What's the plan, Capcom? SVP Svensson looks ahead

Since even before the beginning of the current console generation, Osaka, Japan-headquartered Capcom has been very aware of the fact that in order to compete on a global scale, there needs to be tight integration between operations in the East and the West. Localizing the latest version of Street Fighter or Resident Evil wasn't going to cut it. Now, Capcom finds itself in a rapidly evolving global industry that is merciless to those who take a misstep. Part of the job for Christian Svensson, SVP at San Mateo, CA-based Capcom Entertainment, is to avoid those missteps, and steer the game publishing giant in the right direction making sure Capcom's various branches around the globe play nice together. There's a lot happening at Capcom. Here, Svensson offers his unique insight into Capcom's business on Sony's new Vita handheld, social games that aren't like Zynga social games, and his hopes for next-gen consoles. Right now you have games on Vita, and Capcom is supporting that platform, and the Nintendo 3DS. Do you see smartphone games eating into that dedicated handheld market? Or can the two markets keep on growing separately of one another? That may be a market-by-market question. If anything, we're seeing in Japan that, quite frankly, the handheld market is alive and well, and I think it's going to continue. Nintendo 3DS is very successful there, and the Vita is off to a reasonable start early on. But we'll have to see what happens there longer there, in that particular [Japanese] market. In our Western market, I think 3DS is off to a very good start, and Vita has, I think, surpassed much of the retail expectations based on our retailers that we've spoken with. Marvel vs. Capcom 3 [for Vita] is off to a good start. Most of our retail partners have us pegged at number two [on Vita] after [Naughty Dog's] Uncharted [The Golden Abyss]. We'll see what the tale of the tape looks like in a few weeks. Long story short, while there may be some overlap, I think there's still going to be an audience for what I call deeper engagement and deeper funds, for lack of a better word. As a result, I think those two markets [dedicated handheld and mobiles] are going to be viable, and served by content creators. How does Capcom feel about Vita's performance so far? You're saying it's "reasonable," but it's not really setting things on fire. What's Capcom's view on the Vita right now, and its continued support for the platform? We obviously will continue to support it, it's too early to call one way or the other. I'll say our sell-through has been reasonably decent. I wish that retail had been a little bit more supportive of the platform from the outset. But I think they're getting in line now that they're actually starting to see some sales. The holidays are going to be much more telling for Vita. The holiday was where the 3DS first solidified. What do you mean retail didn't really support the platform? They were a little wishy-washy on what they were taking and how deep they were stocking, versus what the demand was. Retail got caught a little flat-footed on not going deep enough in their ordering, at least on the software side. I can't speak to the hardware side, only Sony could. I've seen some news recently about Capcom in Japan doing these social games like Resident Evil and Monster Hunter. What is the strategy right now, or roadmap, for Capcom getting into more social games in the West? Right now, the titles that you're speaking of tend to live on the Gree and DeNA social networks, and they're primarily mobile. When you say "social" in Japan, the first thing that comes to mind for most people there are mobile-social. In the West, most people in the development community here think Facebook, amongst other things. The focus in Japan for social will remain on the mobile networks. We launched Monster Hunter about two weeks ago on DeNA's Mobage network, and it's been very successful. There's a lot of learning going on. We have an internal group in Tokyo that is handling development on most of those titles, though they may be using some external shops from time to time in the future. Basically what they're finding is that a lot of people want to play in a different way. In the West, we're still mulling over what we want our strategy to be, to bring those products here, if at all. Some of that is up to the proliferation on those networks in the West, and for more info on that, you need to speak to DeNA and Gree. However, I will say that we do have some social initiatives underway at our [U.S.] office that I'm not prepared to get into great detail about, other than to say, we won't be following the path of Zynga or the like. We will remain true to Capcom and our audience focus, and the brand expectations they have. So when you say "social" in that case, you're talking about Facebook and social networks? More along those lines, yes. [Shortly after this interview, Capcom announced its first browser-based game, Onimusha Soul -- Ed.] Where do you see Capcom five years from now, when you're talking about digital revenues, and how retail will play -- or not play -- a role in the future. Retail will always have a place in our future, but I think that five years down the road, the value proposition of retail, to publishers, will change. I think retail's role will shift from planned purchase to impulse purchase, predominantly. And planned purchases will increasingly happen online, just for sheer convenience's sake. I think five years from now, more likely than not, we'll not have plastic discs in a box, but we'll have tokens in a box, something that is gift-able, and able to be bundled with other hard items like figurines or plushes, or something else that has tangible value that can't be downloaded over a wire. I'd like to say that within five years, certainly well-north of 50 percent of our revenue will be coming from digital, and significantly higher than [50 percent] of our operating profit will [come from digital]. Very obviously, certainly sometime before five years from now, every game will be digital and retail day and date [same release]. On some platforms that’s already the case, as it is on Vita. In Europe, the PlayStation 3 is already that way. I wish it were that way here in the States as well. But I’d say that’s an inevitability. No one is really fighting that, but the question is when that will occur. To quote my friend Paul Raines, the CEO of GameStop, they don't disagree on the inevitability of it, they disagree on the timing of it -- when it's going to happen. I definitely think that's going to happen very, very quickly. It's going to depend a lot on what the first party [console manufacturers] do in the next generation of console hardware. But I'm not privy to those details today, so I couldn't possibly predict what is going to happen there. Is there anything that you're trying to anticipate for the next-gen consoles? The networks in general are going to become increasingly important to the future of our content offerings, and the services we offer around them. I think you'll see continued migration to games as a service, and increasingly less discrete products. I'll tell you something I'm hoping for. I'm hoping for a much more fluid means of providing updates to consumers, being able to have a much more rapid turnaround in between when content is submitted and when content goes live to consumers, to provide a higher level of service to them. I'm hoping that the networking and the processes in the future are built with that in mind. I'd like to see more server-based backends that are more under publisher-developer control, rather than being forced through systems that are bit more pre-defined by the first-party. That would enable experiences online that are not currently available in today's console marketplace. In many ways, I hope that first-parties react to what's happening in the PC and smartphone space, in that the barriers between developer and consumer are much lower there. And console makers need to be aware that that's what they're competing against, and that's increasingly what the customer expectation is, in terms of responsiveness and engagement. A couple years ago, there were some Western-developed Capcom games that didn't do that great, from Airtight and from GRIN. What steps were taken for improvement in that regard? Just launching this month, we have Resident Evil: Operation Raccoon City, which was done with a Western developer [Slant Six]. We had successes with Dead Rising 2, and subsequently acquired [its developer] Blue Castle, which is now Capcom Game Studio Vancouver. And they have multiple projects that continue to be in development. You will see additional titles announced from them. DMC is probably also worth mentioning. [UK-based] Ninja Theory has engaged with us very, very deeply, probably the deepest engagement between Capcom Japan and the Western development process. There's been very, very tight collaboration between the two on that project. So we've done many larger titles that way, and dare I say you'll see us announce some more in the not-so-distant future. Suffice to say, we have not at all stepped away [from Western developer partnerships]. We have sought to improve on our working process, our collaborative process, we have sought to improve upon the quality of the teams with which we work.