Raised the ratio of external directors• Established the Nomination and Remuneration • Established the Information Technology Security Oversight Committee for ongoing enhancement of information securityCommittee (voluntary)and non-financial bases• Evaluated proper corporate value on both financial • Avoided managerial decision-making risk through • Ensured the appropriateness of growth strategies by having the Board of Directors consider a range of viewsbetter management monitoring• Perpetuated the founder’s business know-howsupervisory committee system• Increasing the number of opportunities for persons in charge of development to converse with the market• The effective operation of the audit and • Board of Directors effectiveness assessments and • Review the composition of the Board of Directors• Setting developer compensation in consideration of medium- to long-term sustainable growththeir utilizationPlease refer to “ESG Highlights” on pages 13-14 for details on the KPI for material issues55CAPCOM INTEGRATED REPORT 2021E Capcom and the EnvironmentnvironmentalnvironmentalEnvironmental Action as an Entertainment CompanyCapcom’s Digital Contents business accounts for approximately 80% of the Group’s consolidated net sales and primarily entails the development and sale of software. This gives Capcom an environmental impact that is lower than the general manufacturing industry. Because our environmental impact comes largely from the power used at amusement facilities and for manufacturing pachislo machines, as well as from distributing our products, we are focused on saving energy.Reducing Power UsageReducing CO2 emissions by promoting energy saving measures companywideCapcom has worked to cut power usage through efforts that include ongoing power saving at all of its places of business, saving energy at its amusement facilities, and implementing peak shifting for the power used by PCs and other electrical equipment. The fiscal year ended March 2017 saw our CO2 emissions increase compared to the previous fiscal year due to the construction of the R&D Building #2 and Capcom Technical Center. However, in the fiscal year ended March 2021, we succeeded in reducing emissions by 9.5% compared to the previous year by introducing energy-saving equipment at those facilities and promoting the switch to LED lighting at each workplace.Promoted energy-saving initiatives, including switching to LED lighting at each workplace* Assumes energy consumption of 100% without introduction of this equipment.Capcom’s CO2 Emissions (Non-consolidated) (t)11,779 t14,89215,28515,02114,15213,00411,779201620172018201920202021(Years ended March 31)Rated “S Class” six years in a row bythe Business Operator Class-BasedAssessment SystemEvery year Capcom has achieved year-on-year reductions to its energy intensity. For these efforts, Capcom has been awarded S Class (out of classes S, A, B, and C) status for six years running under the Business Operator Class-Based Assessment System that has been administered since 2016 by the Agency for Natural Resources and Energy in accordance with the Act on Rationalizing Energy Use (Measures Pertaining to Factories).Energy Intensity*Vs. Previous FY(Non-consolidated)FY2015201620172018201920200.061930.060180.059940.058690.055830.0518692.9%97.2%99.6%97.9%95.1%92.9%* Calculated using the method defined by the Agency for Natural Resources and Energy.The Agency for Natural Resources and Energy website: https://www.enecho.meti.go.jp/en/Innovations in Product DistributionConserving resources through digital sales of game softwareIn the past, games included a printed instruction manual inside the package, but in recent years, these manuals are now included as data within the software as a way to save paper. This enables us to eliminate approximately 30.10 million game units’ worth of paper manuals annually. Moreover, the increasing popularity of digital sales, where games are downloaded after purchase, has made it possible to conserve resources used to produce discs, semiconductors, software packaging, and other components in addition to paper resources. In the fiscal year ended March 2021, the resources used in the equivalent of around 23.15 million units of game software were conserved as a result of digital sales. We will continue promoting digital sales of game software with the aim of achieving effectively zero resource consumption in the future by selling solely via digital download.Sharing distribution networks with othercompanies in the industrySharing distribution networks with other companies in the same industry when shipping products enables the efficient supply of products. As a result, we are able to realize reductions in packing materials, fuel and emissions. In the future, we aim to achieve further reductions by decreasing the volume of distribution through the promotion of digital sales.CAPCOM INTEGRATED REPORT 2021 56Development and Manufacturing InitiativesConsiderations in Game DevelopmentReducing the environmental impact ofpachislo machinesIn-game purchasesocialS Society and CapcomocialRelationship with CustomersIn the Japanese game market, discussions have been taking place for several years on the problem of gacha, or high-priced lottery-style game mechanics, primarily in mobile games. Overseas, gacha-like “loot boxes” have been banned in some countries. As a creator of entertainment culture, Capcom believes that games should be enjoyed for the entertainment value they provide with gameplay, not for thrills associated with winning a lottery. We do not want to see games that are supposed to make people happy having the opposite effect as a result of excessive charges. For that reason, we are working to ensure that all users can enjoy our games fairly and safely. In principle, we minimize gacha elements in the mobile games we develop; in our home video games, we provide any content required to enjoy the full game free of charge, while offering some additional content at low cost.Capcom games are enjoyed worldwide. In the fiscal year ended March 2021, the percentage of home video games sold overseas was 80.9%. Naturally, translation (localization) of video games developed in Japanese is required so that game players around the world can enjoy them. The volume and importance of localization is increasing year after year due to factors such as improvements in game machine performance, support for online gameplay, and an increase in the number of languages accompanying a more diversified, global audience. As such, Capcom’s localization team is involved in game development from the initial stages. By carrying out localization concurrently with development, rather than following completion of the Japanese language version as had been done in the past, Capcom is able to launch games simultaneously around the globe. What is more, depending on the country, simply translating games developed under Japanese norms can end up hurting users unexpectedly due to historical, religious, or cultural differences. As such, we focus on employing staff from around the world to culturize the games so that they can be enjoyed by all, regardless of locale. Example of culturalizationCapcom and the EnvironmentIn solidarity with the efforts of the Japan Pachislo Machine Industry Association (Nichidenkyo), Capcom manufactures and sells pachislo machines partially made from recycled parts and equipped with standardized “green devices” aimed at controlling power usage.Status of disposal of used arcade game machinesAmount recycledThermal recycling*1Year20152016201720182019*2202077.8%77.9%74.4%83.7%00.0%99.77%22.2%22.1%25.6%16.3%00.0%00.0%Promoting workplace proximityAt Capcom, we encourage employees to live within five kilometers of their place of work and to commute by bicycle. As such, we have arranged company housing near our offices and built bicycle parking close to our R&D facilities. The primary goal is to promote a proper work-life balance by shortening commuting distances, but at the same time, it also helps reduce greenhouse gas emissions associated with use of transportation.Bicycle parkingExploring renewable energyIn October 2020, the Japanese government pledged to be carbon neutral by 2050. The goal is to realize a carbon-free society by 2050 and effectively eliminate greenhouse gas emissions. Realizing carbon neutrality will require the introduction of renewable energy that does not produce CO2 emissions. At Capcom, we have begun looking into the introduction of renewable energy to do our part to bring about a sustainable society.*1 Volume used as heat source for hot water, heating, etc.*2 Capcom switched to new cabinets in fiscal 2019, so there was no collection of used arcade game machines.Localization and culturalization57CAPCOM INTEGRATED REPORT 2021Resident Evil is known as Biohazard in Japan.Foundation forSustainable Growth (ESG)Healthy Development of EntertainmentCompliance with the CERO rating system andendorsement of guidelinesThe Computer Entertainment Rating Organization (CERO), a Specified Nonprofit Corporation, was created to provide age-appropriate ratings for video games. Capcom complies with the CERO rating system and rules. The rating system is an initiative for the healthy development of young people that calls for voluntary restrictions on home video game content and sales methods to limit access by young people to sexual or violent content. In addition, recent game platforms include a parental control function that enables parents to limit the online purchase and use of certain games according to their ratings.Guidelines issued by the Computer Entertainment Suppliers’Association (CESA)Name of guidelineImplementation dateGuidelines on blockchain gamesEnforced July 1, 2021Guidelines for Real Money Trade MeasuresApril 26, 2017Guidelines for the Protection of MinorsDecember 21, 2016Revised March 27, 2019Operating Guidelines for Random ItemDistribution in Network GamesApril 27, 2016Guidelines for Advertisements, Etc. in Home VideoGame Software Targeting Only Those 18 and OverApril 1, 2008Revised June 20, 2012Code of Ethics Concerning ComputerEntertainment Software, 2nd RevisionOctober 1, 2002Please refer to CESA’s website for information on its activities.https://www.cesa.or.jp/index_e.htmlAddressing the WHO’s recognition ofgaming disorderIn May 2019, the World Health Organization (WHO) included gaming disorder as a new mental health condition characterized by excessive use of games to the point where it has a negative impact on health and social life. Cooperating with industry organizations such as the Computer Entertainment Supplier’s Association, we are taking the appropriate steps to raise awareness of the issue in response to social demand. As an independent effort, we will continue to educate elementary and junior high school students on how to interact with games in a healthy manner through our educational support program.For details see p. 61Addressing addiction to pachinko and pachisloPachinko and pachislo are a form of entertainment that has taken root in society. At the same time, however, there is concern over players becoming addicted. For that reason, the Recovery Support Network (RSN), a pachinko addiction consultation hotline, was established in 2006 with the support of industry organizations. In addition to the launch of this free phone-based consultation service, various measures were implemented in the industry to prevent addiction. These measures included putting up posters at all locations nationwide to raise awareness of RSN, establishing a system in which pachinko and pachislo advisors (specialist staff) are stationed at each location to provide customers with appropriate information on addiction, and preparing guidelines for addressing addiction at pachinko parlors. In 2017, the Pachinko and Pachislo Industry Association for the 21st Century, which consists of 13 organizations from the amusement industry, announced the “Declaration on Pachinko and Pachislo Addiction,” strengthening measures to address pachinko and pachislo addiction and declaring it as a top priority. In May 2021, the association played a central role in holding online forums on the “Special Website for the Issue of Pachinko and Pachislo Addiction,” which provides an overview of addiction and information on industry initiatives. The website has rolled out various educational activities. In fiscal 2019, the “Basic Guidelines for Measures to Address Pachinko Addiction” and the “Pachinko and Pachislo Industry Guidelines for Measures to Address Addiction” were established based on the government’s Basic Plan for Promoting Measures to Address Gambling and Other Addictions. Capcom endorses and cooperates with these initiatives to contribute to healthy development of the industry.Support for Community-building among Senior CitizensHolding regular amusement arcade toursToday, amusement facilities are becoming increasingly popular among senior citizens as spaces for communication with friends and facility staff. Since 2012, Capcom has held amusement arcade tours free of charge on long public holidays and Respect-for-the-Aged Day for senior citizens where they can try out coin-operated games and crane games, enabling more people to make use of such facilities.* The tours were suspended in fiscal 2020 to help prevent the spread of COVID-19. In addition, as part of efforts to create arcades where senior citizens can comfortably enjoy themselves, since 2012 Capcom has encouraged arcade staff to get the Service Assistant certification. Currently, 24 staff members have received this certification.CAPCOM INTEGRATED REPORT 2021 58Medium- to Long-TermGrowth StrategyLatest Creative ReportFinancial Analysis andCorporate DataValue Creation StorySociety and CapcomCumulative number of participants in senior tours2,5821,8712,0372,2472,4632,5822,582201620172018201920202021(Years ended March 31)* The tours were suspended in fiscal 2020 to help prevent the spread of COVID-19.Senior toursEnhancing Customer SupportUser support and utilizing feedbackAt Capcom, we have dedicated support teams for each product to ensure that customers can fully enjoy the services they purchase. We also strive to quickly respond to customer questions by providing online FAQ pages, while each person in charge regularly engages in information exchanges with other teams, working to improve customer satisfaction. The questions and feedback our game support teams receive are condensed and analyzed to be incorporated in development of new products.Inquirieshttps://www.capcom.co.jp/support/index_game.html (Japanese only)Protecting the personal information ofour customersCapcom has more than 10 million records containing personal information on customers, accumulated from site memberships, prize deliveries, product purchases, and other sources. In 2015, the Japanese Act on the Protection of Personal Information was revised, and the revisions went into full effect on May 30, 2017. Meanwhile, overseas, the EU General Data Protection Regulation (GDPR) went into effect in May 2018. The data of game players falls under the category of personal information in these laws, and the scope is expanding each year. Under these circumstances, we established our new Information Management Department in April 2019 to enhance 59CAPCOM INTEGRATED REPORT 2021our information management structure and address the requirements of the Japanese Act on the Protection of Personal Information and the GDPR. This department is leading our efforts to address the risk of personal information leaks by developing a system of conduct guidelines, operational controls, and audits in accordance with the law. In response to the unauthorized access of Capcom’s network in 2020, improvements were made to the security system to prevent recurrence. Additionally, the Information Technology Security Oversight Committee, which includes multiple outside experts, was established in January 2021. It holds regular meetings with the aim of further improving information security.Expanding opportunities for customers to play gamesIn recent years, we have been focusing on promoting esports as part of our efforts as a creator of entertainment culture. We have the role of planning and organizing events as a game manufacturer—a role that had been largely shouldered by the player community in the past—in order to provide an environment that better allows competitors and fans to enjoy the excitement of competitions. Since 2013, we have held Capcom Cup to determine the top players in the world. We are also working to provide amateur players with opportunities to shine, such as with the new Street Fighter League: College-JP 2019 for students, in June 2019. Through these activities, we aim to increase points of contact with our customers and improve customer satisfaction. In fiscal 2021, we will hold Capcom Pro Tour Online 2021, a series of 32 1-on-1 tournaments carried out in 19 regions across the globe. We are also introducing a team ownership system in the Japanese esports league Street Fighter League: Pro-JP 2021, in which eight companies form original teams that participate. In these and other ways, we are expanding the scope of our activities.Street Fighter League: Pro-JP 2020Foundation forSustainable Growth (ESG)Relationship with Regional CommunitiesContributions to Regional RevitalizationUtilizing the appeal and brand recognition ofpopular games to contribute to societyThe appeal of video game content was demonstrated to the world during the opening ceremonies of the preeminent international sporting event of summer 2021 held in Tokyo when video game music was played to accompany the entrance of the athletic teams. In the same vein, Capcom is following a Single Content Multiple Usage strategy for our content, which we deploy in a wide range of fields beyond video games. As such, we are proud to have a high level of recognition and popularity among men and women, young and old alike. Based on our corporate philosophy of making people happy through games, Capcom has been engaged in the following four regional revitalization activities not only in Osaka, where we have our head office, but across Japan, since the mid-2000s: 1) economic promotion that supports the local tourism industries; 2) cultural awareness raising that supports education concerning local history and culture; 3) crime prevention education through coordination with the police; and 4) raising awareness about voting in elections in coordination with the Committee for Election Administration. Further, going forward we will provide support for esports activities regionally throughout Japan while looking into activities to promote regional revitalization through playing games.Comments from a city officialYukihiro OhuchiGeneral Affairs Division,Miharu Municipal GovernmentMiharu is an historic castle town known as the birthplace of Megohime, the daughter of Tamura Kiyoaki (who was the lord of the Miharu Castle), and wife of Date Masumune, who was nicknamed Dokuganryu, or the One-Eyed Dragon. We collaborated with Capcom to utilize the Felyne characters from Monster Hunter in a traffic safety PR campaign. The main target of the campaign was elementary and junior high school students, and the Felyne were a big hit with children and students. Going forward, we hope to continue collaborating with Capcom, a company that values community engagement, utilizing anime and game content that appeals to young people in regional revitalization efforts.Supporting regional revitalization using the appeal of Capcom video game contentRegional RevitalizationActivitiesInitiatives Across JapanEconomic DevelopmentPrevention EducationOtherCultural Awareness RaisingParticipation in ElectionsMiyagi Prefecture: Mascot for gubernatorial electionIbaraki Prefecture: Co-sponsorship of special museum exhibitSaitama Prefecture: Co-sponsorship of special museum exhibitKofu, Yamanashi Prefecture: Conclusion ofcomprehensive partnership agreement2020: Kofu, Yamanashi Prefecture: Stamp rallyUeda, Nagano Prefecture: Support for tourism eventKyoto Prefecture: Mascot for vehicle-related theft prevention awarenessHyogo Prefecture: Mascot for vehicle-related theft prevention awarenessOkayama Prefecture: Co-sponsorship of special museum exhibitWakayama Prefecture: Support for campaign to attract visitorsKochi Prefecture:Mascot for House of Councillors electionKochi Prefecture: Mascot for gubernatorial electionHamamatsu, Shizuoka Prefecture: Support for tourism promotionOkazaki, Aichi Prefecture: Support for tourism promotion2020: Osaka PrefectureMascot for employment support eventOsaka Prefecture: Mascot for vehicle-related damage and theft preventionUse in recruitment ads for cybercrime investigators2020: Osaka PrefectureMascot for Cybercrime preventionProduction of posters and display of originalcollaborative videos on digital signs in train stations2020: Fukushima PrefectureMascot for Tamura Police Station traffic safety awareness campaignProduction of original collaborative merchandise, including posters and reflectors2020: Fukushima PrefecturePlastic file folders for traffic safety awareness in Tamura areaCAPCOM INTEGRATED REPORT 2021 60Medium- to Long-TermGrowth StrategyLatest Creative ReportFinancial Analysis andCorporate DataValue Creation StorySociety and CapcomRelationship with EmployeesPromoting Healthy Relationships with GamesPromotion of DiversityMore than a decade of on-site classes forchildren in schoolGames are a relatively new cultural phenomenon with little academic research, and discussions tend to focus on the detrimental effects rather than the educational aspects. Recently, recognition by WHO of gaming disorder made headlines as did the establishment of the Kagawa Prefectural Ordinance on Countermeasures for Addiction to Internet and Computer Games. However, video game creator is a popular future career choice among children, and programming and other such lessons will be made compulsory in Japanese elementary schools starting in 2020. Many private sector efforts are also underway, including opening programming academies for youth. Considering these developments, it is reasonable to expect that the number of children hoping to become game creators will increase. Additionally, smartphone use rates among young people—53.1% of elementary school students and 79.3% of junior high school students—are rising each year. Smartphone games are also gaining popularity and children are growing more familiar with games. Given this, with a desire to promote social understanding of games, we accept visits to our offices from primarily elementary and junior high school students and conduct on-site classes at schools to promote sustainable economic growth and social development. Class programs have three sessions: Career Education introduces the work done in a game company and its challenges and rewards; Game Literacy Education helps students use their judgement to build a healthy relationship with games; and CAPCOM: Work × Mathematics shows students how mathematics—typically not a favorite subject—is used in work. These programs have been well-received with schools, and Capcom is incorporating educators’ feedback to improve them. In addition, based on prior feedback expressed by educators we launched an online program starting in fiscal 2021, which also allows us to hold classes smoothly even during the COVID-19 pandemic. We will continue to launch new initiatives to enable us to respond flexibly over a wider geographical area than before. Altogether, Capcom has welcomed 3,355 children as part of 403 different field trips to its offices (as of March 31, 2021). Capcom has also held 174 on-site classes for 15,726 students (as of March 31, 2021) at schools such as the one held at Miharu Junior High School in Fukushima Prefecture in November 2020.Impressions of the on-site classes(An excerpt of this fiscal year’s comments)Listening to the stories of people who do the work, such as programmers and sound creators, and observing their enthusiasm made me want to be like them when I start working in the future. (Elementary school student)Because it came from a game creator rather than a teacher, the lesson of how to make and interact with games really resonated with the children. (Elementary school teacher)(The students) seemed to recognize that they themselves were consumers and realize that on the other side of the games there are efforts being made by the game creators. (Junior high school teacher)61CAPCOM INTEGRATED REPORT 2021Initiatives aimed at promoting the improvementof the work environment for women andproactively hiring non-JapaneseCapcom is currently engaged in initiatives aimed at improving the work environment for women and proactively hiring non-Japanese. In terms of providing an environment that facilitates women, we introduced systems enabling women to take a leave of absence before and after giving birth, childcare leave and shortened working hours, and promote their use throughout the Company. In fiscal 2020, 34 employees took childcare leave, 17 of whom were men, and 100% of eligible women took childcare leave (fiscal 2019: 23 employees, 10 of whom were men and 100% of eligible women took leave). A high percentage of women returned to work afterwards: 31 (96.9%) returned in fiscal 2020 (fiscal 2019: 27 (100%) returned). As a result, despite it being said that Japan’s gaming industry is generally dominated by men, women account for roughly 22% of Capcom’s workforce, and 27 (10.3%) of Capcom’s managers are women. In accordance with the execution of the Act on Advancement of Measures to Support Raising Next-Generation Children and the Act on Promotion of Women’s Participation and Advancement in the Workplace, in 2019 we formulated the General Employer Action Plan, which seeks to achieve two things: (1) developing a personnel system that contributes to diversity in work styles, and (2) having women comprise at least 15% of managers by the end of fiscal 2024. In recognition of Capcom’s efforts toward improving the workplace environment for women, since 2014 we have earned the “Kurumin” mark, the symbol of a “company supporting childcare,” from the Ministry of Health, Labour and Welfare. In terms of the proactive employment of non-Japanese individuals, Capcom is making efforts to strengthen overseas expansion capabilities including creating an English hiring website. We currently employ 192 non-Japanese workers (representing 6.5% of our employees). Going forward, we will create a system for improving motivation in an attempt to increase the ratio of foreign employees, including support for career advancement and the promotion of non-Japanese individuals to management positions.Number of Female Managers and Ratio of Female Employees(Capcom Co., Ltd.)Number of Female ManagersRatio of Female Employees (%)2722%212521241924202522242227201620172018201920202021(Years ended March 31)Foundation forSustainable Growth (ESG)Number and Ratio of Foreign Employees (Capcom Co., Ltd.)Number of Foreign EmployeesRatio of Foreign Employees (%)1926.5 %5.61495.81626.51924.0914.3994.2107201620172018201920202021(Years ended March 31)Comments from a female employeeAlicia KimSenior DirectorCommunicationsCapcom U.S.A., Inc.I oversee the North/South American PR, social/community, and customer service teams, which are responsible for communications including those with media, fans and customers. I myself am a big fan of Capcom’s games which makes it even more rewarding to see the recognition and reputation of our brands grow through our hard work. During the COVID-19 pandemic, there were restrictions in place preventing us from having regular face-to-face interactions with others including colleagues, media partners and player communities. However, by adapting our approach to use digital tools and strategies, we were able to find new ways to achieve our goals in an effective manner. As a manager, I endeavor to lead in such a way that allows team members to demonstrate their full potential by fostering a supportive atmosphere and collaborative culture.Providing a Pleasant WorkplacePromoting work-life balanceCreating entertainment culture requires that creators themselves make time for play. At Capcom, we have established Paid Leave Promotion Days and encourage employees to take extended leave to refresh and look for new sources of inspiration during the year-end/New Year’s holidays as well as during the series of holidays in May. Additionally, we have built a four-story bicycle parking facility near our development studio and encourage our employees to live within a five-kilometer radius to shorten commuting times. This saves time and living costs while giving creators the free time necessary to cultivate their creative powers and imaginations, which is essential for creative work. Moreover, we opened Capcom Juku as an on-site daycare facility in April 2017 to provide a stable workplace environment for creators. As it is located close to work, it provides peace of mind for employees who are married or have children and has been well-received by those who have utilized it.Please refer to the information below or page 54 of the 2018 Integrated Report.Supporting employees’ health managementThe employee cafeteria was renovated in 2015 when the new development studio was completed. Healthy meals are served for breakfast, lunch, and supper. There is also a massage room staffed by nationally-certified massage therapists at both the Tokyo and Osaka locations to support our employees in managing their health.Fulfilling employee potential in a cutting-edge environmentThe biggest thing when it comes to motivating developers working in a creative field such as games is access to an environment that allows them to bring their ideas to life. Capcom maintains a cutting-edge development environment that includes 3D scanners, a motion capture studio, a dynamic sound mixing stage, and a Foley stage. In this way, we support our creators in fulfilling their vision.Capcom JukuProviding an environment for vibrant childcarecombining day care and educationGiven the desire to quickly improve the issue of long day care waiting lists accompanying a lack of preschools, Capcom’s top management set its sights on the future, desiring to provide an environment in which employees can raise their children with peace of mind while remaining employed over the long term. We operate Capcom Juku aiming to add individual education and growth to standard day care for children. Capcom Juku goes beyond caring for infants and preschool children and accepts a wide range of youth, including after-school kindergarten and elementary school students. This helps employees avoid the stress of not being able to find open facilities for their children. Furthermore, by offering educational support in the form of a place for learning English, eurhythmics, math, science, and other subjects, Capcom Juku joins its efforts with employees and fosters the growth of children. Currently, as of March 31, 2021, the school takes care of 19 children a month and accepts as many as 18 temporary pupils a month. In the future, we will create a learning atmosphere at Capcom Juku that stimulates and broadens children’s curiosity, while also striving for an environment where parents can work with peace of mind so that both they and their families can lead fulfilling lives.CAPCOM INTEGRATED REPORT 2021 62Medium- to Long-TermGrowth StrategyLatest Creative ReportFinancial Analysis andCorporate DataValue Creation StoryG Corporate GovernanceovernanceovernanceKenzo TsujimotoHaruhiro TsujimotoDirectors(As of June 23, 2021)InternalExternalToru MuranakaYutaka MizukoshiWataru KotaniKenzo TsujimotoChairman and Chief Executive Officer (CEO)Jun. 1983 President and Representative Director of the CompanyApr. 2001 Chief Executive Officer (CEO) of the Company (to present)Jul. 2007 Chairman and Representative Director of the Company (to present)Haruhiro TsujimotoPresident and Chief Operating Officer (COO)Apr. 1987 Entered into the CompanyJun. 1997 Director of the CompanyFeb. 1999 Managing Director of the CompanyApr. 2001 Senior Managing Director of the CompanyJul. 2004 Director and Executive Corporate Officer of the CompanyApr. 2006 Director and Executive Vice President of the CompanyJul. 2007 President and Representative Director, Chief Operating Officer (COO) of the Company (to present)Aug. 2016 President and Representative Director, and Director in charge of Global Marketing Business and Arcade Operations Business of the Company Jun. 2018 President and Representative Director, and Director in charge of Arcade Operations Business of the CompanyApr. 2020 President and Representative Director, and Director in charge of Sales Operations Business and Arcade Operations Business of the Company(to present)Satoshi MiyazakiDirectorExecutive Vice PresidentApr. 1983 Entered the Industrial Bank of Japan, Ltd. (currently Mizuho Bank, Ltd.) Apr. 2011 Executive Officer, General Manager of Corporate Banking Division No.6 of the Mizuho Corporate Bank, Ltd. (currently Mizuho Bank, Ltd.) Apr. 2013 Managing Executive Officer in charge of Sales of Mizuho Corporate Bank, Ltd. and Mizuho Bank, Ltd. Apr. 2016 Executive Officer and Deputy President in charge of Western Japan of Mizuho Financial Group, Inc.Representative Director and Deputy President & Executive Officer in charge of Western Japan of Mizuho Bank, Ltd. Apr. 2020 Representative Director and Deputy President of Mizuho Bank, Ltd. Apr. 2021 Resigned from the post above May. 2021 Executive Vice President of the Company (to present) Jun. 2021 Director of the Company (to present)Yoichi EgawaDirector Executive Corporate OfficerApr. 1985 Entered into the CompanyApr. 1999 General Manager of Creative Division 5 of the CompanyAug. 1999 Corporate Officer, General Manager of Creative Yutaka MizukoshiDirectorExternalIndependent DirectorApr. 1980 Entered into Nippon Steel CorporationMay 2004 Senior Vice President of The Boston Consulting GroupJan. 2005 Japan Co-chair of The Boston Consulting GroupJan. 2016 Senior Partner and Managing Director of The Boston Division 5 of the CompanyConsulting GroupApr. 2011 Managing Corporate Officer of the CompanyApr. 2013 Executive Corporate Officer of the Company (to present)Jun. 2013 Director, in charge of Arcade Business and Pachinko & Pachislo Business of the CompanyJun. 2016 External Director of Lifenet Insurance Company (to present) External Director of Asagami Corporation (to present)Jan. 2018 Senior Advisor of The Boston Consulting Group, Tokyo